Regulation on bridge institution tool

Pursuant to Article 35, paragraph 1, subparagraph 1.1 and Article 65, paragraph 1 and 2 of the Law No. 03/L-209 on Central Bank of the Republic of Kosovo (Official Gazette of the Republic of Kosovo, No. 77/16 August 2010), amended by Law No. 05/L-150 (Official Gazette of the Republic of Kosovo No. 10/03 April 2017) and Article 8 and paragraph 4 of Article 109 of the Law No. 08/L-304 on Banks (Official Gazette of the Republic of Kosovo, No.2 /27 January 2026), the Board of the Central Bank of Republic of Kosovo at the meeting held on June, 29 2026, approved the following:
REGULATION ON BRIDGE INSTITUTION TOOL
Article 1
Purpose and Scope

1. The purpose of this Regulation is to establish the conditions related to the application of the bridge
   institution tool, licencing and operations of bridge institution, for the application of the bank resolution process.
2. This Regulation shall apply to all banks in the Republic of Kosovo that are licensed by the CBK,
   excluding branches of foreign banks.
   Article 2
   Definitions
3. All terms used in this Regulation shall have the definition ascribed to them in Article 3 of Law No.
   08/L-304 on Banks and/or as further defined herein for the purpose of this Regulation:
   1.1. Law on Banks – Law No. 08/L-304 on Banks;
   1.2. Bridge institution – means a legal person meeting the requirements laid down in paragraph 3. of
   Article 109 of the Law on Banks;

1.3. Bridge institution tool – means the mechanism for transferring shares or other instruments of
ownership issued by a bank under resolution or assets, rights or liabilities of a bank under resolution to a bridge institution, in accordance with Article 109 of the Law on Banks;
1.4. CBK as supervisory authority - means CBK acting as supervisory authority or licencing
authority;
1.5. Resolution tools – means resolution tools as specified in Article 107 of the Law on Banks;
2. Unless otherwise indicated, references to the CBK in this regulation shall be construed as to the CBK
acting in its capacity as resolution authority.
Article 3
General principles for the application of bridge institution tool

1. The CBK may apply the bridge institution tool, individually or in combination with other resolution
   tools, referred to banks that meet the applicable conditions for resolution in accordance with Article 106 of the Law on Banks.

2. To apply the bridge institution tool and maintain critical functions in the bridge institution, CBK has
   the right to transfer to a bridge institution:
   2.1. shares or other instruments of ownership issued by a bank or banks under resolution.
   2.2. all or any assets, rights or liabilities of a bank or banks under resolution.

3. The transfer of shares or other instruments of ownership issued by one or more banks under resolution
   and/or assets, rights or liabilities of one or more banks under resolution in whole or in part shall be effected to a bridge institution in accordance with the decision of the CBK for the purpose of achieving resolution objectives referred to in Article 100 of the Law on Banks.

4. Where the decision to initiate the resolution proceedings specifies that the resolution is to be carried
   out by means of bridge institution tool through the transfer of shares or other instruments of ownership issued by one or more banks under resolution, the CBK shall reach a decision to establish a bridge institution through the transfer of the instruments of ownership of the bank under resolution.

5. Where the decision to initiate the resolution proceedings specifies that the resolution is to be carried
   out by means of the transfer of assets, rights or liabilities of the bank under resolution in full or in part to the bridge institution, the CBK shall reach a decision to separate the bank under resolution, according to Article 110 of the Law on Banks, by establishing a bridge institution with the assets, rights and liabilities of the bank under resolution and authorise to effect the transfer to the bridge institution established for this purpose.

6. The bridge institution referred to in this Article shall be established as a joint stock company and shall
   be wholly or partially owned by one or more public authorities which may include the CBK and is controlled by the CBK.

7. In its decision to establish a bridge institution, the CBK as supervisory authority, in accordance with
   resolution objectives under Article 100 of the Law on Banks and taking into consideration conditions for resolution specified in Article 106 of the Law on Banks, may set less stringent requirements for the licensing and supervision of the bridge institution, compared to the requirements set for other banks licensed by the CBK as supervisory authority, during the commencement of the bridge institution's activities, by determining the period during which these requirements will apply.

8. Less stringent requirements referred to in paragraph 7 of this Article, may include lower minimum
   paid-in capital amount, documentation required for approval of Directors and Senior Managers, as well as the regarding the application of supervisory ratios required by the Law on Banks and relevant CBK regulations.

