 The bitter war that rocked Bosnia and Herzegovina brought devastation on many fronts, including the complete collapse of the country’s banking system. The loss of people’s lifesavings led to widespread distrust, making the operation of most banks unviable. Today, a number of key reforms and the entry of foreign financial institutions, with access to capital and better lending conditions, are helping to restore faith in the system.
The Multilateral Investment Guarantee Agency (MIGA) is contributing to the recovery of the banking sector by providing guarantees to a number of foreign banks, including coverage for the expansion and diversification of an Austrian bank, Hypo Alpe-Adria-Bank, throughout the Federation of Bosnia and Herzegovina and the Republika Srpska.
Hypo Bank offers a variety of services, including corporate and individual lending. The bank is helping to make reconstruction more affordable to everyday citizens and to restore the country’s production base by offering lower-interest, longer-term capital to local investors. Its clients are engaged in a variety of sectors, including the production of food, furniture, and construction materials. With most of Bosnia’s production facilities destroyed in the war and almost all goods imported at a higher cost, these loans are critical to the country’s economic reconstruction.
One of the bank’s clients, FeAl, produces aluminum window profiles. “It is very important for companies to have enough liquidity to expand operations and to face the increase in demand; availability of credit is fundamental for the recovery of the local industry,” says Mate Cujic, the company’s director.
Related Links:
 Bosnia and Herzegovina
MIGA
Updated: September 2002
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