State Owned Financial Institutions Reform Project (P156837)

Transcription

1 EUROPE AND CENTRAL ASIA Serbia Finance, Competitiveness and Innovation Global Practice IBRD/IDA Investment Project Financing FY 2018 Seq No: 2 ARCHIVED on 12-Dec-2018 ISR34752 Implementing Agencies: Republic of Serbia, Ministry of Finance Key Dates Key Project Dates Bank Approval Date: 20-Mar-2018 Effectiveness Date: 22-Aug-2018 Planned Mid Term Review Date: -- Actual Mid-Term Review Date: -- Original Closing Date: 01-Aug-2022 pdotable Project Development Objectives Project Development Objective (from Project Appraisal Document) Revised Closing Date: 01-Aug-2022 The Project Development Objective is to improve the performance of Banka Postanska Stedionica AD Beograd and promote the reform of Development Finance Institutions and Other State-Owned Financial Institutions. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Support the Reform of State Owned Financial Institutions:(Cost $34.87 M) Strengthen Institutional Capacity:(Cost $15.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions The Project became effective on August 22, Overall, there has been moderately satisfactory progress in implementation of the Project, as verified during the implementation support mission between November 28 - December 7, Based on the information provided to the team, BPS is progressing well towards achieving the relevant DLRs within the specified timeframes. The bank has been successful in reducing its nonperforming loans and loans to medium and large enterprises. The bank s financial results remain strong and, if future growth is prudently managed, BPS prospects are good. However, the team draws the authorities attention to the importance of making progress with the DLR that is meant to be achieved in 2019, namely reaching agreement between BPS and Serbia Post on their future business relationship and the need to implement a market-based compensation scheme for BPS management and staff. 12/12/2018 Page 1 of 5

2 The reforms related to development finance are being advanced under the leadership of the Ministry of Economy. The Development Fund and AOFI have each adopted Decisions consistent with the quantitative and qualitative requirements of their respective Conclusions, in line with the requirements of DLR 2.2, according to the responsible Ministries. The Development Finance Working Group met for the second time in November 2018 and the process of developing the Development Finance Strategy has started. The reform area related to the resolution of state-owned NPLs has progressed well. On October 11, 2018 the Deposit Insurance Agency issued the first tender for a portfolio of receivables of banks in bankruptcy as well as receivables in the name and for the account of the state, in the amount of EUR 240 million. This corresponds to DLR 3.1 which was only expected to be achieved in There have been delays in hiring the consultant who will undertake the independent verification of achievement of DLRs, however those have now been resolved and a consultant has been engaged. The team therefore expects that all relevant documents related to the verification of the achievement of DLR 1.1 and DLR 2.1 (retroactive) as well as DLR 2.2 and DLR 3.1 will be submitted to the World Bank by 31 December Regarding the technical assistance component, the team was made aware in October 2018 that BPS and the MoF are no longer intending to use Project funds for the procurement of the new IT system for BPS and related services as well as the advisory services for business plan implementation, amounting to a total of EUR 6.6 million. The funds will remain in the component until after the mid-term review of the Project. At that time it will be decided whether these funds can be usefully applied to other reform areas. Six consultants have been hired for the MoF financial sector unit under the Project. The procurement for five additional consultants is currently in progress. In addition, the procurement for the consultants who will support the preparation of the development finance strategy is expected to be launched soon. It is expected that the first outreach session with business representatives as part of the citizen engagement strategy will be held by end May This is delayed from agreements reached in June Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Substantial Substantial Macroeconomic Moderate Moderate Moderate Sector Strategies and Policies Moderate Moderate Substantial Technical Design of Project or Program High High High Institutional Capacity for Implementation and Sustainability Substantial Substantial Substantial Fiduciary Substantial Substantial Substantial Environment and Social Moderate Moderate Moderate Stakeholders Substantial Substantial Substantial Other Overall Substantial Substantial Substantial Results PDO Indicators by Objectives / Outcomes Improve the performance of Banka Postanska Stedionica AD Beograd IN BPS gross amount of performing credit exposures to medium and large private sector enterprises is reduced compared to end-2016 (Number, Custom) 12/12/2018 Page 2 of 5

3 IN IN IN IN IN Value 4, , Date 31-Dec Sep Dec-2021 BPS gross NPLs are reduced compared to end-2016 (Number, Custom) Value Date 31-Dec Sep Dec-2021 Promote the reform of Development Finance Institutions and Other State-Owned Financial Institutions Reduction in state-owned NPLs compared to end-2016 (Number, Custom) Value Date 31-Dec Dec Dec-2021 Intermediate Results Indicators by Components Restructure Banka Postanska Stedionica AD Beograd BPS is in compliance with the prudential ratios set forth in Selected NBS Decisions (Yes/No, Custom) Value Yes -- Yes Yes Date 30-Dec Sep Dec-2021 BPS in compliance with limit on lending to State Owned Enterprises (Yes/No, Custom) Value Yes -- Yes Yes Date 30-Dec Sep Dec-2021 IN BPS BoD adopts (i) strengthened risk management policies and the Executive Board adopts implementing procedures, and (ii) compensation scheme in line with approved business plan (Yes/No, Custom) 12/12/2018 Page 3 of 5

4 IN IN IN BPS completes installation of core banking system and associated software, hardware and services (Yes/No, Custom) Implement NPL Resolution Strategy and State-Owned Banks Strategy IN Updated NPL resolution strategy, which includes a strategy for state-owned NPLs with a separate action plan, has been adopted (Yes/No, Custom) Tender issued for the sale of SOFIs' NPLs, in an approximate amount of EUR million (Yes/No, Custom) Value No -- Yes Yes Complete Reforms and Develop Strategy on Development Finance Strategy for Development Finance has been adopted (Yes/No, Custom) Support the Reform of State Owned Financial Institutions Number of outreach sessions organized with business representatives as a two-way interaction (Number, Custom) Value Data on Financial Performance 12/12/2018 Page 4 of 5

5 Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P IBRD Effective USD % Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P IBRD Effective 20-Mar Mar Aug Aug Aug-2022 Cumulative Disbursements Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 12/12/2018 Page 5 of 5