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Croatia’s Regulatory Requirements for Financial Institutions

The Croatian National Bank (CNB) is the main regulator of the banking sector in Croatia, responsible for maintaining financial stability while supporting national economic policy. In addition to the CNB, other supervisory-regulatory authorities and financial auxiliaries work together to ensure a smooth functioning of the country’s financial system.

Obtaining a Banking Licence

To conduct banking services in Croatia, a credit institution must obtain a licence from the CNB. The application process involves submitting an application form with required documentation, which is assessed to check whether it meets legal requirements. Croatian law considers all banks as credit institutions and applies the same provisions to them.

Establishing Financial Institutions

The Credit Institutions Act prescribes that financial institutions in Croatia must be established as joint-stock companies (dionicko društvo). Banks based in other jurisdictions can operate in Croatia on the basis of their home-state banking licence, respecting EU Capital Requirements Directive provisions.

Banking Sector Overview

Currently, there are 19 commercial banks operating in Croatia, with a small number of banks offering a wide range of services. The banking sector is characterized by a high degree of concentration and foreign capital ownership. Italian-owned banks account for almost half of total bank assets, followed by Austrian-owned banks.

Leading Banks

The largest profits are realized by:

• Zagrebacka banka, owned by the Italian UniCredit group
• Privredna banka Zagreb (Intesa Sanpaolo)
• Erste & Steiermaerkische bank, Raiffeisenbank Austria, and OTP bank

Corporate Governance

Banks in Croatia are established as joint-stock companies, subject to provisions of the Companies Act. The Credit Institutions Act and other regulations define corporate governance rules for banks. Joint-stock companies whose shares are traded on a regulated market must state in their annual report which corporate governance code they are bound by or voluntarily applying.

Corporate Governance Code

The Corporate Governance Code issued by HANFA and the Zagreb Stock Exchange defines corporate governance and business transparency standards, focusing on:

• Responsibilities of management and supervisory boards
• Diversification of board members
• Independency of management and supervisory boards

Other important pieces of legislation applicable to banks as joint-stock companies include:

• Audit Act
• Accounting Act

Conclusion

Overall, Croatia’s regulatory requirements for financial institutions aim to ensure a stable and transparent banking sector, while also promoting corporate governance standards that comply with EU directives and international best practices.