CROATIAN PARLIAMENT
1388
Pursuant to Article 88 of the Constitution of the Republic of Croatia, I hereby pass the
following
DECISION
ON THE ENACTMENT OF THE BANKING ACT
I hereby enact the Banking Act, adopted by the Croatian Parliament at the session of 3
July 2002.
Number: 01-081-02-2612/2
Zagreb, 8 July 2002
President of the
Republic of Croatia
Stjepan Mesic
BANKING ACT
I. GENERAL PROVISIONS
General Provision
Article 1
This Act regulates the conditions for the establishment, business and termination of banks,
and for supervision of the work of banks.
Banks
Article 2
(1) A bank is a financial institution that has obtained a license to operate from the Croatian
National Bank and that has been established as a joint stock company having its seat in the
Republic of Croatia.
(2) A bank cannot be entered in the court register before the license to operate is obtained
from the Croatian National Bank.
(3) The word "bank" or derivatives of that word, if included in the name of the bank, can be
entered in the court register and used in legal transactions only by a company that has
obtained a license to operate as a bank from the Croatian National Bank.
(4) Without prejudice to the provision of paragraph 3 of this Article, the word "bank" or a
derivative of that word, if included in the name of the bank, can be entered in the court
register and used in legal transactions by some other company, as well, if so permitted by
another law.
(5) For the purposes of this Act, the license to operate shall mean the license as in Article 33
of this Act.
Banking Services
Article 3
Banking services are the receipt of monetary deposits and the granting of credits and other
placements from those means in the bank's own name and on the bank's behalf, as well as the
issuance of payment instruments in the form of electronic money.
Rendering Banking Services
Article 4
Banking services may be rendered by:
1) a bank that obtains a license to render such services from the Croatian National Bank;
2) the bank of a member state of the European Union from Article 13, paragraph 1 of this
Act, which in accordance with this Act has established a branch office in the territory
of the Republic of Croatia or which is authorised, in accordance with this Act, to
render banking services directly in the territory of the Republic of Croatia;
3) the branch office of a foreign bank from Article 13, paragraph 2 of this Act, which
obtains a license from the Croatian National Bank to render services in the territory of
the Republic of Croatia.
Prohibition of Rendering Banking Services
Article 5
Banking services may be rendered only by persons from Article 4 of this Act, unless
determined otherwise by another law.
Other Financial Services
Article 6
(1) A bank and the branch office of a foreign bank, apart from banking services, may also
render other financial services from paragraph 2 of this Article, if the Croatian National Bank
has provided a license to this bank or the branch office of a foreign bank to render those
services.
(2) For the purposes of this Act, “other financial services” are:
1)
2)
3)
4)
issuance of guarantees or other forms of surety;
factoring;
financial lease (leasing);
credit financing, including consumer credits, mortgage credits and financing of
commercial transactions (including forfeiting);
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5) trading in its own name and on its own behalf or in its own name and on behalf of the
client with:
a) money market instruments and other transferable securities;
b) foreign payment instruments, including exchange transactions;
c) financial futures contracts and options;
d) currency and interest instruments;
6) performance of payment operations in the country and abroad in accordance with
separate laws;
7) gathering, processing analyses and providing information about credit-worthiness of
legal and physical persons who have an independent business;
8) acting as mediator and agent for selling insurance policies, in accordance with the law
regulating insurance, mediation and insurance agencies;
9) issuance and management of payment instruments;
10) lease of safe deposit boxes;
11) mediation in the conclusion of financial transactions;
12) services related to securities, in accordance with the law regulating the issuance of
securities and trade in these securities;
13) management of pension or investment funds, in accordance with the law regulating
pension, i.e., investment funds;
14) consultation regarding the structure of capital, business strategy and similar questions,
as well as rendering services relating to the acquisition of shares and business shares in
other companies, and other significant investments;
15) other similar services mentioned in the bank’s operating license.
Prohibition of Rendering Services
Article 7
The bank may not perform services other than banking services from Article 3 of this Act,
other financial services from Article 6 of this Act, and auxiliary banking services from Article
91, paragraph 2 of this Act.
Participation and Qualified Share
Article 8
(1) For the purposes of this Act, a person has a share in another legal person if it has direct or
indirect investments on the basis of which it has 20 or more per cent of the capital of that
legal person or of the voting rights in that legal person.
(2) For the purposes of this Act, a qualified share is a direct or indirect investment on the
basis of which the investor acquires a share of 10 or more per cent in the capital of another
legal person or in the voting rights in that legal person, i.e., an investment of less than 10 per
cent if there is impact on the management of the legal person in which the investment has
been made.
Indirect Investment
Article 9
(1) For the purposes of this Act, indirect investment shall be an investment in the capital of a
legal person or acquisition of the voting rights in that legal person through a third party.
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(2) An indirect holder of shares, business shares or other rights ensuring a share in the capital
of a legal person or in the voting rights in that legal person, according to this Act, shall be:
1. a person on whose behalf another person (the direct holder) has acquired the shares,
business shares or other rights in the legal person; and/or
2. a person associated with a direct holder of shares, business shares or other rights in the
legal person.
Dependant and Dominant Companies
Article 10
(1) For the purposes of this Act, a dependant company is a legal person controlled by another
legal person – the dominant company.
(2) For the purposes of this Act, a dominant company shall be a legal person that has one or
several dependant companies.
(3) Each legal person that is a dependant company of another dependant company is
considered to be the dependant company of the dominant company.
(4) For the purposes of this Act, the dominant company and all its dependant companies form
a group of associated companies.
(5) Legal persons in a control-type relationship, in which it cannot be determined with
certainty which is dependent and which dominant, are also regarded as a group of associated
companies.
Control
Article 11
(1) For the purposes of to this Act, control means the relationship between the dominant and
the dependant company or the relationship between the natural or legal person and another
natural or legal person producing the same or similar influence as in the relationship of the
dominant and the dependant company.
(2) Control is deemed to exist if the dominant company meets at least one of the following
conditions in the dependant company:
1) it has direct or indirect majority shares in the capital or direct or indirect majority of
the voting rights;
2) it has the right to appoint or recall a majority of members of the board of directors or
the supervisory board;
3) it has the right to apply or applies the dominant influence;
4) it has the right to manage business and financial policies of the company on the basis
of authority from statute or agreements;
5) it has control over more than 50 per cent of voting rights, established pursuant to an
agreement with other holders of voting rights; or
6) it has the power to influence decision-making at meetings of the board of directors, the
supervisory board or the relevant management body of the company.
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Associated Persons
Article 12
(1) Associated persons are persons meeting at least one of the following conditions:
1) two or more natural or legal persons that represent a single risk for the bank, because
one of them directly or indirectly has control over the other or others;
2) two or more natural or legal persons that represent a single risk for the bank, because
one of them directly or indirectly has significant influence on the other or others;
3) two or more natural or legal persons amongst whom there is no relationship of control
from item 1 of this paragraph or of significant influence from item 2 of this paragraph,
but which nonetheless represent a single risk for the bank, because they are mutually
associated, so that there is a great probability that as the result of deterioration or
improvement of the economic and financial state of one person the economic and
financial state of one or several other persons could also deteriorate or improve, since
the transfer of losses, profit or credit-worthiness is performed or can be performed
amongst them, or
4) the trustee and the person on whose behalf he/she acts.
(2) Within the meaning of paragraph 1 of this Article, it is presumed that associated persons
are also persons mutually associated as:
1. members of a nuclear family;
2. members of the board of directors or the supervisory board, and members of the
nuclear families of such persons; or
3. persons employed pursuant to employment contracts with special conditions,
concluded with the company in which they are employed, as well as members of
the nuclear families of such persons.
(3) Members of the nuclear family of a person, according to this Act, are:
1. his/her spouse or the person with whom he/she has been living for some time in the
same household, which according to the law regulating marriage and family
relations has the legal position equal to that of marriage;
2. children or adopted children;
3. other persons under the custody of that person.
(4) A group of associated persons includes all persons associated in at least one of the ways
mentioned in paragraphs 1 and 2 of this Article.
(5) For the purposes of this Act, the group of associated persons from paragraph 4 of this
Article is also regarded as one person.
(6) For the purposes of this Act, apart from persons from this Article, other forms of
associated companies in accordance with the provisions of the Company Act are also
regarded as associated persons.
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Person from a Member State of the European Union and a Foreign Person
Article 13
(1) A person from a member state of the European Union is a natural person with permanent
residence in the territory of a member state of the European Union or a legal person having its
seat in the territory of a member state of the European Union.
(2) For the purposes of this Act, a foreign person is a person with a permanent residence or
seat outside the territory of the Republic of Croatia and outside the territory of a member state
of the European Union.
II. STATUS-RELATED PROVISIONS
II.1. APPLICATION OF THE PROVISIONS OF THE COMPANY ACT
Application of the Provisions of the Company Act
Article 14
The operation of banks is governed by the provisions of the Company Act, unless prescribed
differently in this Act.
II.2. EQUITY CAPITAL AND THE SHARES OF THE BANK
Equity capital of a Bank
Article 15
The minimum amount of equity capital necessary for the establishment of a bank is HRK 40
million.
Shares of a Bank
Article 16
(1) The shares of a bank shall be shares registered by name.
(2) The shares of a bank shall be paid in money in full before the entry of establishment or the
entry of an increase in equity capital in the court register.
(3) The shares of a bank are issued in dematerialised form.
Credits and Suretyship for the Acquisition of Shares or Business Shares
Article 17
(1) A bank may not directly or indirectly provide credit financing or issue suretyship for the
acquisition of shares of the bank or of shares, i.e., business shares of companies in the capital
of which the bank participates with 20 or more per cent, except if by acquisition of these
shares, i.e., business shares, all connections related to the capital between the bank and the
company would terminate.
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(2) Any other legal transactions, the economic purpose of which is equivalent to credit, are
also regarded as credit financing from paragraph 1 of this Article.
(3) Without prejudice to the provisions of paragraph 1 of this Article, the bank may grant
credits or suretyship for credits to its employees and the employees of its dependent
companies for the purchase of bank treasury shares. The total amount of such credits and
suretyship may not exceed 10 per cent of the equity capital of the bank.
Preferred Shares of the Bank
Article 18
A bank may not have in preferred shares its equity capital in excess of one-quarter of all
issued shares.
II.3. SHAREHOLDERS OF THE BANK
Prohibition of Acquisition of Bank Shares
Article 19
A bank or any other financial institution in which another bank has a share higher than 10 per
cent in the capital or voting rights may not acquire the shares of that bank on the basis of
which it would have a share of more than 10 per cent in its capital or voting rights.
Consent for Acquisition of a Qualified Share
Article 20
(1) For the acquisition of bank shares on the basis of which a person would directly or
indirectly acquire a qualified share in the bank (hereinafter the "qualified shareholder"), the
prior consent of the Croatian National Bank is required (hereinafter the "consent for the
acquisition of a qualified share").