9. The CBK communicates with the Government of the Republic of Kosovo to assess the possible use
   of public funds for the purpose of financing the capital of the bridge institution including via a loan to the Resolution Fund and in line with the conditions for public support under Article 123 of the Law on Banks and public financial support rules where relevant.

10. The CBK shall, as soon as possible, deliver the decisions referred to in paragraphs 3 and 4 of this
    Article to the bank under resolution, as well as to the Kosovo Business Registration Agency (ARBK),
    and to the persons to whom the decision has effect, to the extent that those decisions concern them.

11. The transfers referred to in paragraph 2 of this Article do not require the consent of the shareholders
    of the bank under resolution or other persons, nor the compliance with or action in accordance with the requirements of the procedure referred to in the relevant laws for business organisations or securities.

12. Decisions of the CBK under this Regulation may be challenged in the manner provided for in Article
    145 of the Law on Banks.

13. In compliance with paragraph 8 of Article 102 of the Law on Banks, the CBK and the National
    Resolution Fund may recover any reasonable expenses properly incurred in connection with the use of the resolution tools and powers, or government financial stabilisation tools in one or more of the following ways:
    13.1. as a deduction from any consideration paid by a recipient to the bank under resolution or, as the
    case may be, to the owners of the shares or other instruments of ownership;
    13.2. from the bank under resolution, as a preferred creditor; or

13.3. from any proceeds generated as a result of the termination of the operation of the bridge
institution or the asset management vehicle, as a preferred creditor.
14. The objectives of the bridge institution shall not imply any duty or responsibility to shareholders or
creditors of the bank under resolution, and the management body or senior management shall have no liability to such shareholders or creditors for acts and omissions in the discharge of their duties unless the act or omission implies gross negligence or serious misconduct in accordance with national laws which directly affects rights of such shareholders or creditors.
15. When the CBK decides to apply a resolution tool to a bank, and that resolution action would result in
losses being borne by creditors or their claims being converted, the CBK shall exercise the power to write down and convert capital instruments in accordance with Article 112 of the Law on Banks, immediately before or together with the application of the resolution tool. The power to write down or convert in relation to liabilities of a bank under resolution in accordance with Article 111 of the Law on Banks, may also be applied in combination with the Bridge institution tool.
16. Any transfer under this Regulation shall be based on the valuation framework laid down in Article 102
of the Law on Banks and the relevant CBK regulation for resolution purposes. Before taking a decision to transfer shares, assets, rights or liabilities to a bridge institution, the CBK shall ensure that the valuation is fair, prudent and realistic. Where, due to urgency, an independent valuation is not possible within the required timeframe, the CBK may rely on a provisional valuation in accordance with the Law on Banks. Any provisional valuation shall include a buffer for additional losses of uncertain amount or timing and shall be followed by any subsequent valuation required under the Law on Banks.
Article 4
Licencing of bridge institution

1. The proposed shareholders of the bridge institution shall submit an application for the licensing of the
   bridge institution and shall contain documentation as required by the Law on Banks and relevant CBK regulations applicable for licencing of banks.
2. Notwithstanding paragraph 1 of this Article, where necessary to achieve the resolution objectives set
   out in Article 100 of the Law on Banks and taking into consideration the conditions for resolution specified in Article 106 of the Law on Banks, a bridge institution may be established and licensed with less stringent requirements provided by the CBK decision, for a short period at the beginning of its operations. For this purpose, the CBK, in its capacity as the Resolution Authority, shall recommend the measures in the submitted request to the CBK acting as the Supervisory Authority, in order to

decide on the licensing as well as the period during which the bridge institution shall become compliant with the requirements of the Law on Banks.
3. The licence of a bridge institution shall be issued in writing and is non-transferable. The term bridge
institution (bank) shall be written after the commercial name of the bridge institution.
Article 5
Transfer of assets and liabilities

1. The CBK implements the procedure for the transfer of assets, rights, and liabilities to the bridge
   institution, in accordance with the resolution decision.

2. The total value of the liabilities transferred to the bridge institution shall not exceed the total value of
   the rights and assets transferred from the bank under resolution or the rights secured from other sources.

3. The CBK may transfer shares, other instruments of ownership, assets and liabilities more than once
   from the bank under resolution to the bridge institution.

4. The CBK may transfer shares, other instruments of ownership, assets, rights or liabilities back from
   the bridge institution to the bank under resolution or to the original owners when:
   4.1. the possibility of transfer back is expressly stated in the instrument by which the transfer was
   made; or
   4.2. the specific shares or other instruments of ownership, assets, rights or liabilities do not in fact fall
   within the categories of, or meet the conditions for transfer of shares or other instruments of ownership, assets, rights or liabilities specified in the instrument by which the transfer was made.

