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.

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.

Banking System

The country’s banking sector is dominated by foreign private banks, which own 75 percent of the total capital.  Currently, 21 commercial banks operate in BiH, including 13 in the Federation and 8 in the RS. The sector is generally sound, well capitalized, liquid, and profitable, with non-performing loans at their lowest level in a decade. However, banks do not contribute sufficiently to meet the financing needs of the private sector due to higher risk aversion, conservative policies from their parent companies, and the fact that a large share of lending currently goes to consumer credit and government-owned enterprises. Dominant foreign ownership of banks also means that the country is more susceptible to negative spillovers.

The BiH Central Bank (CBBiH) is the country’s monetary authority. It operates under a currency board arrangement and has for years served as an anchor for macro-financial stability, predictability, and low inflation. The local currency (BAM) is tied to the euro at a fixed exchange rate of 1 BAM = 0.51129 euro. 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 also coordinates the activities of the entity level banking regulatory agencies, which are in charge of bank licensing and supervision.

Foreign Exchange Controls

The state-level Law on Foreign Direct Investment provides a generic framework for foreign investment. The law accords foreign investors the same rights as domestic investors, including bidding on privatization tenders. The primary exceptions are the defense and media (including all TV and radio) industries, where foreign control or ownership is limited to 49 percent. This limit can be waived by entity level governments, but this is rarely done. Foreign investors are also restricted from majority ownership of public television and radio services.

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
  71000 Sarajevo
   
• UniCredit Bank dd (Italian)
  Phone: (+387) 36 312 112
  Kardinala Stepinca bb
  88000 Mostar
   
• Sparkasse Bank dd (Austrian)
  Phone: +387 33 280 300
  Zmaja od Bosne 7, 
  71000 Sarajevo
   
• 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
  71000 Sarajevo
   
• ASA Banka (Bosnian)
  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.