Liquidity in the banking sector is analyzed at a banks operating in the territory of Bosnia and Herzegovina in the period from 2010 to 2014. The basic aim of this study is to determine the importance of liquidity in the operations of the banking sector and to analyze the liquidity of banks in Bosnia and Herzegovina, especially Hypo-Alpe-Adria-Bank d.d. and seeking ways to improve liquidity risk management. While the overall banking sector recorded growth in total deposits in the observed period, Hypo Alpe-Adira-Bank d.d. in the observed period recorded a continuous decline of total deposits. The paper identifies factors that have affected the reduction of total deposits at Hypo Alpe-Adria-Bank d.d. Mostar and the assessment of measures taken in order to remedy the difficulties caused by the continuous decline in client savings. The research is based on the annual reports of commercial banks and publicly available data published by the Central Bank of Bosnia and Herzegovina and entity banking agencies. The research results show that the measures taken have yielded results and that identifying the early warning indicators and applying the instruments can successfully manage the liquidity risk in the Bank.