On 17 May the
online Bosnian news service Capital published an article by journalist Jelena
Despotović examining the work of the Ombudsman for the Banking System that was instituted
in April 2011 in Republika Srpska, one of the two main constituent entities of Bosnia and
Herzegovina
On 22 March 2011
the National Assembly of Republika Srpska adopted a statute that made changes
to the Law on the Banking Agency of Republika Srpska (Закон о
Агенцији за банкарство Републике Српскe), and these changes entered into
effect when the statute was published on 13 April 2011. The main change contained in the statute was
the creation of an independent Ombudsman for the Banking System (Oмбудсман
за банкарски систем) within the already-existing Banking Agency of
Republika Srpska (Агенција за банкарство Републике Српске). The statute assigned to the Ombudsman the
duty of promoting and protecting the rights and interests of individual
consumers who use financial services. In
late April 2011 the office of Ombudsman was duly created within the Banking
Agency, on 28 June 2011 the Banking Agency
appointed Vladimir Rudić (Владимир Рудић) as the first Ombudsman for a
term of five years beginning upon the publication of the appointment notice in
the official gazette, and in September 2011 the Ombudsman began hearing his
first cases.
Vladimir Rudić, Ombudsman for
the Banking System
in Republika Srpska (Bosnia and
Herzegovina
The article in Capital
quotes at length Mika Nikić, a board member of the Association for the
Protection of Guarantors (Удружење за заштиту жираната), who characterizes
the Ombudsman as being “a hidden player of the banking lobby” (prikriveni
igrač bankarskog lobija) in that although many of the complaints submitted by
consumers against banks and microfinance organizations regard legal violations,
the Ombudsman does not investigate whether fraud may have been committed but
instead always seeks to reach a negotiated agreement between the financial
institution and the customer. The
article goes on to characterize the Ombudsman, Vladimir Rudić, as evasive for
having refused to respond to questions from the journalist’s except in written
form. The article closes by reiterating
that an earlier article by Capital, published on 15 July 2011 shortly
after the appointment of Vladimir Rudić to the post of Ombudsman had become
official, revealed that Rudić is the brother of Snježana Rudić, who at that
time was Deputy Minister of Finance for Republika Srpska as well as a member of
the Managing Board of the banking agency that selected Vladimir Rudić for the
job.
Although the journalist
herself strongly implies that the present Ombudsman is not doing the job that
he was hired to do, the primary source for her information, the board member of
the Association for the Protection of Guarantors, merely states that the final
result is that the office of Ombudsman protects financial institutions more
than customers. It is worth noting, therefore,
that the actual text of the statute passed by the National Assembly on 22 March
2011 clearly states that in the case of disputes between consumers and
financial institutions the Ombudsman must attempt to resolve such disputes
peacefully through negotiation and mediation so that the disputes do not end up
in court, and the statute gives the Ombudsman no investigatory, prosecutorial,
or disciplinary powers. So if in fact
the Ombudsman for the Banking System in Republika Srpska is effectively serving
as a tool of the “banking lobby”, the influence of the “banking lobby” over the
Ombudsman’s office would seem to date back all the way to the drafting of the
statute that the assembly adopted on 22 March 2011.
Principal sources:
Law passed on 22
March 2011 that mandates the creation of ombudsman's office: Закон
о измјенама и допунама Закона о Агенцији за банкарство Републике Српске
In other news, on
17 May the International Monetary fund issued a 45-page staff report on Bosnia and
Herzegovina 23 April 2013 . The section of the report dealing most
directly with the banking sector is reproduced below verbatim, with emphasis as
per the original.
POLICY
DISCUSSIONS
[...]
C. Ensuring Financial
Sector Stability
18.
The banking system is relatively stable, but lending remains muted and
nonperforming loans are creeping up. Financial sector indicators through end-2012
suggest that the banking system—which is predominantly owned by Austrian and
Italian banks—remains profitable and adequately capitalized at the aggregate
level. However, the headwinds from weak domestic activity are being more
pronouncedly felt. Non-performing loans (NPLs) have edged up further, to over
13 percent by end-2012 and could rise even more in the near future, although
provisioning stands at 67 percent of non-performing assets. While the latest
stress tests did not reveal major weaknesses in the system, the banking
agencies have been quick to engage some smaller banks that presented tighter
capital positions under severe shock scenarios. Parent banks’ exposure to their
subsidiaries declined only moderately over the last several quarters. The
loan-to-deposit ratio remains relatively high at around 125 percent. Credit
growth remains subdued, however, at 3 percent in 2012, reflecting banks
applying tighter credit standards and the weak economy.
19. Further progress is
being made to strengthen bank supervision and the crisis resolution framework.
Specifically:
· The Federation authorities have amended the
legal framework related to the treatment of confidential information to align
it with EU requirements, while in the Republika Srpska this is awaiting
parliamentary approval (an end-December 2012 structural benchmark that is now expected
to be completed before end-June 2013, and which is the proposed new deadline for
this benchmark). These changes would help to pave the way to sign MOUs with homecountry
banking supervisors, aimed at enhancing cooperation. The authorities are also planning
to host a cross-border forum in the near future, inviting home country
supervisors and parent banks.
·
Amendments to the entities’ banking laws to
limit the provisional administration of banks to one year, with a possible
6-month extension are also awaiting approval by the respective parliaments
(structural benchmarks for end-December 2012 which are now expected to be completed
before end-June 2013, which is also proposed as the new deadline for these benchmarks).
A more comprehensive overhaul of both entities’ banking laws is planned in order
to fully harmonize them with EU legislation. This process is expected to be
completed in the first half of 2014.
· A joint MOU between the Central Bank of Bosnia
and Herzegovina (CBBH), and the banking agencies, which formalizes the
procedures for top-down stress-testing has been prepared and was signed in mid
March 2013.
· The authorities have established the criteria
for identifying—and prepared a preliminary list of—those financial institutions
that are considered systemically important and which will be subject to
increased monitoring, including bottom-up stress tests.
· The authorities have requested Fund technical
assistance to assess the NPL resolution framework and to identify steps to
strengthen this framework by removing legal, tax, and institutional obstacles.
· The amendments to the law governing the DIA have
been submitted to the BiH parliament. These amendments aim to ensure that: (i)
coverage will be extended to small- and medium-sized enterprises; (ii) all
banks will be members of the deposit insurance scheme, including those that may
fall under provisional administration; and (iii) it is consistent with international
standards (an end-March 2013 structural benchmark).
Source:
