Regulation on the Asset Separation 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 Article 110, paragraph 5 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 29 June 2026, approved the following:
REGULATION ON THE ASSET SEPARATION TOOL
CHAPTER I
GENERAL PROVISIONS
Article 1
Purpose and Scope

This Regulation establishes the conditions for the application of asset separation tool for bank
resolution purposes.
This Regulation shall apply to all banks in the Republic of Kosovo and bridge institutions that are
licensed by the CBK, excluding branches of foreign banks.
Article 2
Definitions
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. CBK as supervisory authority - means CBK acting as supervisory authority or licencing
authority.

1.3. AMV - Asset Management Vehicle
1.4. Ministry of finance - means the responsible ministry for finance of the Government of the
Republic of Kosovo.
1.5. Asset separation tool - means the mechanism for effecting a transfer of assets, rights or liabilities
of a bank under resolution to an asset management vehicle in accordance with Article 110 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.
CHAPTER II
ASSET SEPARATION TOOL
Article 3
General conditions for the implementation of asset separation tool

The CBK may apply the asset separation tool to banks that meet the applicable conditions for
resolution, in compliance with Article 106 of the Law on Banks.
Where CBK decides to apply the asset separation tool to a bank, and that the resolution action would
result in losses being borne by creditors or their claims being converted, 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 CBK may apply the asset separation tool only together with another resolution tool.
In cases where the sale of business and bridge institution tools are applied and where CBK also applies
the asset separation tool to transfer only part of the assets, rights or liabilities of the bank under resolution, the residual bank or the bank from which the assets, rights or liabilities have been transferred, shall be wound up under normal insolvency proceedings.
4.1. Such winding up shall be done within a reasonable timeframe, having regard to any need for that
bank to provide services or support pursuant to Article 121, paragraph 1, subparagraph 1.12, of the Law on Banks, in order to enable the recipient to carry out the activities or services acquired by virtue of that transfer, and any other reason that the continuation of the residual bank is necessary to achieve the resolution objectives.
In accordance 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 or powers, or government financial stabilisation tools in one or more of the following ways:
5.1. 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;
5.2. from the bank under resolution, as a preferred creditor; or
5.3. 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.
Article 4
Asset separation tool
In order to give effect to the asset separation tool, the CBK, based on Article 121 of the Law on Banks,
shall have the power to transfer assets, rights or liabilities of a bank under resolution or a bridge institution to one or more asset management vehicles. The transfer may take place without obtaining the consent of the shareholders of the bank under resolution or any third party other than the bridge institution, and without complying with any procedural requirements.
For the purposes of the asset separation tool, CBK may establish an asset management vehicle that
shall be a legal person that meets all of the following requirements:
2.1. it is wholly or partially owned by one or more public authorities which may include the CBK and
is in all cases controlled by the CBK;
2.2. it has been created for the purpose of receiving some or all of the assets, rights and liabilities of
one or more banks under resolution or a bridge institution.
The CBK may exercise the power specified in paragraph 1 of this Article to transfer assets, rights or
liabilities only if:
3.1. the situation of the particular market for those assets is of such a nature that the liquidation of
those assets under normal insolvency proceedings could have an adverse effect on one or more financial markets; For the purposes of assessing whether the liquidation of the relevant assets, rights or liabilities under normal insolvency proceedings could have an adverse effect on one or more financial markets the CBK shall take into account, at a minimum:
3.1.1. the size, depth and liquidity of the relevant market or markets;

3.1.2. the expected time required for disposal and the likely volume of assets, rights or liabilities
to be liquidated;
3.1.3. the risk of material price volatility, fire-sale discounts or other disorderly market effects;
3.1.4. the number, type and financial capacity of potential purchasers or investors;
3.1.5. the degree of interconnection of the relevant assets, rights or liabilities with other market
participants, including through collateral, funding, derivatives, payment or settlement arrangements; and
3.1.6. any likely impact on critical functions, financial stability and confidence in the banking
system.
3.2. such a transfer is necessary to ensure the proper functioning of the bank under resolution or bridge
institution; or
3.3. such a transfer is necessary to maximise liquidation proceeds.
4. When applying the asset separation tool, CBK shall determine the consideration for which assets,
rights and liabilities are transferred to the asset management vehicle in accordance with Article 102 of the Law on Banks and relevant CBK regulation. This paragraph does not prevent the consideration having nominal or negative value.
5. Subject to Article 3, paragraph 5, subparagraph 5.3, of this regulation, any consideration paid by the
asset management vehicle in respect of the assets, rights or liabilities acquired directly from the bank under resolution shall benefit the bank under resolution. Consideration may be paid in the form of debt issued by the asset management vehicle.
6. Where the bridge institution tool has been applied, an asset management vehicle may, subsequent to
the application of the bridge institution tool, acquire assets, rights or liabilities from the bridge institution.
7. The CBK may transfer assets, rights or liabilities from the bank under resolution to one or more asset
management vehicles on more than one occasion and transfer assets, rights or liabilities back from one or more asset management vehicles to the bank under resolution provided that the conditions specified in paragraph 8 of this Article are met. The bank under resolution shall be obliged to take back any such assets, rights or liabilities.
8. The CBK may transfer rights, assets or liabilities back from the asset management vehicle to the bank
under resolution in one of the following circumstances:
8.1. the possibility that the specific rights, assets or liabilities might be transferred back is stated
expressly in the instrument by which the transfer was made.

