To support the reconstruction of Bosnia’s economy, in 1998 KfW, the European Union and other donors launched the Housing and Construction Loan Programme (HCLP) and the Small and Medium Enterprise Fund (SMEF). Both programmes were revolving funds, whose financial resources were on-lent to selected Partner Banks. The Partner Banks in turn extended working capital and investment loans to SMEs and housing loans to households, assuming the full credit risk for these loans. Through accompanying consultancy, training and portfolio monitoring services, the capacity of the Partner Banks was developed and strengthened.
LFS was responsible for the strategic implementation of the SMEF and the HCLP. This implied the provision of advisory services to Partner Banks, as well as the monitoring of their performance. Advisory services to partner banks included the design and implementation of an appropriate credit technology as well as the training of loan officers.