Methods of Payment
The following financial instruments are used in BiH to make payments abroad: documentary collections, checks, and letters of credit. The safest method of receiving payment for a U.S. export sale is cash-in-advance and/or irrevocable letter of credit. However, most importers prefer to avoid this costly instrument. Many claim to do business on open account terms with their European suppliers. Nevertheless, a confirmed letter of credit should be a minimum term. Companies that acquire capital goods expect the vendor to provide financing, preferably in the form of a loan.
With a growing number of foreign banks present in the country (83 percent of the total bank capital), competition is strong and banks are beginning to offer an extended product range of financial instruments (credit cards, consumer loans, mortgages). However, the level of bank intermediation remains low, due to the slow restructuring of the economy. Small and medium size enterprises still experience difficulties obtaining long-term credit, a problem exacerbated by the uncertain global economy. Inadequate secured transaction regulations and an inefficient court system make collateral foreclosure difficult and increase the cost of capital. There are currently 20 commercial banks operating in BiH, 13 in the Federation and 7 in the RS.
The BiH Central Bank (CBBiH) is the country’s monetary authority. Its goal is to maintain monetary stability under the present currency board arrangement, with full coverage in freely convertible foreign exchange funds under a fixed exchange rate of 1 KM: EUR 0.51129. In addition, the CBBiH supports and maintains appropriate payment and settlement systems and coordinates the activities related to supervision of commercial banks. The Central Bank of BiH also coordinates the activities of the bank regulatory agencies in the two entities, which are in charge of bank licensing and supervision.
Foreign Exchange Controls
In accordance with the BiH Law on the Central Bank, neither the Central Bank nor any other relevant institution may impose payment restrictions on international transactions, except when the Central Bank deems it indispensable to meet BiH’s obligations under international treaties or law.
Commercial banks and financial institutions in BiH may publicly trade in domestic and foreign currency without restrictions according to the law. The foreign exchange and payment system has no restrictions (no administrative management nor limits) on payments and transfers related to international current and capital transactions. In commercial banks, there are no restrictions for individuals or businesses (domestic and foreign) on opening accounts in domestic or any foreign currency, on exchanging KM for any foreign currency, or in payments to foreign partners.
In both the Federation and the RS, the Law on Foreign Exchange Operations regulates foreign exchange operations. These laws extend identical treatment to domestic and foreign physical and legal entities.
U.S. Banks & Local Correspondent Banks
The following are the largest banks in BiH that maintain U.S. correspondent banking arrangements:
Raiffeisen Bank dd Bosna i Hercegovina (Austrian)
Phone: (+387) 33 755 010
Zmaja od Bosne bb
UniCredit Bank dd (Italian)
Phone: (+387) 36 312 112
Kardinala Stepinca bb
Sparkasse Bank dd (Austrian)
Phone: +387 33 280 300
Zmaja od Bosne 7,
Addiko Bank (Austrian/American)
Phone: (+387) 33 755 755
Trg Solidarnosti 12
71 000 Sarajevo
Intesa Sanpaolo Banka Bosna i Hercegovina (Italian)
Phone: (+387) 33 497 500
Obala Kulina Bana 9a
Phone: (+387) 33 586 870
Trg Medjunarodnog Prijateljstva 25
NLB Razvojna Banka (Slovenian)
Phone: (+387) 51 221 620
Milana Tepica 4, 78000 Banja Luka
For additional information, visit the U.S. Department of State Investment Climate Statements.