8.2. the specific rights, assets or liabilities do not in fact fall within the classes of, or meet the
conditions for transfer of, rights, assets or liabilities specified in the instrument by which the transfer was made.
9. In either of the cases referred in subparagraphs 8.1 and 8.2 of paragraph 8 of this Article, the transfer
back may be made within any period, and shall comply with any other conditions, stated in that instrument for the relevant purpose.
10. Transfers between the bank under resolution and the asset management vehicle shall be subject to the
safeguards referred to in Article 116 and 117 of the Law on Banks and the relevant CBK Regulation.
11. Without prejudice to Articles 116 and 117 of the Law on Banks and the relevant regulations issued by
CBK, shareholders or creditors of the bank under resolution and other third parties whose assets, rights or liabilities are not transferred to the asset management vehicle shall not have any rights over or in relation to the assets, rights or liabilities transferred to the asset management vehicle or its management body or senior management.
12. The objectives of an asset management vehicle 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 law which directly affects rights of such shareholders or creditors.
Article 5
Transfer perimeter, separability and marketability

Prior to any transfer, the CBK shall determine the transfer perimeter.
Where available and where possible in the individual case, the transfer perimeter may identify, in
relation to each asset, right or liability to be transferred:
2.1. the related contractual rights and obligations;
2.2. any collateral, guarantees, security interests, hedging arrangements or ancillary rights;
2.3. any legal, financial, operational or informational dependencies relevant to the management,
servicing, enforcement or disposal of such item;
2.4. any related services, staff, records, licences, systems access or data required to ensure the effective
management of the transferred perimeter.
The CBK shall ensure that the transfer perimeter is consistent with the business model, mandate and
exit strategy of the AMV and, to the extent practicable, permits efficient management and value maximisation.
The transfer instrument shall identify any items that may need to remain with, or be supported by, the
residual bank or bridge institution on a temporary basis and shall set out the corresponding support arrangements.
The transfer instrument shall specify the conditions and procedure for any subsequent adjustment of
the transfer perimeter, including any transfer back pursuant to Article 4 of this Regulation.
CHAPTER III
ASSET MANAGEMENT VEHICLE
Article 6
Establishment of the Asset Management Vehicle
The AMV shall be a legal person established in the form of a joint-stock company, wholly or partially
owned by one or more public authorities and controlled by the Central Bank of the Republic of Kosovo (CBK).
The AMV shall manage the assets transferred to it with a view to maximising their value through
eventual sale or orderly wind down.
The operation of an asset management vehicle shall respect the following provisions:
3.1. the contents of the asset management vehicle’s constitutional documents are approved by the
CBK;
3.2. subject to the asset management vehicle’s ownership structure, the CBK either appoints or
approves the vehicle’s management body;
3.3. the CBK approves the remuneration of the members of the management body and determines
their appropriate responsibilities;
3.4. the CBK approves the strategy and risk profile of the asset management vehicle.
The AMV is established by decision of the CBK, pursuant to Article 110 of the Law on Banks and this
Regulation, to carry out activities specified in the CBK decision, and any subsequent amendments thereto, for the purpose of achieving the resolution objectives set out in Article 100 of the Law on Banks, without being required to obtain a separate licence under the Law on Banks.
Where CBK considers the use of public funds necessary, it shall submit a proposal to the Ministry of
Finance for the purpose of establishing and capitalising the Asset Management Vehicle as a resolution tool.
The CBK shall adopt the decision establishing the AMV and shall approve its Statute, which shall be
registered with the Kosovo Business Registration Agency (KBRA).
The Statute of the Asset Management Vehicle shall, at a minimum, contain the following:
7.1. the name and registered office of the Asset Management Vehicle;
7.2. the object of activity;
7.3. the amount of the initial capital;
7.4. the governing bodies of the Asset Management Vehicle;
7.5. the method of appointment, the number of members and the powers of the Board of Directors of
the Asset Management Vehicle;
7.6. the determination of the remuneration and compensation arrangements for the members of the
Board of Directors and other employees of the Asset Management Vehicle, as well as their rights and obligations;
