Bosnia and Herzegovina submitted its formal application for EU membership in February 2016. The application is the first step in the process and opens the door to new EU pre-accession funds which will be utilized for economic growth.

The only Islamic bank in Bosnia, and the fastest-growing among both conventional and Islamic financial institutions, is Bosna Bank International ((BBI)). Together with the (IDB), (BBI) is a shareholder of (BBI) Real Estate, a very successful Islamic leasing company in Bosnia. The (IDB) continuously invests and assists with different projects in Bosnia.

The Bosnian banking market remains highly competitive with 24 banks. Due to accumulated risks, several banks reported significant losses in their business. As a result, two mergers and one bankruptcy occurred in Bosnia and Herzegovina’s banking sector during 2016.

Review of 2016
Islamic banking assets in Bosnia have been experiencing strong growth in 2016, where total growth from October 2015 to October 2016 amounted to 17.1%. At the same time, profitability has increased by 37%.

The first Shariah compliant stock market index in the region was launched in October 2016. The index is a product of the collaboration between the Sarajevo Stock Exchange (SASE) and (BBI). In addition, (BBI) made publicly available a list of all 117 Shariah compliant companies on the SASE.

The Sarajevo Business Forum (SBF) 2016, organized by (BBI) and the (IDB) Group, gathered more than 1,600 participants from 45 countries, and once again confirmed its position as the ‘Balkan’s Davos’. The forum attracts significant investments from the GCC to the Southeast Europe (SEE) region. As a result of the SBF, the Investment Corporation of Dubai invested in Hepok, one of the largest agriculture companies in the country.

Islamic finance public education projects are continuously implemented in Bosnia through newspapers, radio and now even TV shows, sponsored by (BBI). The bank also collaborates with the academic community. The University of Sarajevo and the University of Bolton enrolled a new generation of Islamic banking Master’s students in the 2016/17 academic year, this being the only study of this kind in the SEE region. The third partner in this educational project is (BBI) which provides scholarships and professional training to students. Around 100 students have received (BBI) scholarships for Master of Arts studies in Islamic banking thus far. In the beginning, it was very difficult to secure a Shariah governance framework due to a lack of expertise but today, a large number of well-educated Islamic banking specialists who maintain different positions in (BBI) provide an extra layer of Shariah compliance in this institution.

(BBI) collaborates with other important institutions worldwide with the aim of facilitating the mutual exchange of know-how and experience. The Istanbul Stock Exchange (Borsa Istanbul), in partnership with Kuveyt Turk Bank, has launched a comprehensive training program for employees of (BBI). As a result, 50 employees of (BBI) will pass through this valuable three-month training course.

At the University of Sarajevo’s annual graduation ceremony, the CEO of (BBI) addressed students and announced that (BBI) will offer employment to the best students among those 5,491 who graduated during the last academic year from the largest university in Bosnia. This represents a great opportunity for these young people since the bank traditionally receives the country’s renowned ‘The Most Desirable Employer’ award for the finance sector.

Preview of 2017
In late 2016, (BBI) initiated cooperation with the government aimed at supporting entrepreneurship and formed a special line of financing for SMEs with extremely favorable conditions, which will be utilized during 2017. At the same time, with the SBF and continued efforts at strengthening business ties with the Middle East, India and Malaysia, Islamic banking will open new horizons for these companies.

Forthcoming changes in the Bosnian banking legislation landscape represent a great opportunity to adapt the laws to Islamic finance which would enable Islamic banks to use all available Islamic models of financing. This was also one of the conclusions of the 7th International Conference on Islamic Banking and Finance: Risk Management, Regulation and Supervision which took place in Sarajevo and was organized by the Islamic Research and Training Institute and the European Association for Islamic Economics, Banking and Finance. (BBI) has already prepared the appropriate amendments to the law.

In 2017, (BBI) will continue developing its use of Islamic models of financing, promoting foreign direct investments, interconnecting the business and academic communities, granting scholarships and employment opportunities to the best students, educating the public about Islamic finance and supporting entrepreneurship. All of these activities arguably render (BBI) the most socially responsible financial institution in the country.

The outlook of Bosnia’s Islamic finance industry remains positive based on economic growth projection and the fact that Islamic banking plays a very significant role in the promotion of new foreign direct investments. Islamic banking in Bosnia has increased influence despite regulatory constraints and Sarajevo now serves as a hub for Islamic finance in the SEE region. Besides its Shariah compliance, (BBI) has succeeded in building several unique features which help to create one of the strongest brands in the Bosnian finance industry. With its business club, social responsibility and public education projects, (BBI) can serve as a role model for other Islamic banks in a conventional regulatory environment.

Amer Bukvic is CEO and Admir Meskovic is an investment banking associate at Bosna Bank International. They can be contacted at and respectively.