On 27 December the
Banking Agency of Republika Srpska (Агенција за банкарство Републике Српске) published on its
website a full report (69 pp.) on the banking system in Republika Srpska for 9M
2012. The report is dated November 2012,
and a few consolidated statistics were made public on 19 December, but only on
27 December was the full report made available to the public.
Unlike the report
for 9M 2012 released on 11 December by the banking agency for the other main
entity in Bosnia and Herzegovina Herzegovina
Bank
|
Total
Assets
(000
BAM)
|
Capital
(000
BAM)
|
Branches
|
Other
Org.
Units
|
POS
Devices
|
ATMs
|
Employees
|
Operations in RS by banks
headquartered in RS:
|
|||||||
Hypo Alpe-Adria-Bank a.d. Banja
Luka
|
1,428,705
|
252,122
|
44
|
455
|
48
|
573
|
|
Nova banka a.d. Banja Luka Бања
|
1,173,125
|
103,631
|
10
|
37
|
768
|
59
|
549
|
NLB Razvojna banka a.d. Banja Luka
|
1,138,506
|
104,276
|
12
|
57
|
1,595
|
63
|
499
|
UniCredit bank a.d. Banja Luka
|
830,498
|
109,867
|
37
|
6
|
44
|
52
|
438
|
Volksbank a.d. Banja Luka
|
468,836
|
67,535
|
9
|
11
|
362
|
21
|
245
|
Balkan Investment Bank a.d. Banja
Luka
|
279,218
|
44,057
|
12
|
25
|
19
|
14
|
221
|
Bobar banka a.d. Bijeljina
|
260,995
|
34,478
|
6
|
43
|
67
|
5
|
186
|
Komercijalna banka a.d. Banja Luka
|
242,496
|
64,334
|
10
|
7
|
16
|
26
|
141
|
Pavlović International Bank a.d.
Slobomir
|
200,496
|
30,030
|
5
|
26
|
30
|
3
|
229
|
MF banka a.d. Banja Luka
|
95,835
|
20,104
|
15
|
6
|
109
|
||
Operations in RS by banks
headquartered in FBiH:
|
|||||||
ProCredit Bank d.d. Sarajevo
|
2
|
2
|
1
|
4
|
|||
Raiffeisen Bank d.d. Bosna i
Hercegovina
|
9
|
18
|
1,025
|
41
|
|||
Volksbank BH d.d.
|
1
|
2
|
29
|
3
|
|||
Intesa
Sanpaolo banka d.d. Bosna i Hercegovina
|
1
|
5
|
5
|
8
|
|||
UniCredit Bank d.d.
|
6
|
384
|
15
|
||||
Moja banka d.d. Sarajevo
|
1
|
2
|
1
|
||||
Sparkasse Bank d.d. Sarajevo
|
2
|
3
|
4
|
5
|
|||
TOTAL
|
6,118,710
|
830,434
|
123
|
301
|
4,806
|
297
|
3,190
|
On the basis of the
above data some basic benchmarks of market concentration can be
calculated. One major index of market
concentration, used primarily by anti-monopoly regulators, is the Herfindahl–Hirschman
Index, or “HHI”. It is calculated
simply by squaring the market share for each firm (or for at least the 50
largest firms), and summing the total of the squares. In its report the banking agency for RS itself
provides HHI figures for assets, for deposits, and for loans, but because the
report only contains raw data for assets, it is not possible to independently verify
the HHIs for deposits or loans. Nevertheless
the HHI for total assets in the banking sector in RS as of 30 September 2012 can be verified, and is
calculated as follows:
Bank
|
Total Assets (000 BAM)
|
Market share by assets
|
Market share squared
|
Hypo
Alpe-Adria-Bank a.d. Banja Luka
|
1,428,705
|
23.35%
|
545.21
|
Nova banka
a.d. Banja Luka Бања
|
1,173,125
|
19.17%
|
367.59
|
NLB
Razvojna banka a.d. Banja Luka
|
1,138,506
|
18.61%
|
346.22
|
UniCredit
bank a.d. Banja Luka
|
830,498
|
13.57%
|
184.23
|
Volksbank
a.d. Banja Luka
|
468,836
|
7.66%
|
58.71
|
Balkan
Investment Bank a.d. Banja Luka
|
279,218
|
4.56%
|
20.82
|
Bobar
banka a.d. Bijeljina
|
260,995
|
4.27%
|
18.19
|
Komercijalna
banka a.d. Banja Luka
|
242,496
|
3.96%
|
15.71
|
Pavlović
International Bank a.d. Slobomir
|
200,496
|
3.28%
|
10.74
|
MF banka
a.d. Banja Luka
|
95,835
|
1.57%
|
2.45
|
TOTAL
|
6,118,710
|
100.00%
|
1569.88
|
The HHI for assets
in the banking sector calculates out as 1569.88, which corresponds well to the
figure of “1570” provided in the report.
