The World Bank Implementation Status & Results Report State Owned Financial Institutions Strengthening Project (P156837) State Owned Financial Institutions Strengthening Project (P156837) EUROPE AND CENTRAL ASIA | Serbia | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 8 | ARCHIVED on 13-Oct-2021 | ISR48373 | Implementing Agencies: Republic of Serbia, Ministry of Finance Key Dates Key Project Dates Bank Approval Date: 20-Mar-2018 Effectiveness Date: 22-Aug-2018 Planned Mid Term Review Date: 14-Sep-2020 Actual Mid-Term Review Date: 07-Sep-2020 Original Closing Date: 01-Aug-2022 Revised Closing Date: 01-Aug-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective is to improve the performance of Banka Postanska Stedionica AD Beograd and promote the reform of Development Finance Institutions and Other State-Owned Financial Institutions. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Support the Reform of State Owned Financial Institutions:(Cost $43.10 M) Strengthen Institutional Capacity:(Cost $6.77 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions Progress under the Project is rated as Satisfactory. Banka Postanska Stedionica (BPS) continues to perform well, with good financial results in 2021Q1. The drafting of a public policy document on development finance is underway, but the reforms are delayed. There is a need to continue with the process and make the needed decisions in a timely manner to complete the reforms. Progress on the resolution of non-performing loans (NPLs) continues to be satisfactory. The resolution of the second, large NPL portfolio is close to completion. Progress has also been made regarding the implementation of the Government’s strategy to reduce the role of the state in the banking sector. The technical assistance component of the Project is being implemented as planned. mpaTable 10/13/2021 Page 1 of 5 The World Bank Implementation Status & Results Report State Owned Financial Institutions Strengthening Project (P156837) Multiphase Programmatic Approach (MPA) Status mpaTableBody Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Moderate Moderate Macroeconomic Moderate Moderate Moderate Sector Strategies and Policies Moderate Substantial Substantial Technical Design of Project or Program High Moderate Moderate Institutional Capacity for Implementation and Substantial Moderate Moderate Sustainability Fiduciary Substantial Moderate Moderate Environment and Social Moderate Low Low Stakeholders Substantial Moderate Moderate Other -- Moderate Moderate Overall Substantial Moderate Moderate Results PDO Indicators by Objectives / Outcomes Improve the performance of Banka Postanska Stedionica AD Beograd IN01042779 ►BPS gross amount of performing credit exposures to medium and large private sector enterprises is reduced compared to end-2016 (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 4,050.00 650.00 845.00 1,620.00 Date 31-Dec-2016 31-Dec-2020 30-Jun-2021 31-Dec-2021 IN01042781 ►BPS gross NPLs are reduced compared to end-2016 (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 23.32 5.24 5.15 11.66 Date 31-Dec-2016 31-Dec-2020 30-Jun-2021 31-Dec-2021 Promote the reform of Development Finance Institutions and Other State-Owned Financial Institutions IN01042780 10/13/2021 Page 2 of 5 The World Bank Implementation Status & Results Report State Owned Financial Institutions Strengthening Project (P156837) ►Reduction in state-owned NPLs compared to end-2016 (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3.87 3.27 2.27 1.20 Date 31-Dec-2016 31-Dec-2020 30-Jun-2021 30-Jun-2022 Based on new information received from the DIA regarding the level of state-owned NPLs on December 31, 2016, the baseline number was revised upwards from USD 3.10bn to USD 3.87bn. The end target Comments: remains at the level of USD 1.20bn. Overall Comments PDO The latest quantitative data is available as of end June 2021. Qualitative data is updated to end September. Intermediate Results Indicators by Components Restructure Banka Postanska Stedionica AD Beograd IN01042782 ►BPS is in compliance with the prudential ratios set forth in Selected NBS Decisions (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Yes Yes Yes Yes Date 30-Dec-2016 31-Dec-2020 30-Jun-2021 31-Dec-2021 IN01042786 ►BPS in compliance with limit on lending to State Owned Enterprises (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Yes Yes Yes Yes Date 30-Dec-2016 31-Dec-2020 30-Jun-2021 31-Dec-2021 IN01042788 ►BPS BoD adopts (i) strengthened risk management policies and the Executive Board adopts implementing procedures, and (ii) compensation scheme in line with approved 2018-2020 business plan (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 30-Dec-2016 31-Mar-2021 30-Sep-2021 31-Dec-2021 The indicator has been partly achieved: (i) strengthened risk management policies have been adopted by Comments: the Executive Board; (ii) an updated compensation scheme remains pending. IN01042789 ►BPS completes installation of core banking system and associated software, hardware and services (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes 10/13/2021 Page 3 of 5 The World Bank Implementation Status & Results Report State Owned Financial Institutions Strengthening Project (P156837) Date 30-Dec-2016 31-Mar-2021 30-Sep-2021 31-Dec-2021 Implement NPL Resolution Strategy and State-Owned Banks Strategy IN01042784 ►Updated NPL resolution strategy, which includes a strategy for state-owned NPLs with a separate action plan, has been adopted (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 30-Dec-2016 31-Mar-2021 30-Sep-2021 31-Dec-2021 IN01042787 ►Tender issued for the sale of SOFIs' NPLs, in an approximate amount of EUR 145.6 million (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 30-Dec-2016 31-Mar-2021 30-Sep-2021 31-Dec-2021 Complete Reforms and Develop Strategy on Development Finance IN01042785 ►Strategy for Development Finance has been adopted (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 30-Dec-2016 31-Mar-2021 30-Sep-2021 31-Dec-2021 Support the Reform of State Owned Financial Institutions IN01042783 ►Number of outreach sessions organized with business representatives as a two-way interaction (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.00 3.00 3.00 Date 30-Dec-2016 31-Mar-2021 30-Sep-2021 31-Dec-2021 Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P156837 IBRD-88320 Effective USD 50.00 50.00 0.00 21.38 26.63 45% 10/13/2021 Page 4 of 5 The World Bank Implementation Status & Results Report State Owned Financial Institutions Strengthening Project (P156837) Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P156837 IBRD-88320 Effective 20-Mar-2018 21-Mar-2018 22-Aug-2018 01-Aug-2022 01-Aug-2022 Cumulative Disbursements Restructuring History Level 2 Approved on 06-Apr-2020 ,Level Approved on 09-May-2020 Related Project(s) There are no related projects. 10/13/2021 Page 5 of 5