Financial Crime World

Croatia’s Financial Institutions Face Tough Regulatory Requirements

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Croatia has implemented robust regulatory requirements for its financial institutions to maintain stability and resilience in its banking sector. The country’s banking system is considered one of the strongest sectors of its economy, thanks in part to efficient regulation and disciplined borrowers.

Role of the Croatian National Bank (CNB)

The Croatian National Bank (CNB) plays a crucial role in maintaining price stability and ensuring the overall stability of the financial system. The CNB:

  • Regulates and supervises credit institutions
  • Issues and revokes licenses for credit institutions
  • Manages the interbank Real Time Gross Settlement System

Monetary Policy Tools

The CNB uses various monetary policy tools to manage interest rates, including:

  • Increasing deposit requirements
  • Encouraging banks to make loans in the local currency (HRK)
  • Reducing foreign-currency denominated loans
  • Conducting market operations such as:
    • Repo and reverse repo auctions
    • Intra-day and overnight Lombard loans
    • Mandatory reserve requirement
    • Short-term liquidity loans

Banking Sector Overview

Croatia’s banking sector is dominated by foreign-owned banks, with:

  • Around 90% of institutions owned by shareholders from the European Union
  • Eleven EU-based entities owning Croatian banks
  • Almost 150 EU-based institutions providing services in Croatia

Banking System Stability

Croatia’s total capital ratio is above the European Union average, making its banking system relatively stable and recession-resistant. The country has also made significant progress towards adopting the Euro as its official currency, having met the Maastricht requirements in 2018.

Representation of the Banking Sector

The interests of the banking sector are represented by:

  • Croatian Banking Association (HUB)
  • Banking Association within the Croatian Chamber of Economy (HGK)

For more information on Croatia’s banking sector and individual banks, readers can visit Banks Bulletin.