In 1989 the constitutional autonomy of Kosovo within the Federal Republic of Yugoslavia (FRY) was abrogated, beginning a decade of social and economic apartheid for its majority ethnic Albanian population. Kosovo Albanians were excluded from civic life, and many who had held public-sector jobs were replaced by Serbs. Infrastructure, mining and heavy industry experienced divestment on a massive scale.
While tensions between the Albanian majority and the Serb minority have a long history, the conflict at the end of the 1990s was a result of growing hostilities between the Yugoslav state and the emerging Kosovo Liberation Army (KLA). After the FRY increasingly violated human rights in Kosovo, NATO intervened, using force to resolve the conflict. An internationally engineered peace agreement was signed by the FRY and representatives of the majority Albanian population in early June 1999.
Following the NATO air strikes and the end of hostilities, Kosovo became a UN protectorate under the UN Mission in Kosovo (UNMIK) in accordance with UN Security Council Resolution 1244 (1999). The Constitutional Framework created in April 2001 defined the powers of the provisional institutions of self-government (PISG) in Kosovo, although the UNMIK continued to have the final say in many key areas.
In February 2008, Kosovo declared its independence and is now known as the Republic of Kosovo. It has been recognised by 71 UN member states. On 22 July 2010, the International Court of Justice ruled that Kosovo's declaration of independence did not violate international law, which its president said contains no "prohibitions on declarations of independence".
Over the past two decades, a new class of small entrepreneurs has evolved in Kosovo - a process triggered by the FRY's dismissal of ethnic Albanians from formal-sector employment. Although Kosovo's infrastructure and many larger enterprises are weak, the small enterprise sector is thriving. The resilience of this sector was particularly apparent just after the 1999 war, when, even in the worst-affected areas, small entrepreneurs were back in business very soon.
At the end of the war, the local financial system was in chaos. Yugoslav banks had pulled out, taking their customers' deposits with them. For more than six months, no banks operated at all. The centralised payments system, which was similar to that in other parts of the former Yugoslavia, had also ceased to function.
In November 1999 the UNMIK established the Banking and Payments Authority of Kosovo (BPK) as the regulatory authority for the emerging banking sector. In 2006 this institution was transformed into the Central Banking Authority of Kosovo (CBAK). The new institution performs more functions and has greater financial independence than the BPK. However, its mandate does not include the formulation or implementation of a monetary policy, since Kosovo has adopted the euro as legal tender for all payments.
During 2009, Kosovo joined the International Monetary Fund (IMF) and the World Bank (WB), a move that presents a unique opportunity for economic development and dealing with macroeconomic challenges.
On January 12, 2000, Micro Enterprise Bank (MEB) became the first bank licensed by the BPK in post-war Kosovo. Five days later, MEB, at this stage the only bank in Kosovo, opened its doors to clients. MEB was founded by ProCredit Holding (formerly known as Internationale Micro Investitionen AG) and several international financial institutions, including the European Bank for Reconstruction and Development (EBRD), Kreditanstalt für Wiederaufbau (KfW), the International Finance Corporation (IFC), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), and Commerzbank AG.
In November 2003, MEB was renamed "ProCredit Bank Kosovo". Both customers and staff appreciate the benefits they derive from the bank's status as a member of the regional ProCredit network and the opportunities that the network offers for integrated services through collaboration with sister banks.
ProCredit Bank has benefited from being the pioneer in all areas of banking in post-war Kosovo, and the staff have successfully managed the institution's rapid growth.
As of December 2011, it was the largest bank in the market in terms of net loans to the non-financial sector and in terms of the volume of customer deposits (Kosovo Bankers Association http://www.bankassoc-kos.com). ProCredit's current challenge is to build on the successful initial phase of its operations as the market grows more competitive.
ProCredit Bank aims to continue to serve a diverse client base that reflects the full spectrum of individuals, enterprises and institutions in Kosovo - from local businesses, salary-earners and pensioners to international governmental and non-governmental organisations. At the end of 2011, the bank had a network of 61 branches covering all the main towns and regions in Kosovo, including rural areas. In addition to loans, the bank offers a full range of deposit accounts, cheque encashment, domestic and international money transfers (including Western Union transfers), letters of credit and bank guarantees.