(2) The qualified shareholder has to obtain the prior consent of the Croatian National Bank for
every further acquisition of bank shares on the basis of which he/she acquires or acquires in
excess of 20 per cent, 33 per cent, 50 per cent or 75 per cent of the share in the voting rights
or in the capital of the bank or on the basis of which he/she controls the bank.
(3) The Croatian National Bank may set conditions, as well as terms within which the
qualified shareholder has to meet the conditions, for the consent from paragraphs 1 and 2 of
this Article to remain in force.
(4) If the person who has obtained the consent from paragraphs 1 and 2 of this Article intends
to sell or in some other way alienate his/her shares, by which his/her share would be reduced
below the limit for which he/she has obtained the consent, he/she shall inform the Croatian
National Bank accordingly in writing.
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(5) The Croatian National Bank, before deciding to issue consent for the acquisition of a
qualified share or the share from paragraph 2 of this Article, shall inform the competent
supervisory body of the relevant member state of the European Union if the application for
the issuance of a consent for the acquisition of a qualified share has been submitted by one of
the following persons:
1)
A bank authorised to render banking services in that member state of the European
Union;
2) A company controlling the bank or the dependent company from item 1 of this
paragraph;
3) A person controlled by the same person or persons controlling the bank from item 1 of
this paragraph.
(6) If the application for the issuance of consent for the acquisition of a qualified share has
been submitted by the bank of a member state of the European Union or by a foreign bank, it
shall enclose with the application for the issuance of consent for the acquisition of a qualified
share the consent or the opinion of the competent supervisory board of the bank of the
member state of the European Union or the competent supervisory body of the foreign bank.
Decision-making regarding Consent for the Acquisition of a Qualified Share
Article 21
(1) With an application for the issuance of consent for the acquisition of a qualified share it is
necessary to enclose documents from Article 35, paragraph 1, items 4 and 5 of this Act, as
well as other documentation designated by the Croatian National Bank, if any.
(2) The Croatian National Bank shall reject an application for the issuance of consent for the
acquisition of a qualified share, if it emerges from the data available to the Croatian National
Bank that:
1)
in view of the activities or transactions performed by the qualified shareholder or
associated person or in view of the acts performed by the qualified shareholder or
associated person the business of the bank could be threatened, because of a failure to
comply with risk management rules;
2) in view of the activities or transactions performed by the qualified shareholder or
associated person or in view of the manner in which the persons are mutually
associated it would be made impossible or significantly more difficult to perform
supervision over the bank; or
3) should the consent be granted, a concentration in the banking system would or could
take place that would undermine the freedom of market competition;
4) should the consent be granted, the monetary and foreign exchange policies in the
Republic of Croatia would or could be unfavourably influenced.
(3) The Croatian National Bank shall also reject an application by a foreign person for the
acquisition of a qualified share if it is probable that, taking into account the regulations of the
state of that person or practice of the state of that person, the performance of supervision in
accordance with the provisions of this Act would be more difficult or impossible.
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The Legal Consequences of Acquisition without Consent
Article 22
(1) The person who obtains shares contrary to Articles 19 and 20 of this Act or does not meet
the conditions from Article 20, paragraph 3 of this Act is not entitled to the right to vote
arising out of the shares obtained in this manner.
(2) If the qualified shareholder violates the obligations of a superior bank in the group of
banks from Article 92 of this Act or of a superior financial holding in the group of banks from
Article 97, paragraph 3 of this Act or if a person from Article 95, paragraphs 1 and 2 of this
Act violates the obligations from Article 95, paragraph 3 of this Act or in the event of
circumstances from Article 21, paragraphs 2 and 3 of this Act, the Croatian National Bank
shall adopt a decision to remove the voting rights from the qualified shareholder.
II.4. THE BOARD OF DIRECTORS AND SUPERVISORY BOARD OF BANKS
The Board of Directors of Banks
Article 23
(1) The board of directors shall have at least two members who run the affairs of and
represent the bank. One of the members of the board of directors shall be appointed chairman
of the board of directors.
(2) Unless the statute of the bank provides otherwise, members of the board of directors run
the affairs of and represent the company jointly.
(3) The board of directors of a bank may not authorise a procurator (one or several) to
independently represent the bank, i.e., to independently conclude all agreements and take all
legal actions in the name and on behalf of the bank that arise out of the overall scope of
banking and other financial services for which the bank has obtained a license from the
Croatian National Bank and for which it is entered in the court or some other register.
(4) The conditions that have to be met by the person appointed to be procurator, the type and
manner of granting the procuration, the scope of powers from the procuration, including
limitations in taking certain actions by the procurator, are prescribed by the statute of the
bank.
(5) At least one member of the board of directors shall know the Croatian language. At least
one member of the board of directors shall have permanent residence in the Republic of
Croatia.
Employment of Members of the Board of Directors
Article 24
(1) Members of the board of directors of a bank shall be employed by the bank for an
indefinite term and with full working hours.
(2) All special rights of members of the board of directors and other employees of the bank
pursuant to employment contracts or other contracts with the bank, which do not arise out of
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the collective agreement or the law regulating employment in the Republic of Croatia, shall
cease as of the date of service of the ruling on the appointment of a separate board of directors
of a bank.
(3) Any provisions of the employment contract or other contracts that would be contrary to
paragraph 2 of this Article shall be regarded as void.
Conditions for Membership of the Board of Directors of a Bank
Article 25
(1) The member of the board of directors of a bank may be a person meeting the following
conditions:
1) university qualifications;
2) relevant professional qualifications, abilities and experience necessary to run the affairs
of a bank;
3) has never been an executive in a bank or company against which bankruptcy
proceedings have been initiated or whose license to operate has been revoked;
4) is not a member of the supervisory board of that bank or the supervisory board of one
of the banks entered in the court register in the Republic of Croatia;
5) no bankruptcy proceedings have been initiated against his/her property;
6) he/she meets the conditions of the Company Act for a member of a board of directors;
7) he/she is not a member of the board of directors, i.e., procurator, of another company.
(2) The professional qualifications and experience from paragraph 1, item 2 of this Article
implies at least three years of experience in executive positions in banks or six years of
experience in running the affairs of a business enterprise that can be compared to the activities
of a bank or other comparable transactions.
(3) Without prejudice to the provision of paragraph 1, item 3 of this Article, a person may be
a member of the board of directors who was an executive in a company or bank against which
bankruptcy proceedings have been initiated or whose license to operate revoked, if the
Croatian National Bank evaluates that the person was not responsible for the events from
paragraph 1, item 3 of this Article.
Consent for Appointment of a Member of the Board of Directors of a Bank
Article 26
(1) Only a person who has obtained the prior consent of the Croatian National Bank may be
appointed a member of the board of directors.
(2) An application for the consent from paragraph 1 of this Article shall be submitted by the
supervisory board of the bank for a term that may not be longer than five years.
(3) Evidence that the conditions from Article 25 of this Act have been met shall be enclosed
with the application from paragraph 2 of this Article.
(4) In the procedure of deciding on consent, the Croatian National Bank may request the
candidate for the position of member of the board of directors to provide a presentation of
how to run the affairs of the bank.
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(5) The Croatian National Bank shall issue the consent from paragraph 1 of this Article if on
the basis of the documents from paragraph 3 of this Article, the presentation from paragraph 4
of this Article, and other data available to the Croatian National Bank, it concludes that the
candidate meets the conditions to be a member of the board of directors of the bank.
(6) The Croatian National Bank shall reject the application for the issuance of consent for
membership of the board of directors of the bank if from the available data it arises that in
view of the activities and transactions performed by the person or in view of the actions
performed by the person the business of the bank could be jeopardised, in accordance with the
rules on risk management.
(7) A person who has obtained consent to be a member of the board of directors of the bank
shall once again obtain the consent of the Croatian National Bank before his/her appointment
to that function in another bank. The provisions of paragraphs 2, 3, 4, 5 and 6 of this Article
shall also be applied in the appropriate manner for the consent from this paragraph.
(8) A person who has already obtained consent for membership of the board of directors and
whom the supervisory board wishes to re-appoint shall undergo the procedure prescribed by
this Act once again.
(9) In the event that members of the board of directors are not present or that they are not able
to perform their function, the supervisory board of the bank may appoint members on a onetime basis, without the consent of the Croatian National Bank as deputy members of the board
of directors for a maximum duration of three months.
The Duties and Responsibilities of Members of the Board of Directors
Article 27
Apart from the duties of members of the board of directors arising out of the Company Act,
members of the board of directors of a bank shall ensure:
1) that the bank does its business in accordance with risk management rules as laid down
by this Act and other laws regulating banking operations or other financial services,
and in regulations adopted on the basis of this and other laws;
2) that risks to which the bank is exposed in its business are monitored and that
appropriate risk management procedures are taken;
3) systematic monitoring, assessment and strategy for maintaining, i.e., reaching adequate
levels of capital in relation to risks to which the bank is exposed in its business;
4) the functioning of the system of internal control for all fields of business of the bank;
5) the unhindered performance of internal audits;
6) that the bank keeps its business and other books and business documentation, draws up
book-keeping documents, objectively evaluates its assets and obligations, draws up
financial and other statements in accordance with accounting regulations and
standards, as well as this Act and regulations adopted on the basis of this Act;
7) that the bank reports to and informs the Croatian National Bank in accordance with this
Act and regulations adopted on the basis of this Act;
8) the implementation of measures instructed by the Croatian National Bank.
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Informing the Supervisory Board
Article 28
(1) The board of directors of a bank shall immediately inform the supervisory board in writing
about the following events:
1) if the liquidity or solvency of the bank is jeopardised;
2) in the event of circumstances for termination or revocation of the license to render
banking services or for prohibition of the performance of specific banking transactions
or other financial services;
3) if the financial state of the bank changes to the extent that the guaranteed capital of the
bank falls below the amount of the minimum capital from Article 64 or the minimum
capital adequacy rate from Article 65, paragraphs 2 and 3 of this Act;
4) if the bank exceeds its exposure towards a single person, because of a decrease in the
guarantee capital.
(2) A member of the board of directors of the bank shall immediately inform in writing the
supervisory board of the bank about:
1) the election to and recall from the supervisory body of another legal person;
2) legal transactions on the basis of which a member of the board of directors or a member
of his nuclear family has directly or indirectly obtained shares or business shares in a
legal person on the basis of which the member of the board of directors with members
of his/her nuclear family has acquired a qualified share in that legal person or on the
basis of which their shares have fallen below the limit of a qualified share.
Revocation of the Consent for the Performance of the Function of Member of the Board
of Directors
Article 29
(1) The Croatian National Bank shall revoke its consent for the performance of the function of
members of the board of directors:
1) if a member of the board of directors has obtained consent by providing false data;
2) if a member of the board of directors has seriously violated the duties of members
of the board of directors from Articles 27 and 28 of this Act or the provisions on the
duties from the Company Act that result in revocation.
(2) If the procedure for the revocation of a consent for the performance of the function of
member of the board of directors has been initiated against a member of the board of
directors, because of a violation of risk management regulations and rules, because of which a
procedure for the revocation of the license to render banking services had been initiated
against the bank, the Croatian National Bank may combine the two procedures.
