The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Banking Sector Strengthening Project (P158387) EUROPE AND CENTRAL ASIA | Bosnia and Herzegovina | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2017 | Seq No: 5 | ARCHIVED on 23-Oct-2019 | ISR38949 | Implementing Agencies: BiH Ministry of Finance and Treasury, Republika Srpska Ministry of Finance, FBiH Ministry of Finance Key Dates Key Project Dates Bank Approval Date: 28-Apr-2017 Effectiveness Date: 25-Oct-2018 Planned Mid Term Review Date: 27-May-2019 Actual Mid-Term Review Date: 27-May-2019 Original Closing Date: 31-Dec-2020 Revised Closing Date: 31-Dec-2020 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective (PDO) is to improve the soundness of the banking sector by enhancing bank regulation, supervision and resolution capacity and by enhancing the governance of the Entity development banks. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Banking Sector Strengthening:(Cost $60.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO ►Moderately Satisfactory ►Moderately Satisfactory Overall Implementation Progress (IP) ►Moderately Satisfactory ►Moderately Satisfactory Overall Risk Rating ►Substantial ►Substantial Implementation Status and Key Decisions The ratification process for the BSSP project has been finalized on the RS side with the project having been declared effective on October 25, 2018 following significant delays due to the pre-election complex political inter-government relationships. The ratification process in the Federation of BiH is still pending. In the meantime, considerable progress has been made against all four disbursement linked indicators (DLIs). It is expected that by end 2019 all DLIs under Components 1-3 are being met. 10/23/2019 Page 1 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance ►Substantial ►Substantial ►Substantial Macroeconomic ►Moderate ►Moderate ►Moderate Sector Strategies and Policies ►Moderate ►Moderate ►Moderate Technical Design of Project or Program ►Substantial ►Substantial ►Substantial Institutional Capacity for Implementation and Sustainability ►Substantial ►Substantial ►Substantial Fiduciary ►Moderate ►Moderate ►Moderate Environment and Social ►Low ►Low ►Low Stakeholders ►Moderate ►Moderate ►Moderate Other -- -- -- Overall ►Substantial ►Substantial ►Substantial Results PDO Indicators by Objectives / Outcomes Banking Sector Strengthening IN00755861 ►PDI 1.a. (RS): All RS banks remain well-capitalized (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Too early to measure Too early to measure Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755862 ►PDI 1.a. (FBiH): All FBiH banks remain well-capitalized (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Too early to measure. Too early to measure. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 10/23/2019 Page 2 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) IN00755863 ►PDI 1.b. (FBiH): FBA reviews and efficiently responds to cases when banks do not meet prudential norms for capital adequacy (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Too early to measure Too early to measure Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755864 ►PDI 1.b. (RS): BARS reviews and efficiently responds to cases when banks do not meet prudential norms for capital adequacy (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Too early to measure. Too early to measure. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755865 ►PDI 2 (FBiH): FBA performing its legally mandated technical functions in bank resolution (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Too early to measure. Too early to measure. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755866 ►PDI 2 (RS): BARS performs its legally mandated technical functions in bank resolution (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Too early to measure. Too early to measure. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755867 ►PDI 3 (RS): New governance and business model for IRBRS adopted (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755868 ►PDI 3 (FBiH): New governance and business model for RBFBIH adopted (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 Intermediate Results Indicators by Components 10/23/2019 Page 3 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Strengthen bank regulation and supervision IN00755873 ►IRI 1 (FBiH): Quantitative impact study on liquidity and capital regulations completed (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No QIS completed. QIS completed. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in June 2017. Comments: IN00755876 ►IRI2 (FBiH):Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; and (v) consolidated supervision (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target All by-laws have been All by-laws have been Value No Yes adopted adopted Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in October 2017. Comments: IN00755880 ►IRI 3 (FBiH): Adoption of new risk-based supervisory review and evaluation process (SREP) methodology aligned with with EU (European Banking Authority EBA) standards (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Work ongoing Work ongoing Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755883 ►IRI 1 (RS): Quantitative impact study on liquidity and capital regulations completed. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No QIS completed. QIS completed. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in June 2017. Comments: IN00755887 ►IRI 2 (RS): Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; and (v) consolidated supervision (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No All bylaws have adopted. All bylaws have adopted. