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Financial Sector Advisory Center (FinSAC)

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Where we work

FinSAC works with selected countries in the Europe and Central Asia region to support their efforts to align the local regulatory frameworks with international standards and ensure the effective functioning of their financial safety nets. For European Union (EU) candidate and EU neighborhood countries, special attention is given to alignment with relevant EU Directives and regulatory frameworks.?Targeted bilateral technical assistance is the cornerstone of FinSAC¡¯s activities with client countries, which often builds upon previous thematic engagements with the authorities or new regulatory initiatives, such as the adoption of regulatory approaches to climate change-related risks. In its role as a knowledge center, FinSAC organizes relevant conferences, technical workshops, and other knowledge-sharing events, as well as undertakes research projects.

FinSAC is currently working with 10 active client countries. A further five countries received technical assistance in earlier years (Belarus, Bulgaria, Croatia, Poland, & Serbia).

Active Client Countries

FinSAC Client Countries

FinSAC¡¯s cooperation with Albania began in 2013 and continues with deepening and expanding tailored technical assistance on many financial stability-related topics.?Focusing on Albania¡¯s key financial stability challenges, the technical assistance initially aimed to support the authorities in recovering from the Global Financial Crisis and then to adopt a new regulatory framework and practices, aligned with the EU Directives. 

Support to the Albanian Deposit Insurance Agency has enhanced the legal and regulatory framework towards alignment with the International Association of Deposit Insurers Core Principles and European Union Directives. FinSAC activities have included regulatory advice on legal reforms; assessment of the adequacy of the deposit insurance coverage levels and the target fund size of the bank deposit insurance fund; review of the Deposit Insurance Law and advice on implementing improvements; advice on effective coordination between the Bank of Albania and the Agency during bank liquidation and resolution processes, and support to update and reaffirm the public funding backstop mechanism.??

In 2015, amidst an escalating Greek sovereign crisis, FinSAC supported the Bank of Albania to test its crisis management framework.?Following that exercise, FinSAC assisted with implementing macroprudential policy instruments aimed at mitigating systemic risks and safeguarding financial stability. This included linking macroprudential policy tools with model-based evaluations of market dynamics. Examples include assessment of the build-up of macro-financial vulnerabilities in the context of the credit cycle, calibrating countercyclical capital buffers, and drivers of credit growth and lending rates.  

With FinSAC support, Albania has reduced nonperforming loan stock in the banking sector which has encouraged the resumption of lending to viable companies and households. Assistance included comprehensive diagnostics, including assessment of corporate financial health in different economic sectors, the development and implementation of an action plan, and support for the introduction of an out-of-court non-performing loan resolution framework for large multi-creditor nonperforming loan cases (the ¡°Tirana Approach¡±). ?

FinSAC supported the Bank of Albania prepare to implement full International Financial Reporting Standards (IFRS), including through the introduction of a new prudential reporting framework aligned with the EU and the development of prudential reporting templates. 

Albania was one of the first countries in the region to adopt a resolution framework aligned with the Financial Stability Board Key Attributes and with the EU. FinSAC reviewed the existing regime, prepared a gap analysis, assisted with the drafting of legislation, analyzed the potential impact of introducing the bail-in requirements, supported implementation of the new law, and assisted with institutional capacity building within the Bank of Albania.??

FinSAC has helped to advance the assessment of banks¡¯ recovery plans, the drafting of resolution plans, and the introduction of secondary legislation, including a minimum requirement for own funds and eligible liabilities (MREL) by-law, a bridge bank manual, a manual on application of bail-in combined with a bridge bank, a methodology for bank resolution valuation, as well as a bail-in playbook. It has also supported capacity building via workshops, study tours, expert discussions, and producing manuals and other materials. 

FinSAC is supporting the Bank of Albania in designing and actioning a multi-year strategy assessing climate risks to the banking system and possible approaches, including integration into the regulatory and supervisory frameworks. The aim is for banks to include environmental, social, and governance elements in their business models and properly identify, measure, control, and report risks.

 

Non-Active Client Countries

Belarus

FinSAC provided technical assistance to Belarus from 2017 to 2019 focused on improving the bank resolution framework and strengthening the deposit insurance framework. In 2019, FinSAC provided an assessment of cybersecurity regulations for further consideration by the authorities.

Bulgaria

In 2014, FinSAC provided technical assistance to the Banking Supervision Department of the Bulgaria National Bank focused on strengthening the supervision of loan quality and advising on the transition of loan classification and provisioning standards to International Financial Reporting Standards. ľ¹ÏÓ°Ôº Financial Projection Model was provided as a tool to assess the condition and viability of Bulgarian banks, allowing supervisors to analyze and simulate banks¡¯ performance for regulatory analysis and stress-testing purposes. A FinSAC conference in partnership with the Bulgarian Financial Services Commission was held in Sofia, Bulgaria on Consumer Protection and Financial Literacy in June 2014.

Croatia

FinSAC organized a crisis simulation exercise for the Croatian authorities in February 2013 as an opportunity to practice responding to distress in the financial system and to explore the adequacy of existing laws, regulations, policies, and procedures. The exercise tested the decision-making process and communications between the National Bank, the State Agency for Deposit Insurance and Bank Rehabilitation, the Ministry of Finance, and the Croatian Financial Services Supervisory Agency.

Also in 2013, FinSAC carried out a thorough assessment of the existing Croatian bank resolution framework and a gap analysis with European Union requirements and good international practice. In 2014/15, FinSAC and the European Bank for Reconstruction and Development worked together on two projects in Croatia. The first proposed amendments to the Croatian ¡°Personal Insolvency Law¡± at the request of the Ministry of Justice, and the second offered support and technical assistance in the area of nonperforming loan resolution. FinSAC also provided support and capacity-building for judges and insolvency professionals.

Poland

In February 2015, a World Bank/Polish Bank Guarantee Fund Seminar on ¡°Challenges for European Deposit Insurance Systems: Funding, Investment Practices and Reimbursement¡± took place in Warsaw. Specialists from 16 countries, including the United Kingdom, Romania, Croatia, Bulgaria, Finland, Hungary, and Poland, the European Commission, and the EBA shared their knowledge and experience of deposit insurance systems, especially funding, investment, and payout procedures.

Serbia

In 2011/12 FinSAC helped the Supervision Department of National Bank of Serbia related to the establishment of a new unit responsible for the supervision of IT-related operational risk. This included comprehensive training, drafting of regulations, preparing a three-year institution-building plan, and the design of on-site and off-site supervision procedures. In 2013, FinSAC assessed the existing Serbian bank resolution framework. A gap analysis with European Union requirements and good international practice identified areas to be addressed to strengthen bank resolution. Between 2013 and 2015, FinSAC supported the National Bank of Serbia to improve the effectiveness of onsite prudential and anti-money laundering supervision practices. FinSAC also advised on the Internal Capital Adequacy Assessment Process (ICAAP) and improving the efficiency of the Supervisory Review and Examination Process (SREP). In 2016/17, FinSAC worked with the National Bank of Serbia on strengthening supervisory stress-testing capability and analytical abilities to assess the quality of the stress tests done by banks in the context of capital planning. In 2018, FinSAC assessed the Serbian deposit insurance system against the International Association of Deposit Insurers¡¯ core principles and advised on areas for strengthening, including a target fund size model. In 2019, FinSAC prepared a report on the financial health of corporations in Serbia to strengthen the authorities¡¯ capacity to formulate an operational strategy for dealing with nonperforming loans.

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  • FinSAC
    Vienna, Austria
    Praterstrasse 31, 19th floor, 1020
    Tel : +43-1-2170-700