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Members of the Supervisory Board of a Bank
Article 30
(1) A person may not be a member of the supervisory board of the bank:
1) who is associated with legal persons in which the bank has more than a 5 per cent
share in voting rights or share in their equity capital;
2) who is a member of the supervisory board or the board of directors of another
bank, another financial holding or company, the activity of which is to trade with
securities on organised markets;
3) whose obligations towards the bank are greater than his/her claims and investments
in the bank or who is associated with legal persons whose obligations towards the
bank are greater than their claims and investments in the bank, if the difference
between the total obligations towards the bank and the total claims and
investments in the bank of that person and persons associated with that person
exceeds the amount of 1 per cent of the equity capital of the bank.
(2) Employees of the bank may not be members of the supervisory board of the bank.
(3) The prohibition from paragraph 1, item 2 of this Article is not applied to persons who are
members of the supervisory board or the board of directors of a superior bank or the superior
financial holding in a group of banks.
The Competence of the Supervisory Board of the Bank
Article 31
Apart from the competence of the supervisory board under the Company Act, the supervisory
board of the bank is also competent for the following matters:
1) they provide consent to the board of directors for the business policies of the bank;
2) provide consent to the board of directors for the financial plans of the bank;
3) provide consent for the framework of the annual programme of operation for the
internal audit;
4) make decisions on other issues regulated by this Act.
The Duties and Responsibilities of Members of the Supervisory Board of a Bank
Article 32
Apart from the duties and responsibilities of members of the supervisory board arising out of
the Company Act, members of the supervisory board of a bank shall:
1) express their opinions on the findings of the Croatian National Bank and other
supervisory bodies in the procedure of the supervision of the bank;
2) be jointly and severally liable to the bank for damages arising out of failures in the
performance of their duties;
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3) immediately inform the Croatian National Bank about:
a) the appointment and termination of their function in management or
supervisory bodies of other legal persons;
b) legal transactions on the basis of which a member of the supervisory board
or a member of his nuclear family has directly or indirectly obtained shares
or business shares in a legal person on the basis of which the member of the
supervisory board with members of his/her nuclear family has acquired a
qualified share in that legal person or on the basis of which their shares
have fallen below the limit of a qualified share.
III. RENDERING BANKING AND OTHER FINANCIAL SERVICES
III.1. LICENSES TO RENDER BANKING AND OTHER FINANCIAL SERVICES
Operating Licenses
Article 33
(1) The Croatian National Bank issues operating licenses to banks and branch offices of
foreign banks.
(2) The operating license from paragraph 1 of this Article includes the license to render
banking services.
(3) The operating license from paragraph 1 of this Article may also include the license to
render other financial services.
Licenses and Consents
Article 34
(1) Before the registration of establishment in the court register, the bank shall obtain a
license from the Croatian National Bank to render banking services (hereinafter the "license
to render banking services").
(2) If the bank also intends to render other financial services, apart from banking services, it
shall obtain a license from the Croatian National Bank prior to the entry of the relevant
activity in the court register (hereinafter the "license to render other financial services").
(3) If the bank is to merge with another bank or other legal person, it shall obtain consent
from the Croatian National Bank prior to the entry of the decision on merger in the court
register (hereinafter the "consent for merger").
(4) In the event of a consolidation of banks, the consolidating banks shall obtain consent for
consolidation from the Croatian National Bank prior to the entry of the new bank in the court
register (hereinafter the "consent for consolidation"), as well as a license to operate for the
new bank. On the date of entry of the new bank in the court register, the consolidating banks
cease to exist, and their licenses for operation cease to be valid.
(5) Before the establishment of a branch office, a bank shall obtain a license from the Croatian
National Bank (hereinafter the "license to operate of a branch office abroad").
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(6) The Croatian National Bank shall render the decision on the license from paragraph 2 of
this Article simultaneously with the decision on the license to render banking services, unless
the application for the issuance of a license from paragraph 2 of this Article was sent after the
bank had already obtained a license to render banking services.
(7) The Croatian National Bank shall not issue the consent from paragraphs 3 and 4 of this
Article if that would or could engender:
1) a concentration of the banking system that could undermine the freedom of market
competition, or
2) an unfavourable influence on the implementation of the monetary and foreign
exchange policies in the Republic of Croatia.
Applications for the Issuance of a License to Render Banking and Other Financial
Services
Article 35
(1) With the application for the issuance of a license to render banking and/or other financial
services, it is necessary to enclose:
1) the statute in the form of a notarised copy of the notarial deed;
2) the business plan for the first three business years, including the balance sheet and the
profit and loss account, the types of transactions planned, the appropriate structure of
organisation and human resources of the bank, the accounting policies and the
organisation of internal audit;
3) a list of shareholders, including their full names and addresses, i.e., permanent
residence and other identification data, and/or the name of the company and the
address of its seat and other identification data, the total nominal amount of shares and
the percentage of the share in the equity capital of the bank;
4) for shareholders, legal persons who are qualified shareholders:
- a certificate from the court or other public register, original or legalised copy;
− a print-out from the register of shareholders (book of shares) or the book of
business shares, original or legalised copy;
− financial statements for the last two business years;
5) a list of persons associated with qualified shareholders and a description of the way in
which they are associated;
6) a proposal of candidates for members of the board of directors and the supervisory
board, on the establishment of the bank;
7) the opinion or consent from the supervisory body of a bank of a member state of the
European Union or the supervisory body of a foreign bank about the bank that intends
to establish a bank in the Republic of Croatia;
8) the relevant deed of the competent supervisory body if that arises out of the
regulations regulating the performance of certain other financial services anticipated
by the business plan of the bank;
9) documentation designated by the Croatian National Bank, and on the basis of which it
is possible to determine whether the personnel, technical and organisational conditions
are met for the performance of services to which the application for the issuance of a
license refers.
15
(2) If the bank intends to render other financial services, apart from banking services, it shall
state the types of other financial services it intends to perform in the application for the
issuance of a license.
(3) If, after the license to render banking and other financial services is obtained, the bank
wishes to render other financial services for which it does not have a license, it shall enclose
the documentation from paragraph 1, items 8 and 9 of this Article with the application for
rendering other financial services.
(4) Apart from the documentation in paragraph 3 of this Article, the Croatian National Bank
may in certain cases request the bank to deliver a business plan in accordance with paragraph
1, item 2 of this Article, in which the bank shall explain the influence of the new services on
the balance sheet, profit and loss account, organisation, human resources and accounting and
other policies.
Rendering a Decision on the License to Render Banking and Other Financial Services
Article 36
(1) The Croatian National Bank shall issue a license to render banking services if it
establishes that the bank meets the conditions for rendering those services.
(2) If the bank also requests a license to be issued for the rendering of other financial services,
the Croatian National Bank shall expressly mention in the decision the other financial services
for which it has issued the license.
(3) The Croatian National Bank within a term of six months from the receipt of a duly sent
application for rendering banking and/or other financial services, shall decide on the
application, render a relevant decision and inform the applicant. If the application is
incomplete, the bank may supplement the application with the requested documentation or
additional information within the term set by the Croatian National Bank, but the final term
for rendering and notification of the decision shall not exceed twelve months from the date of
receipt of the application.
Refusal of an Application for the Issuance of a License to Render Services
Article 37
The Croatian National Bank shall refuse an application for the issuance of a license to render
banking and/or other financial services:
1) if shareholders who are qualified shareholders do not have the consent from Article
20, paragraphs 1 and 2 of this Act;
2) if the members of the board of directors of the bank do not have the consent of the
Croatian National Bank for the performance of the function of member of the
board of directors of the bank;
3) if it arises from the Statute or other documentation that the bank is not organised in
accordance with this Act, i.e., that the conditions for the business of the bank laid
down in this Act or regulations adopted on the basis of this Act have not been met;
4) if the provisions of the articles of association of the bank are contrary to the
provisions of this Act or the provisions of regulations adopted on the basis of this
Act;
16
5) if it arises out of the documentation and other known facts that in view of its
human resources, organisation and technical conditions the bank is not able to
render banking and/or other financial services in the manner and to the extent
anticipated in its business plan;
6) if any other regulation that regulates the performance of other financial services
anticipated in the business plan of the bank anticipates special conditions for
rendering those services, and the bank does not meet those conditions, or
7) if it arises out of the application and the enclosed documentation that the bank does
not meet other conditions for rendering other financial services to which the
application for the issuance of a license refers.
Termination of Validity of a License to Render Banking Services
Article 38
(1) A license to render banking services ceases to be valid:
1)
2)
3)
4)
on the date of the initiation of bankruptcy proceedings ;
on the date of the initiation of the voluntary liquidation of the bank;
with the service of a ruling on the revocation of the license to render banking services;
on the date of entry of the new bank in the court register in the event of the merger of
banks; and
5) by deletion from the court register of a bank involved in a merger.
(2) On the termination of validity of the license to render banking services, the license to
render other financial services also ceases to be valid.
Reasons for the Revocation of an Operating License
Article 39
(1) The Croatian National Bank shall render a decision to revoke an operating license:
1) if the bank does not commence business within twelve months from the date of
issuance of the license;
2) if the bank independently ceases to render banking services for a term of more than six
months;
3) if the bank no longer meets the conditions pursuant to which it obtained the license to
render banking services;
4) if it has obtained the license to render banking services on the basis of false
documentation or false data; or
5) if the Croatian National Bank establishes the existence of any of the conditions for the
issuance of a special measure of revocation of the license to render banking services
from Article 129 of this Act.
(2) A bank may not conclude, commence with the performance of or perform any new
transaction related to the rendering of banking services from the date of enforceability of the
ruling from paragraph 1 of this Article, except transactions with the goal of and by which the
termination of the bank as a joint stock company is ensured, in the manner established by law.
17
Freedom of Market Competition
Article 40
(1) The Croatian National Bank is authorised to monitor the business activities of banks and
groups of banks that could result in the prevention or limitation of market competition in the
field of banking services.
(2) In monitoring the freedom of market competition and establishing whether it has been
undermined, the Croatian National Bank may request the opinion of the body competent for
the protection of market competition.
(3) If it is established that the freedom of market competition has been undermined in
rendering banking services, the Croatian National Bank shall be obligated to take measures to
ensure the freedom of market competition.
(4) The Croatian National Bank shall determine the manner and criteria by which it shall be
established whether the freedom of market competition in the market of banking services in
the Republic of Croatia has been undermined, and measures to ensure the freedom of market
competition.
III.2.
RENDERING BANKING AND OTHER FINANCIAL SERVICES OUTSIDE
THE TERRITORY OF THE REPUBLIC OF CROATIA
III.2.1. Rendering Services in a Member State of the European Union
Rendering Services in a Member State of the European Union
Article 41
(1), A Bank may render banking and other financial services in the territory of a member state
of the European Union through a branch office or directly in accordance with a license
previously obtained from the Croatian National Bank if it meets the conditions prescribed by
that European Union member state.
(2) The branch office from paragraph 1 of this Article is considered to be the branch office
according to the provisions of the Company Act.