7.7. the organisation of the internal control system;
7.8. the obligation for audit;
7.9. the duration of the operations of the Asset Management Vehicle
7.10. the distribution of liquidation proceeds.
Article 7
Activities of the Asset Management Vehicle
The object of the activity of the AMV shall be the management of assets, rights or liabilities transferred
to it, with the objective of maximising their value through sale.
The CBK shall determine, on a case-by-case basis, the list of assets, rights and liabilities to be
transferred to the AMV.
For the purpose of fulfilling the objectives and functions of the AMV, the CBK shall:
3.1. approve the budget of the AMV;
3.2. approve its governance and organisational structure.
In order to achieve its objectives, the AMV shall exercise any rights in relation to the transferred assets,
rights or liabilities in accordance with the provisions of the Law on Banks, the CBK regulatory framework and the requirements of this Regulation.
In order to fulfil the objectives and functions of its activity, the Asset Management Vehicle shall
perform the following functions:
5.1. manage the transferred assets with the objective of preserving their value, in accordance with the
applicable resolution strategy;
5.2. use its best efforts to achieve a financial return from the assets under its management, taking into
consideration:
5.2.1. the costs related to the transfer and management of assets from the institution under
resolution or the bridge institution;
5.2.2. the costs related to the establishment of the AMV and the funds provided for its
capitalisation;
5.2.3. other factors which the AMV considers relevant for achieving the objectives of its activity;
5.3. receive assets transferred from the institution under resolution or from a bridge institution in
accordance with the decisions adopted by the CBK;
5.4. manage the transferred assets, including the collection of loan interest, principal and capital, and,
where applicable, the enforcement or management of collateral;
5.5. perform other functions related to the management and disposal of transferred assets;
5.6. undertake all necessary actions to protect, enhance or realise the value of the transferred assets,
including:
5.6.1. the sale of loans or loan portfolios at the best possible market price;
5.6.2. the securitisation or refinancing of loan portfolios;
5.6.3. the holding, refinancing, sale or redemption of relevant securities;
5.7. enter into contracts and agreements with public and private entities for the performance of its
functions;
5.8. obtain advisory and technical services necessary for the performance of its functions.
For the purpose of carrying out its activities, the AMV may perform the functions set out in this Article:
6.1. independently or in cooperation with institutions necessary for the performance of the relevant
tasks;

6.2. directly or through third parties contracted to provide services supporting the activities of the
Asset Management Vehicle.
Article 8
Strategy and risk profile of the Asset Management Vehicle

The Asset Management Vehicle shall develop and submit for approval by the CBK and implement the
strategy and risk profile to which it will be exposed while carrying out its activities.
The strategy and risk profile shall include a description of the most significant risks to which the Asset
Management Vehicle will be exposed, the principles governing the assumption and management of such risks and/or the policies and procedures for risk management, as well as arrangements for the performance of internal control functions.
Where there are changes in the facts and circumstances on the basis of which the risk management
strategy has been developed, the Asset Management Vehicle may amend its risk profile and risk management strategy, provided that it notifies the CBK in advance of such amendments.
The CBK shall approve, amend, or reject the proposed amendments referred to in paragraph 3 of this
Article.
Article 9
Governing bodies of the Asset Management Vehicle
The Asset Management Vehicle shall be organised, directed and shall carry out its activities through
the Board of Directors, the Chief Executive Officer and its staff, as provided for in this Regulation.
The Board of Directors shall have the following powers and duties:
2.1. ensures the effective, timely and efficient performance of the functions of the Asset Management
Vehicle as set out in Article 4 of this Regulation;
2.2. determines and adjusts the strategic and financial plan of the Asset Management Vehicle, in
accordance with the resolution strategy;
2.3. determines the strategic objectives of the Asset Management Vehicle, in line with the resolution
strategy;
2.4. ensures that appropriate systems and procedures are in place to achieve the strategic objectives
and take all necessary steps to ensure their achievement;