The report also provides HHIs of “1578” for deposits and “1566” for
loans, but without supporting data. In
short, all three figures fall in a narrow range between 1566 and 1578. As for the significance of HHI figures, the
U.S. Department of Justice writes as follows: “The agencies generally consider
markets in which the HHI is between 1,500 and 2,500 points to be moderately
concentrated, and consider markets in which the HHI is in excess of 2,500
points to be highly concentrated.”
A second, somewhat
simpler measure of market concentration that is commonly used is “CR10”, the
combined market shares of the top ten entities in the market. Because Republika Srpska has only ten banks
based within its borders, the value of CR10 for assets is precisely 100%. Other common measures of market concentration
used are “CR5” and “CR3”, the combined market shares of the top five and top
three entities on the market. From the
above data we can calculate that – for assets – the value for CR5 is 23.35% +
19.17% + 18.61% + 13.57% + 7.66% = 82.36%, while the value for CR3 is 61.13%.
Similar
calculations can also be performed for the banking sector in the other entity
in Bosnia, the Federation of Bosnia and Herzegovina (FBiH), using the data
published by the Banking Agency for FBiH on 11 December. Because the Banking Agency for FBiH published
raw data not only for total assets but also for total deposits and total loans,
HHIs can be calculated for each of these, and values for CR10, CR5, and CR3 as well. Below are data from the FBiH report, with HHI
calculations for each of the three categories:
Bank
|
Total
Assets
(000 BAM) |
Market
share by assets
|
Market share squared
|
Total
Deposits
(000 BAM) |
Market
share by deposits
|
Market share squared
|
Total
Loans
(000 BAM) |
Market
share by loans
|
Market share squared
|
Profit
for 9M 2012
(000
BAM)
|
Raiffeisen
Bank d.d. Bosna i Hercegovina
|
3,713,483
|
24.89%
|
619.75
|
2,725,472
|
25.24%
|
636.99
|
2,471,605
|
23.23%
|
539.47
|
38,175
|
UniCredit
Bank d.d.
|
3,566,586
|
23.91%
|
571.68
|
2,586,604
|
23.95%
|
573.73
|
2,494,550
|
23.44%
|
549.53
|
44,132
|
Hypo
Alpe-Adria-Bank d.d. Mostar
|
1,479,232
|
9.92%
|
98.34
|
1,016,680
|
9.41%
|
88.64
|
1,017,065
|
9.56%
|
91.35
|
-6,031
|
Intesa
Sanpaolo banka d.d. Bosna i Hercegovina
|
1,375,736
|
9.22%
|
85.06
|
912,334
|
8.45%
|
71.38
|
1,158,312
|
10.88%
|
118.48
|
11,243
|
Sparkasse
Bank d.d. Sarajevo
|
935,345
|
6.27%
|
39.32
|
813,540
|
7.53%
|
56.76
|
760,531
|
7.15%
|
51.08
|
6,821
|
NLB Tuzlanska banka d.d. Tuzla
|
828,872
|
5.56%
|
30.88
|
630,686
|
5.84%
|
34.11
|
638,812
|
6.00%
|
36.04
|
4,211
|
Volksbank
BH d.d.
|
683,666
|
4.58%
|
21.01
|
516,064
|
4.78%
|
22.84
|
562,425
|
5.29%
|
27.93
|
4,691
|
BBI
banka d.d.
|
350,586
|
2.35%
|
5.52
|
236,302
|
2.19%
|
4.79
|
240,020
|
2.26%
|
5.09
|
585
|
Bor
banka d.d.