5. Following an application of the bridge institution tool, CBK may transfer shares, other instruments of
   ownership, assets, rights or liabilities from the bridge institution to a third party under the conditions of paragraph 4 of this Article.

6. Any transfer back shall be made within the period and on the conditions specified in the instrument
   by which the original transfer was made.

7. Transfers between the institution under resolution, or the original owners of shares or other instruments
   of ownership, on the one hand, and the bridge institution on the other, shall be subject to the safeguards referred to in Article 117 of the Law on Banks.

8. Where the bridge institution tool is applied to transfer some but not all of the assets, rights or liabilities
   of an institution under resolution to a recipient, such transfer is subject to safeguards under Article 117 of the Law on Banks and relevant CBK regulation.
   Article 6
   Status of bridge institution

9. For the purposes of exercising the rights to provide services under Article 11 of the Law on Banks,
   the bridge institution shall be considered to be the legal successor of the bank under resolution and may continue to exercise any such rights that were in respect of the transferred assets, rights and liabilities irrespective of the consent of the counterparty.

10. For other purposes, CBK may decide that a bridge institution to be considered a continuation of the
    bank under resolution, and be able to continue to exercise any right that was exercised by the bank under resolution in respect of the assets, rights or liabilities transferred.

11. The bridge institution may continue to exercise the rights of membership and access to payment,
    clearing and settlement systems, stock exchanges and the Deposit Insurance Fund of the bank under resolution, provided that it meets the membership and participation criteria for participation in such systems. For such purposes:
    3.1. access shall not be denied on the ground that the bridge institution does not possess a rating from
    a credit rating agency, or that rating is not commensurate to the rating levels required to be granted access to those systems;
    3.2. where the bridge institution does not meet the criteria referred to in this paragraph, the authorities
    competent to grant access to such systems may, within the framework of their competence, grant that the rights are exercised for a specified period of time, not exceeding 24 months of reaching the decision to establish bridge institution and this time limit may be extended at the request of bridge institution for another 12 months.

12. The shareholders or creditors of the bank under resolution and other third parties whose assets, rights
    or liabilities are not transferred to the bridge institution shall not have any rights over or in relation to the transferred assets, rights or liabilities, or participation in managing bridge institution, except the rights to safeguard measures in accordance with Article 117 of the Law on Banks.
    Article 7
    Strategy and risk profile of the bridge institution

13. The bridge institution shall draft the risk management strategy to which the institution is exposed while
    carrying out its business.

14. The strategy and risk profile shall contain a description of most important risks the bridge institution
    is exposed to and shall contain at least the following elements:
    2.1. risk management procedures;
    2.2. forecasts on the liquidity risk management;
    2.3. forecasts on the conduction of internal control functions;
    2.4. forecasts on the prevention of money laundering and financing of terrorism;
    2.5. forecasts on the signing of arrangements with third parties on the conduction of functions and
    responsibilities for the management of the bridge institution.
    Article 8
    Management bodies of a bridge institution

15. The management bodies of the bridge institution shall be as defined in Article 36 of the Law on Banks.

16. Notwithstanding the first paragraph of this Article, for the purpose of achieving the resolution
    objectives set out in Article 100 and conditions stipulated in Article 106 of the Law on Banks, the CBK may decide that the bridge institution shall have simplified governance structures. In any case, the governance structure shall be reflected in the Statute of the bridge institution.

17. The proposed Directors and Senior managers of the bridge institution must meet the criteria for
    Directors and Senior managers as set out in Article 55 of the Law on Banks and the relevant CBK regulations.

18. The CBK may dismiss the Directors and Senior managers of the bridge institution at any time.
    Article 9
    Operation of a bridge institution

19. The operation of a bridge institution shall respect the following requirements:
    1.1. the contents of the bridge institution’s constitutional documents are approved by the CBK;
    1.2. subject to the bridge institution’s ownership structure, the CBK either appoints or approves the
    bridge institution’s management body;

1.3. the CBK approves the remuneration of the members of the management body and determines
their appropriate responsibilities;
1.4. the CBK approves the strategy and risk profile, specified in Article 7 of this Regulation of the
bridge institution;
1.5. the bridge institution is authorised in accordance with the Law on Banks, and has the necessary
authorisation to carry out the activities or services that it acquires by virtue of a transfer;
1.6. the bridge institution complies with the requirements of, and is subject to supervision by the CBK,
under the Law on Banks;
1.7. the operation of the bridge institution may be subject to the restrictions to its operations that the
CBK may set out.
2. The management of the bridge institution aims to maintain the size and not to extend and expand its
network. Through this management, the aim is to maintain and increase the value of the bank's assets.
Article 10
Reporting and supervision of a bridge institution