Rendering Services in a Member State of the European Union through a Branch Office
Article 42
(1) A bank that intends to establish a branch office in a member state of the European Union
shall inform the Croatian National Bank to this effect in advance and identify the member
state of the European Union in which it intends to open its branch office. With the
notification, the bank shall enclose:
1) a description of the activities that the branch office shall perform and its business
plan for the following three years;
2) the names of persons authorised to run the affairs of the branch office;
3) the name and address of the branch office in the member state of the European
Union where documentation about the branch office may be obtained.
18
(2) Within no more than three months from the receipt of the notification from paragraph 1 of
this Article, the Croatian National Bank shall send this notification with enclosures to the
supervisory body of the member state of the European Union and inform the bank
accordingly.
(3) At the same time as it sends the notification from paragraph 2 of this Article, the Croatian
National Bank shall also send the competent supervisory body of the member state of the
European Union:
1) data about the amount of the guarantee capital of the bank and its capital adequacy;
2) a description of the deposit insurance system adopted in the Republic of Croatia.
(4) Without prejudice to the provisions of paragraph 2 of this Article, the Croatian National
Bank is not obliged to send notification to the competent supervisory body of the member
state of the European Union if, on the basis of the available data and documentation from
paragraph 1 of this Article and in view of the scope of business planned, it concludes that
there are grounds to doubt the appropriateness of the organisation and management of the
branch office or the financial state of the bank.
(5) A bank shall inform the Croatian National Bank about each change of data from paragraph
1 of this Article at the latest one month before the intended change. The Croatian National
Bank shall inform the competent supervisory body of the member state of the European
Union within three months from the receipt of the notification.
Direct Rendering of Services in a Member State of the European Union
Article 43
(1) A bank that intends to commence directly rendering banking and/or other financial
services in the territory of a member state of the European Union shall inform the Croatian
National Bank accordingly and identify the member state of the European Union in which it
intends to commence rendering services directly. With the notification, it shall enclose a
description of the activities to be performed in the member state of the European Union and
the business plan related to the activities.
(2) The Croatian National Bank shall send the notification with enclosures to the supervisory
body of the member state of the European Union at the latest within one month from the
receipt of the notification from paragraph 1 of this Article, and inform the bank accordingly.
(3) The bank of a member state of the European Union as in paragraph 1 of this Article, shall
inform the Croatian National Bank of every intended change relating to the data from Article
42, paragraph 1, items 1 to 3 of this Act, no later than one month before the intended change.
Supervision of the Rendering of Services in a Member State of the European Union
Article 44
(1) The Croatian National Bank supervises branch offices of banks in the member states of
the European Union.
(2) The Croatian National Bank may request the competent supervisory body of the relevant
member state of the European Union in which the bank renders banking services to carry out
19
an inspection of the business of the branch office of the bank in that member state of the
European Union if this would accelerate or facilitate the procedure of supervision or if this is
in the interest of efficiency, simplicity, speed or decreased procedural expenses. Authorised
persons of the Croatian National Bank may participate under the same conditions in the
supervision performed by the competent body of the member state of the European Union.
(3) If a bank rendering banking services in a member state of the European Union, despite the
warning by the competent supervisory body of that member state of the European Union,
violates the regulations of the member state of the European Union, the Croatian National
Bank shall take supervisory measures in accordance with this Act. The Croatian National
Bank shall immediately inform the competent supervisory body of the member state of the
European Union about the measures it has taken.
(4) If the Croatian National Bank revokes the bank’s license to render banking services or
prohibits the bank from rendering certain other financial services, it shall immediately inform
the competent supervisory body of the member state of the European Union in which the bank
renders banking services of its action.
III.2.2. Rendering Services Abroad
Rendering Services Abroad
Article 45
(1) A bank may render banking and/or other financial services abroad only through its branch
offices.
(2) In order to establish a branch office abroad, a bank shall obtain a license from the Croatian
National Bank.
(3) The provisions of Article 42, paragraphs 1, 4 and 5 of this Act are applied in the
appropriate manner in making a decision regarding the issuing of an operating license for a
branch office abroad
(4) Mutual co-operation and exchange of data between the Croatian National Bank and the
supervisory state body abroad may be regulated by special regulations or agreements.
(5) The Croatian National Bank may reject an application for the issuance of an operating
license of a branch office abroad if, taking into consideration the regulations of the state in
which the bank intends to establish its branch office or practice related to the implementation
of such regulations, it is probable that the performance of supervision in accordance with the
provisions of this Act would be not be possible.
III.2.3. The Representative Office of a Bank
The Representative Office of a Bank
Article 46
(1) The representative office of a bank abroad may only perform the activities of market
research and representation of the bank that has established it.
20
(2) A bank that intends to establish a representative office shall inform the Croatian National
Bank accordingly and identify the state in which it intends to establish its representative
office.
(3) The representative office is not a legal person.
III.3.
BRANCH OFFICES AND THE FREEDOM TO RENDER BANKING AND
OTHER FINANCIAL SERVICES BY THE BANKS OF THE MEMBERS
STATES OF THE EUROPEAN UNION
Banks of Member States of the European Union
Article 47
(1) A bank authorised to render banking and other financial services in a member state of the
European Union may also render those services through a branch office or directly in the
territory of the Republic of Croatia.
(2) The provisions of Article 112, paragraph 3 of this Act apply to the bank from paragraph 1
of this Article rendering banking services through a branch office.
(3) The branch office of the bank from paragraph 1 of this Article shall send the Croatian
National Bank reports and information necessary for the performance of the powers and
duties of the Croatian National Bank in the field of monetary and foreign exchange policies
and statistics.
Commencement of Operation
Article 48
(1) A bank of a member state of the European Union from Article 47, paragraph 1 of this Act
may commence operations through a branch office only after the expiration of a two-month
term beginning on the date when the Croatian National Bank receives notification from the
competent supervisory body of the member state of the European Union with the content
prescribed in Article 42, paragraphs 1 and 3 of this Act.
(2) The bank of a member state of the European Union from paragraph 1 of this Article shall
inform the Croatian National Bank of each intended change related to the data from Article
42, paragraph 1, items from 1 to 3 of this Act at the latest one month before the intended
change.
(3) The provisions of paragraph 3 of this Article is also applied in the appropriate manner
when the bank of a member state of the European Union intends to open a representative
office in the territory of the Republic of Croatia.
Supervision of the Branch Office of a Bank of a Member State of the European Union
Article 49
(1) The competent supervisory body of a member state of the European Union or persons
authorised by that body may perform supervision of the business of the branch office of a
21
bank of that member state of the European Union in the territory of the Republic of Croatia
after prior notification of the Croatian National Bank.
(2) In the event from paragraph 1 of this Article, the competent supervisory body or persons
authorised by that body have powers and responsibilities equal to those of the Croatian
National Bank pursuant to the provisions of Articles 118 through 122 of this Act.
(3) At the request of the competent supervisory body of a member state of the European
Union, the Croatian National Bank shall carry out supervision of the business of the branch
office of a bank of that member state of the European Union in the territory of the Republic of
Croatia.
(4) Without prejudice to the provisions of paragraphs 1 through 3 of this Article, the Croatian
National Bank is authorised to carry out supervision of the business of the branch office of a
bank of a member state of the European Union in the territory of the Republic of Croatia in
accordance with the provisions of Articles 118 through 122 of this Act in order to establish
whether the branch office does business in accordance with the provisions of Article 47,
paragraph 3 of this Act.
Supervisory Measures over the Bank or the Branch Office of a Bank of a Member State
of the European Union
Article 50
(1) If a bank of a member state of the European Union in the territory of the Republic of
Croatia violates the provisions from Article 47, paragraph 2 of this Act or if the branch office
of a bank of a member state of the European Union in the territory of the Republic of Croatia
violates the provisions of Article 47, paragraph 3 of this Act, the Croatian National Bank shall
issue instructions for the rectification of the violation.
(2) If a bank of a member state of the European Union or its branch office does not comply
with the terms and conditions of the aforementioned instructions from paragraph 1 of this
Article, the Croatian National Bank shall inform the competent supervisory body of the
member state of the European Union accordingly.
III.4. THE WORK OF FOREIGN BANKS
III.4.1. Branch Offices of Foreign Banks
The Rendering of Services by Foreign Banks
Article 51
(1) A foreign bank may only render banking services and other financial services in the
territory of the Republic of Croatia through its branch office.
(2) The branch office from paragraph 1 of this Article does not have the capacity of a legal
person, and in legal transactions with third parties it may perform transactions in the territory
of the Republic of Croatia in accordance with the powers of the founding bank, and the
founding bank is liable for all obligations arising in the Republic of Croatia from the
operations of the branch office.
22
The Establishment and Termination of the Branch Office
Article 52
(1) A foreign bank may establish a branch office in the territory of the Republic of Croatia if
it obtains an operating license for a branch office from the Croatian National Bank.
(2) With the application for the issuance of an operating license for the branch office, it is
necessary to enclose:
1) an excerpt from the court register or other relevant register of the state in which the
seat of the parent bank is located, not older than 30 days;
2) the statute or other relevant by-laws of the parent bank;
3) data about members of the board of directors and the supervisory board of the
parent bank;
4) a audited business report of the parent bank for the preceding three business years;
5) a document that includes authentic data about holders and their business shares in
the management of the parent bank;
6) an excerpt from the court register or other relevant register of the state of the seat
of legal persons participating in the management of the parent company with a
share higher than 10 per cent, not older than 30 days;
7) a description of banking and other financial services to be rendered by the branch
office, as well as the business plan for the first three years of operation;
8) the license from the supervisory body of the foreign bank for the establishment of a
branch office or a statement of that body that this license is not necessary
according to the regulations of the state of the foreign bank;
9) a statement by the foreign bank that the branch office shall keep all documentation
relating to its business in the Croatian language and store it at the seat of the branch
office, as well as prepare financial statements in accordance with this Act or
regulations issued on the basis of this Act;
10) a detailed description of the deposit insurance system in force in the state in which
the seat of the parent bank is located;
11) other documentation designated by the Croatian National Bank on the basis of
which it is possible to establish whether the branch office, in view of its human
resources, technical conditions and organisation, is capable of rendering services to
which the application for the issuance of a license refers.
(3) As a condition precedent for the issuance of the license to operate of the branch office of a
foreign bank, the Croatian National Bank may request the foreign bank to deposit in the
territory of the Republic of Croatia a certain amount of money or to provide some other
appropriate security as suretyship for the settlement of obligations arising out of transactions
concluded in the territory of the Republic of Croatia.
(4) The Croatian National Bank shall issue an operating license for the branch office of a
foreign bank if on the basis of the data available to the Croatian National Bank and the
documentation enclosed with the application for the issuance of a license it concludes that the
branch office, in view of its finances, management, organisation, human resources and
technical conditions, is capable of doing business in accordance with the provisions of this
Act.
23
(5) The Croatian National Bank shall reject the application for the issuance of an operating
license for the branch office of a foreign bank if in view of the regulations of the state in
which the seat of the bank is located or in view of the practice of that state related to the
application and implementation of the aforementioned regulations it is probable that the
performance of supervision in accordance with the provisions of this Act would be difficult.