|
330,614
|
2.22%
|
4.91
|
206,673
|
1.91%
|
3.66
|
202,631
|
1.90%
|
3.63
|
2,161
|
ProCredit
Bank d.d. Sarajevo
|
314,517
|
2.11%
|
4.45
|
229,784
|
2.13%
|
4.53
|
274,688
|
2.58%
|
6.66
|
309
|
Vakufska
banka d.d. Sarajevo
|
246,935
|
1.66%
|
2.74
|
185,284
|
1.72%
|
2.94
|
179,866
|
1.69%
|
2.86
|
437
|
Privredna
banka d.d. Sarajevo
|
220,709
|
1.48%
|
2.19
|
159,116
|
1.47%
|
2.17
|
151,136
|
1.42%
|
2.02
|
112
|
Turkish
Ziraat Bank Bosnia d.d. Sarajevo
|
218,003
|
1.46%
|
2.14
|
102,713
|
0.95%
|
0.90
|
120,360
|
1.13%
|
1.28
|
1,114
|
Union
banka d.d. Sarajevo
|
204,058
|
1.37%
|
1.87
|
145,764
|
1.35%
|
1.82
|
95,341
|
0.90%
|
0.80
|
728
|
Investiciono-komercijalna
banka d.d. Zenica
|
177,107
|
1.19%
|
1.41
|
124,483
|
1.15%
|
1.33
|
94,351
|
0.89%
|
0.79
|
1,769
|
Moja banka d.d. Sarajevo
|
158,128
|
1.06%
|
1.12
|
130,851
|
1.21%
|
1.47
|
116,645
|
1.10%
|
1.20
|
-76
|
Komercijalno-investiciona
banka d.d. Velika Kladuša
|
62,277
|
0.42%
|
0.17
|
38,286
|
0.35%
|
0.13
|
35,586
|
0.33%
|
0.11
|
566
|
Poštanska
banka BiH d.d. Sarajevo
|
50,913
|
0.34%
|
0.12
|
38,184
|
0.35%
|
0.13
|
27,441
|
0.26%
|
0.07
|
-191
|
TOTAL
|
14,916,767
|
100.00%
|
1492.67
|
10,798,820
|
100.00%
|
1508.30
|
10,641,365
|
100.00%
|
1438.37
|
110,756
|
The resulting HHIs for
FBiH are 1492.67 for assets, 1508.30 for deposits, and 1438.37 for loans. These values correspond well to the values provided
by the agency itself in the report, of “1493”, “1508”, and “1438”.
Because the
Federation has more than 10 banks based within its borders, the CR10 figures
will not be 100% as they were in the case of Republika Srpska. In fact for the Federation the CR10 calculates
out as 91.03% for assets, 91.44% for deposits, and 92.29% for loans. Likewise CR5 values are 74.21%, 74.59%, and
74.26%, respectively, while figures for CR3 are 58.72%, 58.61%, and 56.23%,
respectively.
Sources:
Извјештај
о стању у банкарском систему Републике Српске за период 01.01.2012.-30.09.2012.
године (2012-12-27)
In other news, on 27
December the International Monetary Fund published an updated report on its
relationship with Bosnia and Herzegovina Bosnia and Herzegovina Bosnia and Herzegovina
C. Mitigating Financial
Sector Risks
15. BiH’s banking system has remained relatively
stable. Banks have a large deposit base, and the sector as a whole is
profitable and has improved its capital adequacy through capital injections and
profit retention. Stress tests using end-June 2012 data did not reveal major
weaknesses. Nonperforming loans (NPLs) have remained at around 12½ percent, but
provisioning stands at 67 percent of non-performing assets, broadly in line
with the regional average. BiH banks’ parents are committed to maintain their
exposure to BiH, and the data for the first two quarters of 2012 show that
parent banks’ exposure to BiH banks has remained broadly stable.
16. The authorities are taking measures to
strengthen bank supervision, and will seek further technical assistance
from the Fund on practical steps and procedures in the event of banking sector
difficulties. Specifically:
– Given
the dominance of foreign ownership in the BiH’s banking system, cooperation with
home supervisors is essential. In this context, the Federation authorities have
amended the legal framework related to the treatment of confidential
information to align it with EU requirements and the RS authorities plan to do
this soon (an existing structural benchmark for end-December 2012). This would
help to pave the way for the signing of Memoranda of Understanding with the
Austrian and Italian banking supervision authorities.
– In
addition, to further strengthen the bank resolution frameworks, the authorities
plan to shorten the provisional administration period and to redraft the law
governing the Deposit Insurance Agency in line with Fund staff recommendations
(existing structural benchmarks for end-December 2012 and end-March 2013,
respectively).
– The
authorities are also working to improve their coordination in conducting
topdown stress tests and will agree upon a joint Memorandum of Understanding on
the stress-testing procedures by end-March 2013.
– The authorities are in the process of
identifying financial institutions that are considered systemically important,
and will increase their focus on these institutions, including by conducting
bottom-up stress tests.
17. Improving the
NPL resolution framework would further enhance BiH’s capacity in crisis
resolution. NPL resolution is currently hindered by legal, tax, and
institutional shortcomings. The authorities will conduct a comprehensive review
of the legal and institutional frameworks, with the assistance from the Fund,
in order to create a system that encourages NPL resolution. As part of these
efforts, the authorities plan to adopt legislation on factoring — allowing
banks to sell loans — and review personal bankruptcy legislation in light of
the high level of indebtedness of individuals.
Source:
Mark Pleas
[contact]
