Government adopts Draft Law on the Banking Agency of the FBiH

The Government of the Federation of BiH, at today's session in Sarajevo, adopted and forwarded to the parliamentary procedure the Draft Law on the Banking Agency of the FBiH. Among the prescribed competencies of this agency is the supervision of the operations and legality of the business of banking system entities, ordering and undertaking measures to eliminate identified illegalities and irregularities, as well as restructuring banks in accordance with regulations, Patria reports.

In performing these tasks, the Agency has the right to inspect the business books and other documentation of banking system entities, as well as legal entities that are related to the banking system entity subject to supervision through property or management relations.

In performing its competencies, the Agency is completely autonomous and independent. The Agency, its Management Board, the Director and Deputy Director of the Agency, employees, advisors, temporary/external, special administrator and liquidator, as well as other persons recommended or appointed by the Agency to perform certain actions within the Agency's mission, cannot be prosecuted for criminal offenses, nor be held liable in civil proceedings during and after the termination of their work or engagement with the Agency for any actions performed in good faith during the execution of tasks within their authority.

For the purpose of performing and improving tasks within its competence, the Agency cooperates with the Central Bank of BiH, the Deposit Insurance Agency of BiH, supervisory bodies of the financial sector of the Federation of BiH, the Republika Srpska and the Brčko District of BiH, as well as other control bodies and other institutions and bodies. It also cooperates with international institutions that perform supervision, restructuring and other competencies over banks and other financial organizations.

Among the reasons for adopting the new Law on the Banking Agency of the FBiH is the need to align it with the relevant legislation of the European Union, as well as to update legal solutions, given that the existing law was adopted in 1998 and has, in the meantime, undergone a number of amendments and supplements.

The banking sector is essential for the country's economy, which is why the interruption of its functions has negative consequences not only for the stability of the financial system, but also for the real sector and all citizens. Therefore, the new Law on the Agency, as well as the new Law on Banks, establishes a legal framework for the restructuring of banks in the FBiH in order to take measures that should, in conditions of financial crisis, prevent or mitigate the occurrence of crisis situations both at the individual bank level and at the banking and financial system as a whole. This also applies to ensuring the effective restructuring of a bank whose condition is such that it cannot or will likely not be able to continue operating, primarily from the perspective of the possibility that by applying these measures, the bank's insolvency will be timely prevented from becoming insolvent, as well as enabling preventive action aimed at reducing negative consequences on the performance of the bank's key functions and the stability of the financial system if the bank becomes unable to operate.