(6) The Croatian National Bank shall revoke the operating license of a branch office:
1) if the supervisory body of the foreign bank has revoked that bank’s license to
render banking services;
2) if in the event from Article 54, paragraph 3 of this Act, the branch office does not
meet its obligations arising from deposit insurance;
3) if the branch office does not commence work within six months from the issuance
of the license;
4) if the branch office discontinues its operation for a term longer than six months;
5) if the branch office obtained its license to render banking services on the basis of
false data or if it does not operate in accordance with the valid regulations of the
Republic of Croatia;
6) if the branch office cannot carry out its obligations.
The Application of Other Provisions of this Act
Article 53
(1) The provisions of this Act shall be applied in the appropriate manner to the branch office
of a bank from Article 52, paragraph 1 of this Act in relation to:
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
The board of directors of the bank (Article 23 through 29);
risk management (Chapter V);
banking secrets (Chapter VII);
business books and business reports (Chapter VIII);
internal audits (Chapter IX);
audits (Chapter X);
supervision of banks (Chapter XI);
consumer protection (Chapter XVI).
(2) The Croatian National Bank may elaborate on how the provisions from paragraph 1 of this
Article may be applied to the branch office of a foreign bank.
The Deposit Insurance System of the Branch Office of a Foreign Bank
Article 54
(1) The branch office of a foreign bank comes under the deposit insurance system in the state
in which the seat of the foreign bank is located.
(2) The level and scope of suretyship for deposits in the branch office of a foreign bank may
not exceed the level and scope laid down by the law and regulations on deposit insurance of
the Republic of Croatia.
(3) If a deposit insurance system does not exist in the state in which the seat of a foreign bank
is located or if the scope of suretyship for deposits is lower than in the Republic of Croatia,
24
the branch office of the foreign bank shall be included in the deposit insurance system of the
Republic of Croatia.
(4) The branch office of a foreign bank shall inform without any delay the institution
competent for deposit insurance about the deposit insurance system.
III.4.2. The Representative Office of a Foreign Bank
The Representative Office of a Foreign Bank
Article 55
(1) The representative office of a foreign bank may not render banking or other financial
services in the Republic of Croatia, but may only perform the activities of market research
and representation of the bank that has founded the representative office.
(2) The representative office is not a legal person.
The License to Establish a Representative Office
Article 56
(1) A foreign bank shall previously obtain a license from the Croatian National Bank for the
establishment of a representative office.
(2) With the application for the issuance of the license from paragraph 1 of this Article, it is
necessary to enclose:
(1) an excerpt from the court register or any other relevant register of the state in which
the seat of the parent bank is located;
(2) the statute or other relevant rules of the parent bank;
(3) audited business statements of the parent bank for the preceding three business years;
(4) a list of persons who will run the affairs of the representative office.
(3) If the representative office of a foreign bank acts contrary to the provisions of Article 55
of this Act, the Croatian National Bank shall revoke the license to establish a representative
office.
(4) More detailed conditions for the establishment and operation of the representative office
of a foreign bank shall be prescribed by the Croatian National Bank.
(5) The Croatian National Bank keeps a register of the representative offices of foreign banks.
IV.
CO-OPERATION WITH SUPERVISORY BODIES AND THE
SUPERVISORY BODIES OF THE EUROPEAN UNION
Co-operation between Supervisory Bodies
Article 57
(1) The Croatian National Bank and bodies responsible for the supervision of other financial
institutions in the Republic of Croatia, at the request of a specific supervisory body, shall
deliver to that body all data about banks or other financial institutions that are required for the
25
procedure of performing the duties of supervision of financial institutions and in the
procedure related to the issuance of licenses.
(2) The supervisory bodies from paragraph 1 of this Article shall inform one another about
irregularities discovered during the performance of supervision if these results are also
important for the work of another supervisory body.
(3) The principles of mutual co-operation between supervisory bodies are determined by the
Minister of Finance and the Governor of the Croatian National Bank on the basis of the prior
opinion of the supervisory bodies.
(4) The Croatian National Bank co-operates and exchanges data with the supervisory bodies
of the member states of the European Union or foreign member states about banks or other
financial institutions, as required in the procedure of performing the duties of supervision of
banks or other financial institutions and in the procedure related to the issuance of licenses.
(5) The principles of mutual co-operation and the scope of the exchange of data with the
supervisory bodies from paragraph 4 of this Article are determined by an agreement on cooperation concluded between the Croatian National Bank and the specific supervisory body
from paragraph 4 of this Article.
(6) Supervisory bodies shall keep all data obtained pursuant to paragraphs 1 through 5 of this
Article as confidential and may use them exclusively for the purpose for which they have
been provided.
Data-Processing and Issuing Information
Article 58
(1) The Croatian National Bank is authorised to gather and process data important for the
performance of its duties and responsibilities laid down in this Act.
(2) The data from paragraph 1 of this Article are data about:
(1)
licenses to render banking services and other licenses and consents issued by the
Croatian National Bank;
(2)
members of the board of directors and the supervisory boards of banks, their
organisation and operation of internal audits;
(3)
branch offices and/or direct rendering of banking services of banks in the members
states of the European Union, as well as branch offices and/or direct rendering of
banking services of banks of the members states of the European Union in the
Republic of Croatia;
(4)
branch offices of banks abroad and branch offices of foreign banks in the Republic of
Croatia;
(5)
compliance with the provisions on risk management from Chapters V and VI of this
Act and regulations adopted on the basis of this Act;
(6)
reports from Article 87 of this Act;
26
(7)
qualified shareholders from Article 20 of this Act;
(8)
audited annual statements and consolidated annual statements from Article 112 of this
Act;
(9)
implementation of supervisory measures from this Act;
(10)
information that the Croatian National Bank has obtained as part of information
exchanges from the competent supervisory bodies of the member states of the
European Union and competent supervisory bodies of foreign states.
(3) The Croatian National Bank may disclose the data from paragraph 2 of this Article to:
(1) domestic supervisory bodies as part of the mutual co-operation of domestic
supervisory bodies pursuant to Article 57 of this Act;
(2) the competent bodies of the member states of the European Union if required for the
performance of their duties of supervision of the rendering of banking and other financial
services and if the bodies are obliged to keep data confidential to the extent laid down in
Article 57, paragraph 6 of this Act;
(3) the competent supervisory bodies of foreign states if required for the performance of
their duties of supervision of the rendering of banking and other financial services in
accordance with the principle of reciprocity and if the bodies are obliged to keep data
confidential to the extent laid down in Article 57, paragraph 6 of this Act;
(4) the courts, if required in bankruptcy proceedings against a bank;
(5) the body issuing operating licenses to auditing companies and authorised auditors if
the body requires the data in the supervision procedure within the framework of its
authority.
(4) Without prejudice to the provisions of paragraph 3 of this Article, the Croatian National
Bank may disclose the data from paragraph 2, item 10 of this Article only if expressly
permitted by the body that has disclosed the data to the Croatian National Bank.
Informing the European Commission
Article 59
The Croatian National Bank shall inform the European Commission of a denial to send the
notification from Article 42, paragraph 4 of this Act.
Informing about Relations with Foreign States
Article 60
(1) The Croatian National Bank shall inform the European Commission about:
(1) each agreement issued to a bank whose directly or indirectly superior company is a
legal entity having its seat in a foreign state;
27
(2) each license issued to a bank for the acquisition of a qualified share on the basis of
which a foreign person becomes the superior company of the bank.
(2) The Croatian National Bank informs the European Commission about all general
difficulties encountered by banks in the course of rendering banking services in foreign states.
(3) If the European Commission decides that the supervisory bodies of the member states of
the European Union should temporarily postpone or discontinue the decision-making
procedure relating to the applications of persons from a specific foreign state, the Croatian
National Bank shall decide to discontinue the decision-making procedure on the following
matters for a term of no more than three months:
1) applications for the issuance of licenses and consents to the bank directly or indirectly
controlled by a company that is a legal person with seat in a foreign state, and to which
the decision of the European Commission refers;
2) applications for the issuance of consents for the acquisition of a qualified share on the
basis of which a foreign person with seat in a foreign state, to which the decision of the
European Commission refers, becomes a company controlling the bank.
(4) The term for rendering a decision from Article 36, paragraph 3 of this Act is not
shortened for the period of time within which the procedure from paragraph 3 of this Act has
been initiated.
(5) If the Council of the European Union decides to extend the temporary postponement or
discontinuation of the procedures from paragraph 3 of this Article, the Croatian National
Bank shall decide to extend the discontinuation of the procedure from paragraph 3 of this
Article for the term laid down in the decision of the Council of the European Union.
(6) The measures from paragraphs 3 and 5 of this Article are not applicable to:
(1) the establishment of a bank as the dependant company of a bank that at the moment of
the rendering of the decision from paragraphs 3 and 5 of this Article is authorised to
render banking services in a member state of the European Union, i.e., dependant
companies of that bank;
(2) the acquisition of a qualified share, the future holder of which is a bank that at the
moment of the rendering of the decision from paragraphs 3 and 5 of this Article is
authorised to render banking services in a member state of the European Union, i.e.,
dependant companies of that bank.
(7) The Croatian National Bank shall inform the European Commission, at its request, about
all applications for the issuance of licenses and consents from paragraph 1 of this Article and
about all applications for the acquisition of a qualified share on the basis of which a foreign
holder would become a company controlling the bank, if the European Commission requires
the data to establish facts important for making a decision pursuant to paragraphs 3 and 5 of
this Article.
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V. RISK MANAGEMENT
V.1. GENERAL PROVISIONS
Risk Management
Article 61
(1) The bank shall ensure a level of capital that is adequate for the scope and types of services
the bank renders and in view of the risks to which it is exposed in rendering those services
(capital adequacy).
(2) The bank shall do business, so that the risks to which it is exposed in individual or all
types of transactions the bank performs do not exceed the limits set by this Act and
regulations adopted on the basis of this Act.
(3) The bank shall do business, so that it is able to perform its due obligations at the right time
(the liquidity principle), i.e., so that it is permanently able to perform all its obligations (the
solvency principle).
V.2. THE CAPITAL OF BANKS
The Guarantee Capital of Banks
Article 62
(1) The bank shall maintain its guarantee capital at an adequate level in order to ensure safe
and stabile business or the performance of its obligations towards its creditors.
(2) The guarantee capital of the bank consists of the basic and additional capital, as well as
other forms of capital determined by the Croatian National Bank.
Regulations on Guarantee Capital
Article 63
The Croatian National Bank shall determine the manner of calculation of the guarantee capital
and thereby establishes:
(1) the manner and extent to which individual items for calculation of the guarantee
capital and capital adequacy are taken into account;
(2) the characteristics and types of items taken into account for calculating the guarantee
capital and capital adequacy;
(3) the manner of calculating weighted risk assets by which it determines risk weights for
weighting credit and other risks, as well as factors related to off-balance sheet items;
(4) the manner of calculation of other parts of the guarantee capital.
