BOSNIAN CENTRAL BANK TO INCREASE RESERVE REQUIREMENT FOR COMMERCIAL BANKS TO 18 PERCENT

SARAJEVO, Bosnia (December 6,2007) - The Bosnian Central Bank said it would increase the mandatory reserve requirement for commercial banks in January 2008 to 18 percent from the current 15 percent to prevent a further credit boom.

"The October credit growth, the largest in the last two years, has forced us to tackle the mandatory reserve requirement," the Bosnian Central Bank Governor Kemal Kozaric told a news conference.

"We don't expect the measure to stop credit growth, but to slow it down," Kozaric said.

The data shows commercial banks disbursed some 11.24 billion Bosnian Marks (8.45 billion USD) worth of loans in the January to October 2007 period.

Of the total, some 5.4 billion went to private citizens, 4.8 billion to the private sector and 658 million to public companies, Kozaric said.

"This all proves we had to make such a decision in order to prevent that the high liquidity of commercial banks and the rise in loans influence the future stability of the banking sector", Kozaric said.

He added the move "is a signal for commercial banks to be more cautious in their credit expansion."