Banking and insurance enjoy timely renaissance
PRIVATE FIRMS SUCH AS NOVA BANKA AND KOSIG DUNAV HAVE SHOWN AN ADMIRABLE RESILIENCE TO GET THROUGH DIFFICULT TIMES. THE CHALLENGE NOW IS TO CONSOLIDATE THEIR GROWTH BY LURING INVESTORS

Bosnia and Herzegovina’s banking system has been re-structured and is now a far more solid sector than it was in the initially chaotic post-Dayton Agreement years. The war erupted at a time when Bosnia was in the process of adapting to western standards and resulted in huge debts.

PETER NICHOLL Governor of the Central Bank of Bosnia and Herzegovina

One of the top priorities of the governor of the central bank, Peter Nicholl, when he came to Bosnia and Herzegovina in 1997 was to increase the state’s reserve holdings, followed by the closing down of the communist-era payment bureaus. “The payments reform was important,” says Mr. Nicholl. “Now there are some serious banks coming to BiH, which puts genuine competitive pressure on the local banks.”
One of those local banks is the private Nova Banka, funded entirely by local people. The largest number of share stakes available is 5% of the capital and the maximum for any one person is 15%. In just two years Nova has opened ten branch offices.
“A bank must use western knowledge and all available tools and technology to contribute to the overall development of the region as well as its own development,” says general manager Milorad Andzic. His is the first Bosnian bank to introduce e-banking and it is a licensee for Europay Mastercard. Mr. Andzic has also set up a school called Quality Nova, which introduces ISO standards to banks and companies. He sees the bank’s role as facilitating global development and providing loans throughout the whole of BiH, however small the scale. Of the 11 investment funds in the Republic of Srpska (RS), Nova Banka occupies the second or third place according to size. “As we have the best distribution network, our vouchers currently have the best value,” claims Mr. Andzic. “We will try to maintain it.”

SERVICE-ORIENTED and technology-aware, Nova Banka is at the forefront of the Bosnian financial sector.

He is aware that Nova Banka is a small bank in a large and competitive world and would welcome a U.S. partner to bring security and development opportunities. In his view, the overall situation in Bosnia is improving and potential U.S. investors would find investment there rewarding. “I am certain we can do good business together,” he affirms.
Closely linked to the banking sector is BiH’s insurance industry, which is undergoing similarly fundamental reform. Kosig Dunav Osiguranje was established in 1991 as a joint stock company and was joined two years later by the Dunav insurance company. Today it has eight modern and efficiently-run branches in the whole of the RS. Its 25 shareholders are made up of nine manufacturers, six trade companies, three banks, a brewery, an oil factory, an institute and four other companies. The largest shareholder is Agropan Banka, which has 30.6% of the shares. The capital belongs to the shareholders and not the state. “The board of shareholders, with eight members, and the assembly, with 25 members, lead the company,” says Mr. Popovic.

A TRACK RECORD of efficiency and professionalism guarantees business opportunities in the insurance sector for foreign investors.

General Manager Zarko Popovic thinks the country is still not united economically. He laments that the two entities live separate lives and even have opposing laws in sectors like taxes. A first step forward was provided by the Central Bank which totally reformed the financial sector. “Without this transformation, BiH would not be able to work in the existing market,” says Mr. Popovic. There is a very close relationship between banks and insurance companies, and mergers in BiH serve to integrate both sectors’ potentials in capital management.
Kosig Dunav Osiguranje's insurance range covers fire, burglary, breakages and damage, theft and damage of cars, working accidents, property and guests in catering establishments. They have 300 companies and 35,000 vehicle owners in their books. “This year we expect the invoiced insurance premium of DM13 million: 5% from civil activities, 21% from industry, 3% from agriculture and animals, 45% from transport, 59% from traffic and 8% from civilians,” says Mr. Popovic. Life insurance is not yet included and he is looking for a joint venture in this field. “With its capital and security it is an important form of investment,” he says.

Bearing international business in mind Kosig Dunav introduced its own Green card for motor vehicle insurance and, with the help of CORIS in France, started offering health insurance for travelers. Internationally transported goods, drivers in international transport, and buildings under construction are also covered. The company is currently being considered by the American Embassy as a potential client and its achievements were recognized by the ‘Golden Star of Quality Award’ at the 18th Convention of International Quality Prestige in Paris earlier this year.