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Croatian Banking Regulatory Framework

The Croatian National Bank (CNB) plays a crucial role in regulating and supervising banks in Croatia. The regulatory framework governing banking in Croatia aims to ensure the stability and soundness of the financial system.

I. Regulatory Framework

Overview of Regulatory Authority

  • The Croatian National Bank (CNB) is responsible for regulating and supervising banks.
  • The CNB is authorized to issue licenses, supervise bank operations, and impose penalties for non-compliance with regulatory requirements.

II. Capital Requirements and Risk Management

Minimum Capital Adequacy Ratio

  • Banks in Croatia are required to maintain a minimum capital adequacy ratio of 8%.
  • The CNB has implemented the Basel III framework, which requires banks to hold a minimum amount of common equity Tier 1 (CET1) capital.

Risk Management Requirements

  • Capital requirements are divided into four groups: Capital Conservation Buffer (CCoB), Countercyclical Capital Buffer (CCyB), Systemic Risk Buffer (SRB), and Systemically Important Institutions Buffer (G-SII and O-SII).

III. Reporting, Organizational Requirements, Internal Governance, and Risk Management

Regular Reporting

  • Banks are required to submit regular reports to the CNB on their financial condition and risk management practices.

Organizational Requirements

  • The CNB has established organizational requirements for banks, including a clear governance structure, effective risk management systems, and internal control procedures.
  • The Credit Institutions Act requires banks to establish a risk committee, which is responsible for advising the supervisory board on overall risk-taking strategies.

IV. Loans to Management Body and Related Parties

Prohibition on Unapproved Loans

  • Banks are prohibited from granting loans to members of the management body or their related parties without prior approval from the CNB.
  • Any loan granted in contravention of this requirement must be repaid immediately, regardless of contract provisions.

Conclusion

The Croatian regulatory framework for banking is designed to ensure the stability and soundness of the financial system. The CNB plays a key role in supervising banks and enforcing regulatory requirements to maintain public confidence in the banking sector.