As part of the EBRD’s crisis response, the credit line will enable the DIA to more than double the deposit insurance coverage in Bosnia-Herzegovina from the current 20,000 marka (approximately €10,200) to 50,000 marka (approximately €25,500).

The project will help Bosnia-Herzegovina establish a sound deposit insurance scheme, offering greater protection to small depositors, similar to neighbouring countries, which have recently increased their deposit insurance coverage.

This will offer an important confidence boost to the country’s financial sector, thus ensuring further development of the banking system in Bosnia-Herzegovina.

“Supporting the financial sector in countries of its operations is one of the EBRD’s core priorities, particularly in the current challenging environment. The EBRD loan to the Deposit Insurance Agency of Bosnia and Herzegovina will strengthen the deposit insurance scheme in the country, providing further stability to the system”, said Varel Freeman, EBRD’s First Vice President.

“The increase of the deposit insurance coverage to 50.000 KM is one of the key measures of the package for mitigating the impact of the global economic crisis in Bosnia and Herzegovina adopted by the BiH Council of Ministers. This project will give additional protection to depositors in Bosnia and Herzegovina and provide support to the banking sector, so the Council of Ministers fully supported it by granting a sovereign guarantee”, said Dragan Vrankic, BiH Minister of Finance and Treasury.

“The credit line represents a significant step for further development of the Deposit Insurance Agency in BiH, bringing the level of insured deposits closer to the ones in the region and EU countries. We expect that the increased level of insured deposits will have a positive impact on the banking sector in BiH, and will encourage citizens to increase their saving deposits, which is extremely important for the lending potential of the banks”, said Josip Nevjestic, Director of the Agency.

The DIA was established in 2002 with the support of KfW and USAID. Since then the capital of the Agency has more than quadrupled and reached €66.5 million at the end of 2008.