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2017. Comments: IN00755890 ►IRI 3 (RS): Adoption of new risk based SREP methodology aligned with EU (EBA) standards (Text, Custom) 10/23/2019 Page 4 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Baseline Actual (Previous) Actual (Current) End Target Value No work ongoing. work ongoing. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 Address weaknesses in the domestic banking sector IN00755871 ►IRI 4 (FBiH): FBA (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of AQRs of all banks in FBiH not previously subject to an AQR based on the harmonized 2017 AQR framework. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Harmonised AQR 2017 Harmonised AQR 2017 Value No adopted. AQRs Yes adopted. AQRs completed. completed. Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2017. Comments: IN00755875 ►IRI 5 (FBiH): All undercapitalized banks have in place either mandatory time bound corrective action programs or resolution/liquidation programs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Too early to measure. Too early to measure. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755879 ►IRI 4 (RS): BARS (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of AQRs of all banks in RS not previously subject to an AQR based on the harmonized 2017 AQR framework. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Harmonized 2017 AQR Harmonized 2017 AQR Value No framework adopted. AQRs framework adopted. Yes completed. AQRs completed. Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2017. Comments: IN00755884 ►IRI 5 (RS): All undercapitalized banks have in place either mandatory time bound corrective action programs or resolution/liquidation programs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 BARS confirmed that as of end 2018 that from the banks participating in Phase 3 of the AQR none are undercapitalized. Comments: Improve Banking Agencies’ ability to undertake bank recovery and resolution functions IN00755870 10/23/2019 Page 5 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) ►IRI 6 (FBiH): Bylaw on recovery plans adopted by FBA (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Bylaw adopted. Bylaw adopted. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in October 2017. Comments: IN00755877 ►IRI 7 (FBiH): Resolution unit in FBA established and made operational (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No In progress. In progress. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755881 ►IRI 8 (FBiH): Number of recovery plans submitted and assessed in line with internal assessment methodology (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 15.00 Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755885 ►IRI 6 (RS): Bylaw on recovery plans adopted by BARS (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Bylaw adopted. Bylaw adopted. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2017. Comments: IN00755888 ►IRI 7 (RS): Resolution unit in BARS established and made operational (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No yes yes Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2018. Comments: IN00755891 ►IRI 8 (RS): Number of recovery plans submitted and assessed in line with internal assessment methodology (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 8.00 Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 10/23/2019 Page 6 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Improved governance and business model of the BiH development banks IN00755869 ►IRI 9 (FBiH): FBiH Government to approve a strategic statement for RBFBIH future development (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No In progress. In progress. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755878 ►IRI 10 (FBiH): RBFBIH’s business plan for 2018-20 approved by the Shareholders Assembly (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No In progress. In progress. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755882 ►IRI 11 (FBiH): RBFBiH’s risk management strengthened (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No In progress. In progress. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755886 ►IRI 9 (RS): Approval by the RS Government of a statement governing IRBRS’s future development. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Work ongoing. Work ongoing. Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755889 ►IRI10 (RS): Transfer of identified Funds’ assets to IRBRS in compliance with (i) amended IRBRS Law and (ii) IRBRS regulations and BARS bylaw governing the application of banking regulations to IRBRS. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No In progress In progress Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 IN00755892 ►IRI 11 (RS): IRBRS in full compliance with BARS bylaw governing the application of banking regulations to IRBRS. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No In progress In progress Yes Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 Citizen engagement 10/23/2019 Page 7 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) IN00755872 ►IRI 12 (FBiH): Citizen Engagement: % of Project-supported bylaws reflecting outcomes of consultations. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 100.00 100.00 100.00 Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in June 2018. Comments: IN00755874 ►IRI 12 (RS): Citizen Engagement: % of Project-supported bylaws reflecting outcomes of consultations. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 100.00 100.00 100.00 Date 31-Dec-2016 15-Apr-2019 15-Apr-2019 31-Dec-2020 The indicator was achieved in September 2018. Comments: Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P158387 IBRD-87410 Effective USD 60.00 60.00 0.00 15.12 45.94 25% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P158387 IBRD-87410 Effective 28-Apr-2017 31-Oct-2017 25-Oct-2018 31-Dec-2020 31-Dec-2020 Cumulative Disbursements 10/23/2019 Page 8 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 10/23/2019 Page 9 of 9