Over the last nine months there were few significant legislative changes in the area of banking and finance regulations in Bosnia and Herzegovina. The following regulations have been adopted in the Republic of Srpska: (i) the Law on Amendments to the Law on Banking Agency of the Republic of Srpska and (ii) the Rulebook on the Banking System Ombudsman of the Republic of Srpska. In the Federation of Bosnia and Herzegovina the main legislative changes pertain to the enactment of (i) the Rulebook on the methods, deadlines and the manner of the preparation, presentation and hand over of consolidated financial statements as well as (ii) the Guidelines for Licensing and the Issuance of Other Approvals by the Banking Agency of the Federation of Bosnia and Herzegovina.
Extension of powers of the Banking Agency of the Republic of Srpska and the Introduction of a Banking System Ombudsman in the Republic of Srpska
The Law on Amendments and Supplements to the Law on the Banking Agency of the Republic of Srpska (Official Gazette of the Republic of Srpska, no. 40/11, "LBA Amendments") has been effective since the 21 April 2011.
Competencies of the Banking Agency. The LBA Amendments have extended the competencies of the Banking Agency of the Republic of Srpska ("Agency"). The Agency can now:
- Supervise and carry out the necessary activities in order to prevent money laundering and the financing of terrorism, in relation to the activities of banks, microcredit organizations, savings and loans organizations and other financial organizations;
- Supervise and carry out other activities in accordance with the regulations on the introduction and application of certain temporary measures for the efficient performance of international restrictive measures;
- Adopt bylaws on anti-money laundering and counter-terrorism financing and consumer protection, as well as carry out consumer protection activities.
Banking System Ombudsman. The LBA Amendments provide for the establishment of the Baking System Ombudsman ("Ombudsman"), as an independent organizational unit within the Agency, in order to promote and protect the rights and interests of the consumers. The Ombudsman, as one of the facilitators of consumer protection in the Republic of Srpska, should contribute to a more efficient and faster resolution of misunderstandings and disputes between institutions of the banking system and consumers of the financial services by independent parties, with minimal formalities, through mediation or in other peaceful way. All of the financial institutions in the banking system of the Republic of Srpska are obliged to cooperate with the Ombudsman.
The Rulebook on the Banking System Ombudsman. The establishment, work and financing of the Ombudsman is additionally regulated by the Rulebook on the Banking System Ombudsman of the Republic of Srpska (Official Gazette of the Republic of Srpska, no. 48/11, "Rulebook"). In accordance with the Rulebook, The Ombudsman will process objections that have been submitted and will mediate to achieve the peaceful resolution of disputes between the consumers and the relevant financial organizations in the banking system. The Ombudsman is authorized to receive, monitor and explore all instances of noncompliance with the law and other regulations by any financial organization of the banking system of the Republic of Srpska. Aside from that, the Ombudsman is obliged to provide information on the rights and obligations available to the consumers of financial services and to third parties that have suffered damages. The Ombudsman is also obliged to carry out other tasks in accordance with the LBA. The Ombudsman is appointed by the Agency, and the requirements for the appointment is a high level of education with a specialisation in law, experience in finance and having passed the bar exam.
Amendments to the Rulebook on Consolidated Financial Statements in Federation of Bosnia and Herzegovina
Consolidated financial statements. In accordance with the Rulebook, consolidated financial statements are statements prepared at the level of a group of related legal entities which for reporting purposes form one economic entity: (i) a legal entity exercising control over one or more legal entities as well as controlled legal entities, (ii) legal entities participating in the joint control over one or more legal entities, (iii) legal entities having significant influence over one or more legal entities.
The standards and form of reporting. This Rulebook regulates the preparation of consolidated financial statements, and provides that the International Accounting Standards (IAS) and International Standards of Financial Reporting (IFRS) shall be applied. Consolidated statements prepared in accordance with IAS/IFRS and the Rulebook must be prepared in the specified form depending on the organization of the parent company. The management are obliged to make financial statements publicly available.
Deadlines for the preparation and submission of financial statements. Legal entities that are obliged to prepare and present their consolidated annual financial statements must submit them by 30 April of the current year (for the previous year).
Licensing and issuing of consents by the Banking Agency of the Federation of Bosnia and Herzegovina
The Managing Board of the Banking Agency of Federation of Bosnia and Herzegovina on 7 July 2011 adopted Guidelines for the Licensing and the Issuance of other Approvals by the Banking Agency of Federation of Bosnia and Herzegovina (Official Journal of Federation of Bosnia and Herzegovina, no. 46/11, "Licensing Guidelines"). These closely define the grounds for the issuing and terminating of licences. It also provides guidelines for other approvals concerning the performance of banking activities by the Banking Agency of Federation of Bosnia and Herzegovina ("FBA").
The main goal of the Licensing Guidelines is the establishment of the general criteria for the performance of the statutory competences of the FBA whilst facilitating the effective issuing of its decisions and rulings. The Licensing Guidelines regulate that banks may disclose their requests to the FBA which relate to: the issuing of a banking license, the termination of a banking the license; the authorization to establish organizational units (branches and other organizational units), a license to establish a subsidiary of the bank seated outside of the territory of the Federation of Bosnia and Herzegovina, the approval for a capital reduction or the reduction of the capital structure through the repurchase of its own shares, the approval for an increase or decrease in the qualified shareholding interest in the bank etc.
Banks are obliged to adjust their operations in order for them to be in line with the provisions of the Licensing Guidelines by 27 October 2011.
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