2015年-世界发展银行全球_Bosnia_and_Herzegovina___State_Bank_Governance_Technical_Note_43页_1016kb

Bosnia and Herzegovina: State Bank Corporate Governance Assessment Summary

Core Content

This Technical Note is part of the World Bank-IMF Financial Sector Assessment Program (FSAP) mission in Bosnia and Herzegovina (BiH) conducted in October-November 2014. It provides a detailed analysis of corporate governance practices in state-owned banks and outlines key recommendations to improve governance and accountability structures.

Main Findings

1. Government Ownership and Participation in the Banking Sector

• The Federation of Bosnia and Herzegovina (FBiH) owns the Development Bank of the Federation of Bosnia and Herzegovina (DBFBiH) and the Union Bank.
• The Republic of Srpska (RS) has significantly increased its ownership through:
  • A 100% stake in Banka Srpska.
  • 21% in Pavlovic Banka.
  • 8% in Bobar Banka.
  • 6.7% in Bobar Banka by Nova Bank.
  • Subordinated debt in Nova Banka and Srpska Banka.
• The Investment and Development Bank of the Republic of Srpska (IDBRS) manages the RS holdings in the banking sector.

2. Governance Structure and Concerns

• Supervisory boards in state banks are not fulfilling their strategic and oversight roles. They focus more on compliance than on holding management accountable.
• The management board has become the de facto decision-making body, leading to a blurring of responsibilities and overlapping operational roles.
• In RS minority-held banks, the founders influence the supervisory board, undermining independence.
• Related party transactions are prevalent in state banks, often classified as Non-Performing Loans (NPLs), indicating potential conflicts of interest and lack of transparency.

3. Supervisory Board Member Selection and Composition

• The selection process lacks sufficient experience, skills, and independence.
• Basic criteria (e.g., university degree and 5 years of professional experience) are used, with no legal requirement for independence.
• Civil servants can hold positions on supervisory boards, and non-government individuals are not included, reducing the independence and objectivity of the process.

4. Audit Function and Oversight

• The audit board is a separate entity and not a subcommittee of the supervisory board, leading to diffused accountability.
• Internal audit departments are understaffed and cannot effectively monitor all operations.
• External audit appointments are made late in the financial year and often based on lowest cost rather than quality, undermining the audit function's effectiveness.

5. Risk Management Function

• The risk management function is new and limited in scope.
• It typically supports credit approval and portfolio monitoring, but is not independent and is accountable to senior management rather than the supervisory board.

Key Recommendations

1. Strengthen the Regulatory Framework

• Amend the Law on Banks and Law on Enterprises to make the audit board a subcommittee of the supervisory board.
• Update the law on accounting to reflect the most current version of IFRS.
• Treat transactions with state-owned enterprises and other government entities as related-party transactions and disclose them in accordance with international standards.

2. Improve Supervisory Board Member Selection

• Modify selection criteria to include sector-specific skills and professional experience.
• Review remuneration policies to attract talented professionals to state bank boards.

3. Enhance Supervisory Board Composition and Role

• Ensure a majority of independent members on supervisory boards with sector-specific skills.
• Enable supervisory boards to hold management accountable through performance contracts and agreed strategies.

4. Strengthen Audit Function

• Assign responsibility for internal and external audit to the supervisory board.
• Ensure the supervisory board receives and reviews audit results directly from the audit firm.

5. Federation of Bosnia and Herzegovina (FBiH) Specific Recommendations

• Professionalize the MoF ownership function:
  • Establish and publicly disclose specific objectives for each government investment.
  • Create an adequately resourced ownership division within the MoF.
  • Sign performance agreements with supervisory boards and management, and monitor and evaluate performance.

6. Republic of Srpska (RS) Specific Recommendations

• Professionalize the ownership function of the IDBRS:
  • Establish a dedicated monitoring unit to focus on financial sector exposures, institutional performance, risk mitigation, and exit strategies.
  • Execute and monitor performance agreements with supervisory boards and management bodies.

Conclusion

The report emphasizes the need for clear ownership strategies, independent and skilled supervisory boards, and effective audit and risk management functions in state banks. These improvements are essential for financial stability, transparent governance, and public trust in the banking system. The recommendations aim to align state ownership with market-oriented practices and ensure accountability and efficiency in the management of financial sector investments.