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Legal Framework Governing Banks in Croatia

Croatia’s banking sector is governed by a set of regulations and laws that ensure the stability and security of the financial system. In this article, we will outline the key aspects of the legal framework governing banks in Croatia.

Reporting and Disclosure Requirements

Banks in Croatia are required to report to the Croatian National Bank (CNB) on various matters, including:

  • Changes in court register entries
  • Shareholders meetings
  • Planned changes in share capital
  • Cessation of certain banking services
  • Acquisition or disposal of qualifying shares
  • Composition of related persons
  • Capital conservation buffer (CCoB)
  • Countercyclical capital buffer (CCyB)
  • Systemic risk buffer (SRB)
  • Systemically important institutions buffer (G-SII and O-SII)

Organizational Requirements

According to the Credit Institutions Act, banks must establish an effective and reliable organizational system with a clear structure, transparent lines of authority, and responsibility. This includes:

  • Effective management of risks
  • Internal control systems
  • Remuneration policies that promote risk management
  • A recovery plan

Suitability of Members of the Management Board

A member of the management board must possess certain qualities, including:

  • Good reputation and honesty
  • Appropriate professional knowledge and experience necessary for managing bank affairs
  • Ability to express an independent opinion without conflict of interest
  • Fulfillment of Companies Act requirements
  • Availability of time to fulfill obligations

Loans to Management Body Members and Related Parties

Banks can grant loans to management board members, procurators, or their immediate families only based on a decision by the supervisory board. The loan agreement must be concluded within three months of the decision, specifying interest and repayment terms.

Risk Management in the Banking Sector

The Credit Institutions Act requires banks to establish an organizational system with effective risk management, internal control systems, remuneration policies promoting risk management, and a recovery plan. The supervisory board appoints a risk committee responsible for advising on overall current and future risk-taking tendencies and strategies.

Note: This article provides general information on the legal framework governing banks in Croatia and is not intended to be a comprehensive or definitive guide.