Titanic Shocks: Central Bank Suspects Under Investigation for Alleged Insider Trading in Croatia

Probe into Suspected Breach of Regulations by Croatian National Bank (HNB) Officials

Amid growing allegations of insider trading, the Zagreb prosecution and HANFA, Croatia’s financial regulator, are conducting a thorough investigation into senior officials from the Croatian National Bank (HNB). The inquiry was initiated by media reports hinting at potential regulatory breaches utilizing non-public information.

Central Bank Leaders under Scrutiny

Local media accusations suggest Boris Vujcic, the governor, and Sandra Svaljek, his deputy, may be among the suspects involved in trading shares of banks supervised by the HNB. However, neither HANFA nor the HNB have officially confirmed the identities of those being investigated.

HANFA’s Insider Trading Probe

HANFA publicly announced the insider trading probe to establish if HNB staff had traded in securities from commercial banks, utilizing insider information, and contravening the Market Abuse Regulation and Capital Market Act. Although HANFA did not disclose names, the HNB acknowledged the involvement of its top officials, besides additional employees.

Suspected Unlawful Transactions

According to Index.hr, over 40 HNB employees have reportedly transacted in bonds of banks controlled by the central bank over the last 20 years, resulting in over HRK10mn (€1.3m) worth of transactions. These findings are based on publicly available data from the Central Depository and Clearing Company (SKDD).

Central Bank’s Unwavering Denial

The HNB maintains its stance of lawfulness regarding any alleged wrongdoing, issuing a statement on January 13, 2023, declaring Boris Vujcic, Sandra Svaljek, and additional staff acted within regulatory guidelines and ethical standards at the time of their transactions, with no evidence of insider information usage.

Controversial Acquisitions

Vujcic’s acquisition of Rijecka Banka and Zagrebacka Banka shares before becoming an HNB council member or governor in the late 1990s is a contentious issue. At the time, no restrictions on the acquisition of Croatian bank shares existed. Vujcic sold the shares in 2001, with no regulation or ethical obligation.

Sandra Svaljek’s Corporate Bond Acquisition

Svaljek’s acquisition of Erste & Steiermärkische Bank d.d. corporate bonds in late 2012, when she was an external HNB council member, is also under examination. She obtained the bonds using public information available in the bond issuer’s prospectus, approved by HANFA. There were no restrictions barring HNB Council members from purchasing bank bonds during this period. Svaljek held the bonds for five years and did not compromise any regulations upon maturity in 2017.

HNB Leadership’s Transactions Pre-EU Membership

The time these bank leaders made their transactions, Croatia was not an EU member, meaning there were no internal regulations making their actions unlawful.

The Investigation Continues

The media uproar intensified when local reports hinted at insider information usage by HNB leadership. The ongoing investigation is intended to shed light on the truth, with the central bank pledging transparency throughout the process.