1. The bridge institution shall report to the CBK every three months regarding the progress of its financial
   condition as well as the measures and projects for its sale. Within this reporting, CBK monitors, on an ongoing basis, the management and financial position of the bridge institution and oversees the bridge institution with a view to marketing it and preparing it for a sale to one or more private sector purchasers when conditions are appropriate and as soon as practicable.
2. The bridge institution shall report to the CBK in accordance with the reporting system established by
   the CBK.
3. At the request of the CBK, the bridge institution may report at shorter intervals than those specified in
   paragraph 1 of this Article.
4. The bridge institution shall comply with the applicable legal and sub-legal requirements in force
   regarding the conduct of banking and financial activities as defined in the decision establishing it.
5. Notwithstanding paragraph 1 of this Article, the CBK, in its capacity as Supervisory Authority, shall
   supervise the bridge institution in accordance with the requirements of the Law on Banks and the relevant CBK regulations.
6. The CBK may impose on the bridge institution any supervisory measures it deems necessary, in
   accordance with the provisions of the Law on Banks.

Article 11
Sale of bridge institution

1. The CBK shall effect the sale of the bridge institution or its assets, rights or liabilities under market
   conditions following the principle of transparency and to present, to the largest extent possible, accurately assets, rights, and liabilities, and follow the principle of equality between potential purchasers.

2. The amount obtained through the sale of the bridge institution reduced by the consideration specified
   under paragraph 13 of Article 3 of this Regulation, shall be paid out to:
   2.1. the shareholders of the bank under resolution, where the bridge institution has been established
   by the transfer of their shares or other instruments of ownership;
   2.2. the bank under resolution, where the bridge institution has been established through the transfer,
   in full or in part, of the assets, rights or liabilities of the bank under resolution.
   Article 12
   Termination of bridge institution activities

3. The CBK shall take a decision that terminates the activities of the bridge institution, in any of the
   following cases:
   1.1. the bridge institution merges with another bank;
   1.2. the bridge institution ceases to meet the requirements of Article 109 of the Law on Banks and this
   regulation;
   1.3. the sale of all or substantially all of the bridge institution’s assets, rights or liabilities;
   1.4. the expiry of the period specified in paragraph 2 of this Article, or, where applicable, paragraph
   3, of this Article;
   1.5. the bridge institution’s assets are completely wound down and its liabilities are completely
   discharged.

4. If none of the outcomes referred to in paragraph 1 of this Article, applies, the CBK shall terminate the
   operation of a bridge institution as soon as possible and in any event two years after the date on which the last transfer from a bank under resolution pursuant to the bridge institution tool was made.

5. The CBK may extend the period referred to in paragraph 2 of this Article for one or more additional
   one-year periods where such an extension:
   3.1. supports the outcomes referred to in paragraph 1 of this Article; or
   3.2. is necessary to ensure the continuity of essential banking or financial services.

6. Any decision of the CBK to extend the period referred to in paragraph 3 hereabove shall be reasoned
   and shall contain a detailed assessment of the situation, including of the market conditions and outlook, that justifies the extension.

7. Where the operations of a bridge institution are terminated in the circumstances referred to in
   subparagraphs 1.3 or 1.4 of this Article, the bridge institution shall be wound up under normal insolvency proceedings.

8. Subject to Article 3, paragraph 13, of this regulation any proceeds generated as a result of the
   termination of the operation of the bridge institution shall benefit the shareholders of the bridge institution.

9. Where a bridge institution is used for the purpose of transferring assets and liabilities of more than one
   bank under resolution, the obligation referred to in paragraph 6 of this Article, shall refer to the assets and liabilities transferred from each of the banks under resolution and not to the bridge institution itself.
   Article 13
   Revocation of the licence of the bridge institution

10. Following the termination of the bridge institution activities in accordance with Article 12 of this
    Regulation, the CBK shall revoke its licence.

11. Following the revocation of the licence, any assets and liabilities that have not been transferred shall
    be subject to the normal liquidation procedures as provided for in the Law on Banks.
    Article 14
    Entry into force
    This Regulation shall enter into force fifteen (15) days after its approval by the Board of the Central Bank of the Republic of Kosovo.

Dr. Sc. Bashkim Nurboja
Chairman of the Board of the Central Bank of the Republic of Kosovo