2.5. oversees activities of particular importance involving related parties and large exposures
concerning the transferred assets;
2.6. approves the risk management policy, including the assessment of the effectiveness of internal
control systems and the adequacy of organisational, administrative and accounting practices;
2.7. approves the internal policies for the operation of the Asset Management Vehicle;
2.8. establishes internal committees, as necessary for the achievement of the objectives of the Asset
Management Vehicle;
2.9. ensures that the financial statements of the Asset Management Vehicle are audited at least once
a year by a licensed external auditor;
2.10. ensures that the financial accounts are prepared and reviewed in accordance with international
accounting standards;
2.11. oversees the process of disclosure and public communication regarding the management of the
transferred assets.
3. The functions of the Chief Executive Officer of the Asset Management Vehicle shall be:
3.1. to act on behalf of the Asset Management Vehicle and represent its interests;
3.2. to manage the operations of the Asset Management Vehicle and ensure the implementation of the
decisions of the Board of Directors;
3.3. to appoint the employees of the Asset Management Vehicle.
Article 10
Criteria for the selection of members of the Board of Directors

The Board of Directors of the Asset Management Vehicle shall consist of three (3) members, including
the Chief Executive Officer.
Depending on the ownership structure of the Asset Management Vehicle, the members of the Board
of Directors and the Chief Executive Officer shall be appointed or approved by the Central Bank of the Republic of Kosovo for a term of three (3) years, with the possibility of reappointment.
The Board shall collectively have adequate knowledge, skills and experience commensurate with the
mandate of the Asset Management Vehicle. Candidates for membership of the Board of Directors shall meet the following criteria:

3.1. hold a university degree in economics, law or similar studies or have at least 3 years of adequate
knowledge and work experience in the financial sector, in areas related to financial asset management, restructurings and liquidations, bank valuation, risk management, finance or audit,
3.2. have no actual, potential or perceived conflict of interest that could impair the objective and
independent performance of his or her duties. In particular:
3.2.1. not be employed by, nor act as an owner, co-owner or Director or Senior Manager of a bank
licensed and operating in the Republic of Kosovo;
3.2.2. not have any employment, business, financial or personal relationship with the institution
under resolution, the bridge institution, an acquirer, a principal shareholder or creditor, a valuer, service provider, or any shareholder that may give rise to conflict of interest, in accordance with the applicable legislation;
3.3. not have been convicted by a court of a criminal offence;
3.4. not be subject to criminal investigation;
3.5. not have been involved in, or associated with, financial losses resulting from dishonest,
irresponsible or negligent conduct in relation to the provision of financial services or the management of entities or other institutions.
4. The members of the Board of Directors and the Chief Executive Officer shall comply with the fit and
proper requirements set out in this Article for the entire duration of their mandate. They shall promptly notify the CBK of any circumstance that may affect their suitability. The CBK may require additional training, impose mitigating measures, or remove and replace a member where the requirements of this
Article are no longer met.
Article 11
Administration of the Asset Management Vehicle

At all times, in accordance with the applicable legal and regulatory framework and the Statute of the
Asset Management Vehicle, the Board of Directors and the Chief Executive Officer of the Asset Management Vehicle shall cooperate with the CBK in accordance with the applicable resolution strategy.
Within three (3) months from the date of the establishment of the Asset Management Vehicle, the
Board of Directors shall adopt the following acts:
2.1. a Code of Ethics and internal regulations governing the conduct of the employees of the Asset
Management Vehicle;

2.2. standards and procedures for the treatment and management of transferred assets, in accordance
with their nature and the applicable regulatory and accounting framework;
2.3. risk management practices, consistent with the objectives and purpose of the activities of the Asset
Management Vehicle and the risk profile of the portfolio of transferred assets;
2.4. procedures governing the liquidation or sale of transferred assets and the relevant procedures for
managing such processes.
3. No later than three (3) months from the date of establishment of the Asset Management Vehicle, the
Board of Directors shall approve the establishment of at least two internal committees and designate the respective members of the Board of Directors who shall chair each committee, as follows:
3.1. the Audit Committee;
3.2. the Risk Management Committee.
Article 12
Contractual arrangements for services provided by third parties

For the purpose of achieving the objectives of its activity, the Asset Management Vehicle may
subcontract services provided by third parties in relation to the management, sale and liquidation of transferred assets.
In the contract concluded for services provided by third parties, the Asset Management Vehicle shall
ensure that such third party:
2.1. acts in accordance with the highest ethical standards and provides all necessary technical services
in the performance of its activities, in accordance with the mandate granted to promote the best interests of the Asset Management Vehicle;
2.2. makes available the necessary resources and procedures to ensure the proper and effective
performance of the services provided;
2.3. undertakes all necessary efforts to prevent or appropriately manage conflicts of interest and
declares to the Asset Management Vehicle any such conflict of interest, whether actual or potential;
2.4. complies with all applicable regulatory obligations to which it is subject;
2.5. cooperates with the Asset Management Vehicle in the process of certifying the financial position
of the asset portfolio, insofar as this relates to the services provided to the Asset Management Vehicle.

