FBiH Government approves 20 million KM for youth housing loans through Union Bank

(Patria) - The Government of the Federation of BiH, at today's session in Mostar, upon the proposal of the Federal Ministry of Finance, adopted a Decision approving a loan to Union Bank d.d. Sarajevo under subordinated terms from funds allocated in the FBiH Budget for 2023, in the amount of 20,000,000 KM.

The funds will be used for the credit line intended for young people to resolve their housing issues, and are approved to Union Bank on a credit basis with a maturity of 25 years and a fixed interest rate of 0.1 percent per annum.

This decision, as stated, will significantly contribute to the continued resolution of existential issues for the population, which will impact the retention of young and educated people in the country.

It will also contribute to maintaining a socially responsible approach to lending and supporting the economic recovery in the construction sector from negative economic consequences.
The justification for today's decision highlighted that the effects of forming a long-term stable portfolio are the result of cooperation between the Government of the Federation of BiH as the majority owner of Union Bank and this bank, including based on subordinated loan agreements that have been implemented for seven consecutive years, i.e., since 2018.

As stated, last year a credit portfolio was formed, resulting in 201 approved credit applications totaling 28,401,810.50 KM, with the average loan amount per received application being 142,379.94 KM. The average age of loan beneficiaries is 30.5 years, and loan beneficiaries come from over 33 cities and settlements in the Federation of BiH.

The goals and expected effects of implementing loans under subordinated terms are, as explained, among other things, resolving existential issues for the population, which will impact the retention of young and educated people in the country, strengthening the Bank's credit potential and its ability to offer long-term loans to the population, as well as maintaining a socially responsible approach to lending, and the Bank's participation in the credit line with at least 10,000,000 KM.

The Federal Ministry of Finance is authorized to conclude the Subordinated Loan Agreement with Union Bank on behalf of the Government of the Federation of BiH, and the Federal Minister of Finance is authorized to sign this agreement.