29
V.3. CAPITAL ADEQUACY
Minimum Capital of the Bank
Article 64
The guarantee capital of the bank may not be lower than the minimum amount of the equity
capital from Article 15 of this Act.
Rate of Capital Adequacy
Article 65
(1) Capital adequacy is the relationship between the guarantee capital of the bank and the
weighted risk assets increased by other risk-weighted items.
(2) The rate of capital adequacy shall be at least 10 per cent (hereinafter the "minimum
capital adequacy rate").
(3) Without prejudice to the foregoing provisions, the Croatian National Bank may set a
higher minimum capital adequacy rate for a specific bank than the rate from paragraph 2 of
this Article if it is established that the bank is exceptionally exposed to risks in its business.
Weighted risk assets
Article 66
(1) Weighted risk assets are the sum of book-keeping balances of the relevant active balance
sheet and off-balance sheet items weighted against the degrees of credit, market and other
risks.
(2) The degrees for weighting risks from paragraph 1 of this Article are set by the Croatian
National Bank, depending on the degree of risk of the positions forming part of the weighted
assets.
(3) Without prejudice to the provisions of paragraphs 1 and 2 of this Article, the bank may
apply other methods and models for evaluating credit, market and other risks with the consent
of the Croatian National Bank.
V.4. OTHER RISK MANAGEMENT MEASURES
V.4.1. Joint Provisions
Planning and Implementing Risk Management Measures
Article 67
(1) Banks are obliged to weigh, evaluate and manage on a continuous basis all risks to which
they are exposed in their business. A bank is obliged to determine the criteria, manner and
procedures for measuring, evaluating and managing risks in its by-laws, which have to be in
compliance with the regulations, standards and rules of the profession, depending on the
banking and other services performed by the bank.
30
(2) The by-laws from paragraph 1 of this Article shall include all types of risks to which the
bank is exposed in individual transactions, as well as risks to which the bank is exposed in the
transactions it performs.
(3) Risks to which the bank is exposed in its business and for which the minimum of
procedures of measuring, evaluation and risk management shall be determined are:
(1) liquidity risk;
(2) credit risk;
(3) interest rate, exchange and other market risks;
(4) risk of exposure to a single person;
(5) risks related to capital investments, investments in real estate and other fixed assets;
(6) risk of default by the other contractual party related to the country of origin of the
other contractual party;
(7) operational risk, including risk arising from the inadequate use of information
technology and other related technologies;
(8) other risks.
(4) The by-laws from paragraph 1 of this Article shall include:
(1) internal procedures of the bank for determining and measuring risk;
(2) procedures and other actions that ensure the consistent application of determined
procedures and risk weighting models;
(3) internal procedures that ensure supervision of the correctness of application of the
anticipated proceedings and risk weighting procedures.
Regulations on Weighting, Evaluation and Risk Management
Article 68
The Croatian National Bank may prescribe:
(1) the manner of evaluation and inclusion of individual active balance sheet and offbalance sheet items in the calculation of the bank’s exposure;
(2) procedures and principles for managing liquidity risk;
(3) the manner of calculation of the balance of individual and all open items, and the
maximum allowed difference between the items, and of the scope of individual
outstanding items and total outstanding items;
(4) the manner of classification and weighting of the risk involving a default by the other
contractual party related to the country of origin of the other contractual party;
(5) the manner of evaluation and inclusion of individual investments in the calculation of
the limitation from Articles 82 and 83 of this Act;
(6) the manner of informing the Croatian National Bank about debtors of the bank, whose
the indebtedness exceeds the amount set by the Croatian National Bank, so that all banks
may be informed about such debtors.
31
Provisions for Coverage of Losses
Article 69
(1) The bank is obliged to evaluate credit risk on a continuous basis and hold provisions for
the coverage of losses arising out of credits and similar claims and off-balance sheet
contingencies taken-over (placement).
(2) Provisions for the coverage of losses that have been specifically identified, as well as
those that have not been specifically identified, i.e., that can still not be attributed to specific
placements, but which, judging by experience, are likely to exist in the credit portfolio or
might appear as the consequence of off-balance sheet contingencies taken-over, are formed at
the expense of the bank’s expenditures.
(3) The Croatian National Bank prescribes the manner of calculating the provisions from this
Article, as well as the criteria for classification according to the degrees of risk of credit and
similar claims, i.e., off-balance sheet contingencies taken-over.
Reserves
Article 70
(1) Apart from reserves that the bank is obliged to form in accordance with the Company Act
and its statute, the bank may set aside reserves for general banking risks that are intended to
cover losses that may arise from the risks of its overall business.
(2) Reserves set aside for general banking risks are regarded as distribution of generated profit
after taxation. In the event that the bank forms the reserves from this Article, in its financial
statements it shall separately show changes to the reserves during the reporting period.
(3) By way of derogation from the provisions of paragraph 1 of this Article, the Croatian
National Bank may prescribe the formation of reserves for general banking risks as
mandatory for banks that do business on especially risky terms or for banks that come to be
unusually exposed to various forms of risks.
V.4.2. Credit Risk
Credit Risk
Article 71
Credit risk is the risk of loss that may arise from the borrower's inability to meet his
obligations towards the bank.
Evaluation of Credit Risk
Article 72
(1) Within the framework of the prescribed and its own criteria, the bank shall distribute
active balance sheet and off-balance sheet items according to the degree of credit risk and
evaluate the amount of loss arising from credit risk.
32
(2) The distribution of active balance sheet and off-balance sheet items of the bank into risk
groups is performed according to:
1) the borrower's credit-worthiness;
2) the borrower's ability to duly meet his obligations towards the bank; and
3) the quality of claim security instruments of the bank.
Monitoring Credit Risk
Article 73
(1) Before concluding any agreement that would lead to the development of exposure to credit
risk for a bank's, the bank evaluates the borrower's credit-worthiness, as well as the quality
and value of its claim security instruments.
(2) Throughout the duration of the legal relationship constituting exposure, the bank shall
monitor the borrower's business, as well as the quality and value of its claim security
instruments.
V.4.3. Exposure
Definition of Exposure
Article 74
(1) The exposure of a bank towards a single person is the amount of all claims under credits
and other grounds for investment into securities and ownership contributions, and obligations
undertaken by the bank towards a single person.
(2) A bank’s exposure towards a single person does not include claims from paragraph 1 of
this Article that are secured by a monetary deposit up to the amount of such security, by
securities of the Republic of Croatia or the Croatian National Bank, or by an irrevocable
guarantee of the Republic of Croatia or the competent state institution, i.e., by some other
security instrument determined by the Croatian National Bank in its decision.
Maximum Permissible Exposure
Article 75
(1) The exposure of a bank towards a single person may not exceed 25 per cent of the
guarantee capital of the bank.
(2) Without prejudice to the provisions of paragraph 1 of this Article, the total exposure of a
bank towards persons directly or indirectly controlled by the bank or towards persons directly
or indirectly controlled by the same person that controls the bank may not together exceed 20
per cent of the guarantee capital of the bank.
(3) The limitations from paragraphs 1 and 2 of this Article do not relate to the exposure of the
bank towards persons who constitute a group of banks in the Republic of Croatia, and the
Croatian National Bank supervises them on consolidated basis.
33
(4) If a bank exceeds the maximum permissible exposure from paragraphs 1 and 2 of this
Article, because of consolidation of two legal persons or other reasons out of the bank's
control, the bank shall immediately inform the Croatian National Bank accordingly. The bank
shall enclose with the notification a description of measures to be taken in order to ensure that
paragraphs 1 and 2 of this Article are respected, and in that notification state the term within
which the measures shall be performed. The Croatian National Bank may accept the delivered
measures and terms or set new ones in its acts.
(5) The limitation from paragraph 1 of this Article does not relate to exposure of a bank
towards the Republic of Croatia and the Croatian National Bank.
(6) By way of derogation from the provisions of paragraph 1 of this Article, exposure towards
a single person from Article 78, paragraph 1 of this Act may not exceed 10 per cent of the
guarantee capital of the bank.
Great Exposure
Article 76
(1) Great exposure of a bank is exposure of a bank towards a single person that is equal or
exceeds 10 per cent of the guarantee capital of the bank.
(2) The consent of the bank’s supervisory board is needed to conclude a specific legal
transaction on the basis of which the total exposure of the bank could result in great exposure
of the bank towards a single person. The consent of the supervisory board is also needed to
conclude a legal transaction, because of which the bank’s great exposure towards a single
person would increase to the extent of being equal or exceeding 15 per cent or 20 per cent of
the guarantee capital of the bank.
Limitation on Total Great Exposure
Article 77
The sum of all great exposures may not exceed 600 per cent of the guarantee capital of the
bank.
Exposure towards Persons in a Special Relationship with the Bank
Article 78
(1) Persons in a special relationship with the bank towards which the bank would become
exposed or towards which the exposure would be increased are:
1) bank shareholders with 5 or more per cent of bank voting shares at the shareholders'
meeting of the bank;
2) members of the board of directors and the supervisory board, as well as the bank's
procurators;
3) persons who concluded employment contracts with the bank under special conditions;
4) members of the nuclear families of the persons from items 1, 2 and 3 of this paragraph;
34
5) legal persons in the capital of which the persons from items 1 through 4 of this
paragraph have more than a 20 per cent share with the right to vote;
6) legal persons in the capital of which the bank has more than a 20 per cent share with
the right to vote or which the bank controls in some other way.
(2) The prior consent of the supervisory board of the bank is needed for a legal transaction, as
the result of which the bank would become exposed or if its exposure to the persons from
paragraph 1 of this Article would increase.
V.4.4. Liquidity Risk
Liquidity Management
Article 79
(1) The bank shall manage its assets and liabilities, so as to be able to fulfil all its mature
obligations.
(2) With the aim of efficient liquidity risk management, the bank shall adopt and implement a
policy of liquidity management, including:
1) planning the expected known and contingent monetary outflow and sufficient
monetary inflow for the coverage of the same;
2) continuous liquidity monitoring;
3) adoption of appropriate measures to prevent or rectify the causes of non-liquidity.
V.4.5. Interest Rate, Exchange and Other Market Risks
Adjustment of Assets and Liabilities
Article 80
The bank shall appropriately adjust its assets and liabilities that expose it to the risk of loss as
the result of changes in interest rates, foreign exchange rates, price of securities and other
financial instruments or as the result of other market risks.
Balance of Open Items
Article 81
(1) The balance of open items is the difference between active and passive balance sheet and
off-balance sheet items, the amount of which depends on the change of interest rates, foreign
exchange rates, price of securities and other financial instruments or as the result of other
market risks.
(2) The bank shall calculate separately the balance of individual open items, the amounts of
which depend on the individual changes from paragraph 1 of this Article.
(3) The balance of individual open items and the total balance of all open items may not
exceed the scope laid down in the regulations from Article 68, item 3 of this Act.
35
V.4.6. Investment in Capital and Real Estate
Limitations to the Total Scope of Investments
Article 82
(1) The total investments of a bank in land, buildings, equipment and furbishing of business
premises may not together exceed 40 per cent of the guarantee capital of the bank.