Article 13
Accounts and financial records of the Asset Management Vehicle

The AMV shall maintain accounts and records and prepare separate financial statements in order to
ensure that its financial position is clearly and accurately reflected at all times, in accordance with the applicable legislation on financial reporting and international accounting standards.
For the purposes of paragraph 1 of this Article, the accounts and records of the Asset Management
Vehicle shall clearly identify:
2.1. the funds transferred for the establishment of the AMV;
2.2. the administrative costs and expenses of the Asset Management Vehicle in the course of carrying
out its activities;
2.3. the list of portfolios of assets, rights or liabilities transferred to the Asset Management Vehicle
and the valuation attributed to each portfolio;
2.4. the list of guarantees (if available), in supporting the transferred assets;
2.5. any other information required or communicated by the Central Bank of the Republic of Kosovo
(CBK).
The expenses of the Asset Management Vehicle incurred in the course of its activities shall be covered
by the financial resources available to the Asset Management Vehicle, which shall consist of:
3.1. funds transferred for the establishment of the Asset Management Vehicle;
3.2. income derived from the management of transferred assets.
For the purposes of paragraph 1 of this Article, the Asset Management Vehicle shall adopt, document
and implement all necessary policies, procedures and supporting systems required for the detailed and comprehensive identification, recording, valuation, management, reporting and disposal of the transferred assets, rights or liabilities.
Article 14
Reporting
The AMV shall report to the CBK on its activities on a quarterly basis.
The quarterly report shall include information relating to the relevant quarter, including:

2.1. the number and value of loans in the portfolio and their status, categorised as performing loans
and non-performing loans;
2.2. non-performing loans categorised according to their credit classification;
2.3. the number and value of repaid or settled loans;
2.4. third parties contracted for the management or servicing of the relevant loans within each
portfolio;
2.5. a list of all legal proceedings concerning the transferred assets, specifying:
2.5.1. the subject matter under consideration;
2.5.2. the parties involved in the proceedings;
2.5.3. the position of the Asset Management Vehicle in relation to the proceedings;
2.6. a detailed report on revenues received by portfolio, as well as revenues receivable;
2.7. the amount recovered from the sale of assets within the portfolio;
2.8. other income derived from interest on loans transferred to the Asset Management Vehicle;
2.9. the financial balance sheet of the assets and liabilities of the Asset Management Vehicle;
2.10. the financial result and the financial statement of income and expenses of the Asset Management
Vehicle.
3. The CBK may require the Asset Management Vehicle to provide additional reporting, in such format
and frequency as deemed necessary, including in relation to:
3.1. the achievement of the objectives of the Asset Management Vehicle;
3.2. any information or statistics necessary for assessing the performance of the Asset Management
Vehicle in carrying out its functions.
Article 15
Supervision and oversight of the Asset Management Vehicle

The Asset Management Vehicle shall comply with the applicable legal and regulatory requirements in
force relating to the conduct of the activities specified in the decision establishing it and/or any subsequent amendments thereto.
The CBK shall supervise and oversee the activities of the Asset Management Vehicle in accordance
with the requirements of the Law on Banks and the secondary legislation issued by the CBK.
If the CBK determines that the Chief Executive Officer or members of the Board of Directors are not
acting in accordance with the established interests and objectives, it may take any measures or impose any sanctions it considers necessary, in accordance with the provisions of the Law on Banks and the applicable regulatory framework adopted pursuant to that Law
Article 16
Termination of the activities of the Asset Management Vehicle
The CBK shall decide on the termination of the activities of the Asset Management Vehicle where at
least one of the following conditions is met:
1.1. all assets, rights and liabilities transferred to the Asset Management Vehicle have been sold to a
third party or otherwise liquidated;
1.2. the Asset Management Vehicle no longer fulfils the requirements and objectives for which it was
established;
1.3. the period specified in the decision establishing the Asset Management Vehicle has expired.
Article 17
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 Chairperson of the Board of the Central Bank of the Republic of Kosovo.

Regulation on the Asset Separation Tool

Lineage: In force