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Croatia’s Banking Regulation Compliance: A Complex Framework
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The Croatian National Bank (CNB) oversees the country’s credit institutions, savings banks, and housing savings banks through a regulatory framework that is rooted in EU legislation. At its core lies the Credit Institutions Act, which serves as a cornerstone for banking supervision.
The Credit Institutions Act
Pursuant to this act, the CNB has issued subordinate legislation that outlines specific rules for credit institutions and credit unions. These regulations are designed to be followed from inception to operation, with most being implemented through guidelines and recommendations.
EU Regulations and Directives
The CRD IV package has been transposed into Croatian law, incorporating Basel III rules. This legislative framework consists of a regulation and a directive, which have been in effect since January 1, 2014. The new regulations will be phased-in between 2014 and 2019.
Regulation vs. Directive
- Regulations are directly applicable across the European Union and serve as secondary legislation.
- Directives set out goals that must be achieved by EU member states.
In Croatia, Directive 2013/36/EU on access to the activity of credit institutions has been transposed into the Credit Institutions Act and subordinate legislation.
Technical Standards
The European Banking Authority (EBA) has issued technical standards as part of the CRD IV package. These binding regulations cover areas such as:
- Own Funds
- Recovery and Resolution
- Internal Governance
- Supervisory Reporting
The EBA’s technical standards are directly applicable across the EU and can be accessed on the EUR-lex website.
Guidelines
The CNB issues guidelines to provide clarity on legal norms, offer guidance to supervised entities, and promote good practices in banking operations. These guidelines are based on international standards and take into consideration market conditions, regulatory requirements of other countries, and recommendations from relevant supervisory bodies. The application of these guidelines is governed by the ‘comply or explain’ principle.
Conclusion
In conclusion, Croatia’s banking regulation compliance framework is built upon a complex interplay of EU legislation, directives, regulations, technical standards, and guidelines. While this framework provides a robust foundation for banking supervision, its implementation requires close attention to detail and ongoing monitoring to ensure adherence to regulatory requirements.