(2) Total investments of a bank in the capital of non-financial institutions may not exceed 30
per cent of the guarantee capital of the bank.
(3) In the first two years after acquisition, investments acquired by a bank in exchange for its
claims in procedures of financial restructuring and in bankruptcy and execution proceedings,
as well as by the application of claim security instruments in accordance with the Execution
Act, are not regarded as investments from paragraphs 1 and 2 of this Article.
Limitations to Individual Investments
Article 83
(1) A bank’s investments in the capital of a single non-financial institution may not exceed 15
per cent of the guarantee capital of the bank.
(2) The provisions of Article 82, paragraph 3 of this Act are also applied to investments from
paragraph 1 of this Article.
Consent of the Croatian National Bank for Certain Investments
Article 84
(1) Before concluding a legal transaction by which it would acquire, gradually or at once, a
share in another financial institution or another company higher than 10 per cent of the
guarantee capital of the bank, the bank shall obtain prior consent from the Croatian National
Bank.
(2) Before concluding a legal transaction by which it would acquire a majority interest or a
majority decision-making right in another company, the bank shall obtain prior consent from
the Croatian National Bank.
(3) On the basis of any interest acquired contrary to paragraphs 1 and 2 of this Article, the
bank may neither be entered as a shareholder in the book of shares nor realise the right to vote
at the shareholders' meeting or meeting of the company until it obtains the prior consent of the
Croatian National Bank.
(4) In the events from paragraphs 1 and 2 of this Article, the acquirer of shares is obliged to
enclose with the application for entry of shares the prior consent of the Croatian National
Bank.
(5) The bank is obliged to obtain prior consent from the Croatian National Bank for the
establishment of any legal person.
36
(6) The entry of a legal person from paragraph 5 of this Article in the appropriate register
without the consent of the Croatian National Bank is void.
V.4.7. Deposit Insurance
Deposit Insurance
Article 85
The bank is obliged to insure deposits from citizens with the competent institution in
accordance with the separate law and regulations adopted on the basis of that law.
V.5.
MEASURES FOR ENSURING RISK MONITORING AND CAPITAL
ADEQUACY
V.5.1. Calculation and Reporting
Calculation
Article 86
The bank shall calculate and determine:
1)
2)
3)
4)
5)
6)
the amount of the guarantee capital;
capital adequacy;
exposure;
credit risk;
the individual balance of open items and total balance of those items;
the amount of investment in the capital of non-financial institutions and real estate.
Reporting on Risk Weighing
Article 87
(1) The bank shall report to the Croatian National Bank on:
1)
2)
3)
4)
5)
6)
7)
8)
9)
guarantee capital;
capital adequacy;
exposure;
evaluation of credit risk from Article 72 of this Act;
liquidity;
the balance of open items;
the value of investments in the capital of non-financial institutions and real estate;
debtors of the bank whose indebtedness exceeds the amount set by the Croatian
National Bank;
bank shareholders and persons associated with them who have 3 and more per cent of
voting shares at the shareholders' meeting of the bank.
(2) The Croatian National Bank determines the content of the report from paragraph 1 of this
Article, as well as the terms and conditions for reporting.
37
V.5.2. Measures for Ensuring Capital Adequacy and Liquidity
Prohibition of Profit Payments
Article 88
(1) The bank may not pay out profit or dividend or perform payments for the participation of
the board of directors, supervisory board and employees in the profit of the company in the
following cases:
1)
if the guarantee capital of the bank is lower than the minimum capital set in Article
64 or if the capital adequacy rate is lower than the rate from Article 65, paragraphs 2
and 3 of this Act;
2)
if the guarantee capital of the bank would decrease as the result of payment of profit
to the extent that the bank would no longer be able to maintain the minimum capital
set in Article 64 or the minimum rate of capital adequacy from Article 65, paragraphs
2 and 3 of this Act;
3)
if the bank does not ensure liquidity laid down on the basis of Article 68, paragraph 2
of this Act;
4)
if as the result of the payment of profits the bank would not be able to ensure liquidity
pursuant to the regulations from Article 68, paragraph 2 of this Act;
5)
if the Croatian National Bank has instructed the bank to remedy any weaknesses and
defects related to the incorrect data in active and passive items and which, if correct,
would influence the profit and loss account of the bank, and if the bank has not
complied with the order to remedy unlawfulness and irregularities;
6)
if the Croatian National Bank orders this in its ruling, because of the manner in which
the bank manages risks in its business.
(2) The bank may not pay out advances of profit or advances of dividend.
Measures to be taken by the Board of Directors for Ensuring Minimum Capital
Article 89
(1) If the guarantee capital of the bank does not reach the minimum capital set out in Article
64 or if the capital adequacy rate of the bank is lower than the rate from Article 65,
paragraphs 2 and 3 of this Act, the board of directors of the bank shall immediately adopt
measures from within its competence by which it shall ensure the minimum capital or adopt a
proposal of measures within the competence of other bodies of the bank.
(2) The board of directors shall inform the Croatian National Bank in a report provided for in
Article 87 of this Act about measures or the proposal of measures from paragraph 1 of this
Article, as well as about terms for their implementation.
38
VI. CONSOLIDATED SUPERVISION OVER BANKS
Group of Banks
Article 90
(1) Apart from supervising individual banks, the Croatian National Bank also supervises
groups of banks on the basis of consolidated financial statements and supervisory reports.
(2) For the purposes of this Act, a group of banks exists if a bank or financial holding with its
seat in the Republic of Croatia is a superior company in relation to one or several other banks
or financial holdings, other financial institutions or companies for accessory banking services
with its seat in the Republic of Croatia or outside the Republic of Croatia (subordinate
companies).
(3) The bank or financial holding is regarded as a superior company within the meaning of
paragraph 2 of this Article if in the subordinate company from paragraph 2 of this Article:
1) it has control in accordance with the provisions of Article 11, paragraph 2 of this Act;
or
2) it participates in accordance with the provisions of Article 8, paragraph 1 of this Act.
(4) A group of banks also exists if at least one bank with its seat in the Republic of Croatia is
subordinated to a financial holding with its seat in a member state of the European Union in
one of the ways anticipated in paragraph 3 of this Article, and at the same time a bank that has
the right to render banking services in a member state of the European Union and with its seat
in the same state as the seat of the financial holding is not subordinated to that financial
holding.
(5) Without prejudice to the provisions of paragraph 4 of this Article, a group of banks is
deemed to exist if the financial holding with its seat in a member state of the European Union
has a subordinate:
1) bank with its seat in the Republic of Croatia that has a higher balance sheet total than
any other bank subordinated to that financial holding and that has the right to render
banking services in a member state of the European Union; or
2) bank with its seat in the Republic of Croatia that has previously obtained a license to
render banking services if its balance sheet total is equal to the amount of any other
bank subordinated to that financial holding.
(6) Without prejudice to the provisions of paragraph 3 of this Article, the following persons
are not regarded as a superior company in a group of banks:
1) a bank whose seat is in the Republic of Croatia and that is at the same time
subordinated to another bank with its seat in the Republic of Croatia;
2) a financial holding with its seat in the Republic of Croatia that is at the same time
subordinated to a bank or another financial holding whose seat is in the Republic of
Croatia;
39
3) a financial holding whose seat is in the Republic of Croatia that is at the same time
subordinated to a bank that has the right to render banking services in another member
state of the European Union.
(7) By way of derogation from the provisions of paragraphs 3 through 6 of this Article, it is
deemed that a bank or financial holding is also a superior company within the meaning of
paragraph 2 of this Article when the Croatian National Bank evaluates that the superior
company has significant influence on the subordinate company on ay other grounds.
(8) The Croatian National Bank may reach an agreement with the competent supervisory
bodies of the member states of the European Union responsible for the performance of
supervision of an individual subordinate bank in a group of banks regarding the distribution of
tasks related to the supervision of the business of the group of banks.
Definitions related to Groups of Banks
Article 91
(1) A financial holding is a legal person:
1) that is not a bank;
2) whose main activity is the acquisition or ownership of qualified shares or rendering of
other financial services;
3) to which at least one bank or broker house is subordinated; and
4) to which as a rule banks or other financial institutions are subordinated, whereby the
number is not decisive for determining subordinated companies, but their balance
sheet total, amount of capital, book-keeping value of shares, and other economic
criteria.
(2) A company for accessory banking services is a legal person:
1) whose activities are directly connected to the rendering of banking services;
2) whose activities include real estate management, management and operation of data
processing systems, or similar activities, which are by nature accessory in relation to
the main activity of one or several banks.
(3) Other financial institutions are legal persons rendering as their exclusive or main activity
other financial services from Article 6, paragraph 2 of this Act or financial services based on a
law that regulates insurance, issuance of securities and trade with those securities, investment
funds and companies for managing those funds, as well as legal persons performing financial
services regulated by other laws.
Obligations of the Superior Bank in a Group of Banks
Article 92
(1) The superior bank in a group of banks is a bank whose seat is in the Republic of Croatia
and which at the same time is not subordinated to another bank with its seat in the Republic of
Croatia. If several banks in a group of banks meet this condition, the superior bank is the bank
with the highest balance sheet total.
40
(2) For the purposes of consolidated supervision within the meaning of this Act, the superior
bank in a group of banks is responsible for the performance of obligations of the group of
banks as a whole.
Risk Management in a Group of Banks
Article 93
(1) The group of banks as a whole shall abide by the regulations on risk management laid
down in this Act.
(2) A group of banks shall be organised, so as to enable the superior bank in the group of
banks to monitor risks to which the group of banks is exposed and carry out measures to
manage those risks.
(3) The group of banks as a whole shall establish the consolidated state of their:
1)
2)
3)
4)
5)
guarantee capital;
capital adequacy;
exposure;
open items;
investment in the capital of non-financial institutions.
Consolidation of Financial Statements of a Group of Banks
Article 94
(1) The superior bank in a group of banks shall prepare and deliver consolidated financial
statements to the Croatian National Bank.
(2) Consolidated financial statements of a group of banks shall be drawn on the basis of
individual financial statements of the members of the group prepared in accordance with the
uniform accounting policies.
(3) The Croatian National Bank prescribes the scope and frequency of consolidation, as well
as the content of consolidated financial statements.
(4) The Croatian National Bank may instruct one of the banks in a group of banks to perform
consolidation of individual items or individual transactions or a group of transactions within
the group of banks if that is necessary for a complete and objective portrayal of the financial
state and business results of the group of banks as a whole or of an individual bank in the
group of banks.
Consolidation in Other Cases
Article 95
(1) In the case of a group of banks not defined by this Act, the Croatian National Bank may
instruct a bank subordinated to a legal person that is not a bank or financial holding, as
anticipated in Article 90, paragraph 3 of this Act, to perform consolidation of individual
transactions or a group of transactions, or complete consolidation of financial statements of all
41
members of the group, irrespective of their activity, if that is necessary for a complete and
objective portrayal of the financial state and business results of the bank.
(2) The Croatian National Bank may instruct a bank superior to a legal person that is not a
bank or financial holding, as anticipated by Article 90, paragraph 3 of this Act, to perform
consolidation of individual transactions or a group of transactions, or complete consolidation
of financial statements of all members of the group, irrespective of their activity, if that is
necessary for a complete and objective portrayal of the financial state and business results of
the bank.
(3) Legal persons from paragraph 1 and 2 of this Article shall deliver to the bank all data
necessary to consolidate transactions or groups of transactions or to completely consolidate
the financial statements of the group from paragraphs 1 and 2 of this Article.
(4) If the legal persons from paragraphs 1 and 2 of this Article do not deliver to the bank all
data necessary for consolidation, the bank shall immediately inform the Croatian National
Bank accordingly.
Informing the Croatian National Bank and Publishing Data
Article 96
(1) The superior bank shall inform the Croatian National Bank without any delay about all
new facts and circumstances material for establishing the existence of a group of banks
defined by this Act.
(2) The bank shall inform the Croatian National Bank without any delay about all the
subordinate and superior companies which make up the group, irrespective of their activity.
(3) At the end of the calendar year, the superior bank in a group of banks shall deliver to the
Croatian National Bank current information about subordinate or superior companies in the
group of banks, as well as about the subordinate and superior companies who make up the
group, irrespective of their activity.
(4) The Croatian National Bank may determine the content of the notification and the terms
and conditions for the delivery of the notification from this Article.
Delivery of Data
Article 97
(1) The subordinate companies in a group of banks shall deliver to the superior company all
data and information that the superior company needs for consolidation and ensure
appropriate procedures of internal control for the verification of accuracy of the data and
information.
(2) Legal persons from Article 90 of this Act shall deliver to their superior bank data about
their shares in other legal persons material for establishing the obligation of the superior bank
to perform consolidation.
(3) The superior bank in a group of banks shall ensure that the subordinate companies in the
group of banks and the superior financial holding deliver to the superior bank the data
42
necessary for consolidation. If the superior holding in the group of banks does not deliver the
data necessary for consolidation to the superior bank, the bank shall immediately inform the
Croatian National Bank of this.
VII. BANKING SECRETS
Confidential Data
Article 98
A bank shall keep as confidential data about the balance of individual savings deposits and
other monetary deposits of the bank and about the balance and transactions on checking and
giro accounts, as well as all data, facts and circumstances that it has learnt as the result of
rendering services to clients and in the performance of transactions with individual clients.
The Obligation to Keep Banking Secrets
Article 99
(1) Members of the bodies of the bank, bank shareholders, bank employees and other persons
who, because of the nature of duties they perform with the bank or for the bank, have access
to confidential data from Article 98 of this Act, cannot disclose the data to third parties, use
the data against the interests of the bank and its clients or enable third parties to use the data.
(2) The obligation to keep banking secrets does not include the following cases:
1)
if the client expressly agrees in writing that specific confidential data can be
disclosed;
2)
if the disclosure of confidential data is necessary to gather and establish facts in
criminal proceedings and procedures preceding them, if so requested or ordered in
writing by the competent court;
3)
if the confidential data are disclosed to the Office for Prevention of Money
Laundering, on the basis of the law regulating the prevention of money laundering;
4)
if the disclosure of confidential data is required to establish the legal relationship
between the bank and the client in a court dispute, if so requested or ordered in
writing by the competent court;
5)
if the confidential data are disclosed in probate or other property-related procedures
further to a written request of the competent court;
6)
if the disclosure of confidential data is required for the seizure of the property of the
bank's clients, if so requested or ordered in writing by the competent court;
7)
if the confidential data are disclosed to the Croatian National Bank, Exchange
Inspectorate or other supervisory body for the purposes of the supervision they
perform, as part of their scope of activities, within the framework of their legal
powers, and on the basis of a written request;
43
8)
if the confidential data are disclosed to an appropriately organised legal person that
may be established by banks with the aim of gathering and providing data about the
total amount, types and regularity of performance of the obligations of natural and
legal persons, arising from any grounds;
9)
if the confidential data are required by tax authorities in procedures conducted within
the framework of their legal powers, and they are disclosed at their written request;
10) if the confidential data are disclosed to deposit insurance institutions, on the basis of
the law that regulates deposit insurance.
(3) Persons from paragraph 1 of this Article are obliged to keep banking secrets even after
their employment in the bank terminates, i.e., even after they stop being shareholders or
members of the bodies of the bank.
The Use and Protection of Confidential Data
Article 100
(1) The Croatian National Bank, courts or other competent bodies may use confidential data
obtained pursuant to Article 99, paragraph 2 of this Act exclusively for that purpose and may
not disclose them to third parties or enable them to find out and use the confidential data,
except in the cases determined by law.
(2) The provision of paragraph 1 of this Article also relates to all natural persons who work or
have worked in the capacity of employee or in some other capacity in the Croatian National
Bank and the competent organs from paragraph 1 of this Article.
VIII. BUSINESS BOOKS AND BUSINESS REPORTS
General Provisions
Article 101
A bank shall keep business books, draw up book-keeping documents, value assets and
liabilities and draw up financial statements in accordance with the valid regulations and
standards of the profession.
Keeping Business books, Records and Documentation
Article 102
(1) A bank shall organise its business and keep its business books, business documentation
and other records in a way that enables verification of whether the bank does business in
accordance with the valid regulations and standards of the profession.
(2) A bank is obliged to keep book-keeping documents and other documents, pursuant to
which entries in its business books have been made, according to the terms and conditions
determined in the Accountancy Act and/or other law.
(3) Without prejudice to the provision of paragraph 2 of this Article, a bank is obliged to keep
book-keeping documents or other documents in the following time-frames:
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1) payment orders and other documents related to payment operations recording changes in
the accounts of participants in payment operations, including documents relating to the
opening and closing of accounts through which payment operations are made are kept
for five years -;
2) contracts and other documents pursuant to which other changes, not included in item 1
of this paragraph, occur to the assets, obligations, including contingencies, and capital
of the bank, as well as book-keeping documents pursuant to which data about the
business changes are entered in the business books of the bank are kept for ten years.
(4) The time-frames from paragraph 3 of this Article signify the period of time following the
expiration of the year in which the business change has taken place, i.e., in which the bookkeeping documents and other documents have been drawn up.
Annual Report
Article 103
(1) A bank shall draw up and publish its annual report in accordance with the Accountancy
Act and the International Accounting Standards.
(2) The annual report from paragraph 1 of this Article shall include:
1) a list of shareholders who have a share in the capital of the bank in excess of 3 per
cent, as well as data about the amount of their shares, and
2) a list of members of the board of directors of the bank who have a share in the capital
of the bank, as well as data about the amount of their shares, regardless of the amount of
that share.
The System of Accounts and Financial Statements
Article 104
(1) A bank shall keep its business books in accordance with the system of accounts for banks.
(2) For the purpose of supervision of the business of the bank, a bank shall draw up financial
statements in the form determined by the Croatian National Bank.
Regulations on Business Books and Business Reports
Article 105
(1) The Croatian National Bank shall prescribe:
1) the accounting system for banks;
2) the type and form financial statements from banks required by the Croatian National
Bank;
3) the terms and conditions for the delivery of financial statements from Article 103 and
Article 104 of this Act.
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(2) For the purposes of publications, the Croatian National Bank may prescribe the type, form
and content of statements, as well as the terms and conditions for their publication.
IX. INTERNAL AUDITING
Internal Auditing
Article 106
The bank shall organise an internal auditing department to independently and objectively
perform its duties and contribute to the improvement of the bank's business through advice
and recommendations.
Tasks of the Internal Auditing Department
Article 107
(1) The internal auditing department shall carry out permanent supervision of the overall
business of the bank in order to verify whether the bank:
1) duly performs banking and other financial services in accordance with this Act and
regulations adopted on the basis of this Act and in accordance with the internal rules
that regulate the business of the bank;
2) keeps business books, documents business events on the basis of authentic bookkeeping documents, values book-keeping items, and draws up financial and other
reports in accordance with this Act and regulations adopted on the basis of this Act
and in accordance with internal rules that regulate business of the bank;
3) systematically manages risks arising out of the business activities of the bank in
accordance with the principles of stabile business, including the management of
resources pertaining to information technology and other related technologies.
(2) The internal auditing department conducts an internal audit of business in accordance with
the principles of the profession and internal auditing standards, the code of professional ethics
of internal auditors, and the rules on internal auditing adopted by the supervisory board.
(3) The internal audit department shall adjust its work methods to the work of the external
auditors of the bank who audit the annual financial statements or conduct an extraordinary
audit at the request of the Croatian National Bank.
Persons Performing Internal Audits
Article 108
(1) For the performance of internal audits, the bank shall employ at least one person who is a
qualified auditor or internal auditor in accordance with the law regulating auditing or in
accordance with the rules and programme of the competent professional organisation for
professional education of internal auditors.
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(2) If the performance of internal auditing is entrusted to several persons, one of the persons
who meets the condition from paragraph 1 of this Article shall be in charge of the work of the
internal auditing department as a whole.
(3) Before the conclusion of the employment contract with the person from paragraphs 1 and
2 of this Article, the bank is obliged to inform the Croatian National Bank about the intended
appointment.
(4) Without prejudice to the provisions of paragraph 1 of this Article, a bank with a smaller
scope of business may entrust the conduct of internal audit to one or several persons who are
not employed by the bank, with the prior consent of the Croatian National Bank, provided that
at least one of the persons meets the conditions from paragraph 1 of this Article.
(5) The persons performing the tasks of internal auditing may not perform any other duties
and tasks in the bank.
The Annual Internal Audit Programme
Article 109
(1) The annual internal audit programme shall be passed by the supervisory board, with the
prior opinion of the board of directors of the bank.
(2) The annual programme shall include:
1) The areas of business in which the internal auditing department shall conduct its
investigations;
2) a description of the content of the audits planned in specific fields.
(3) The internal auditing department shall adopt operational work plans for semi-annual or
shorter periods of time on the basis of the annual programme.
Report on the work of Internal Auditing
Article 110
(1) The internal auditing department shall draw up a report in accordance with the terms set
out in the operational plan of work for the internal audit, and at least once in six months. The
report on the work of internal auditing shall include:
1)
2)
3)
4)
a description of all audits performed;
unlawful and irregular actions, if established during the audit;
an evaluation of the adequacy and efficiency of the internal control system;
proposals and recommendations for remedying the unlawful and irregular actions
found and for improving and enhancing the internal control system;
5) findings related to the rectification of unlawful and irregular actions discovered and
the improvement and enhancement of the internal control system.
(2) The internal audit department shall send the reports on its work to the board of directors
and the supervisory board of the bank.
47
Informing the Board of Directors and the Supervisory Board of the Bank
Article 111
If the internal auditing department, during an investigation of certain segments of the business
of the bank, establishes the existence of unlawful business operations and violations of risk
management rules, which are causing the bank to be faced with the prospect of non-liquidity,
insolvency or which are a threat to the safety of the business, it shall immediately inform the
board of directors and the supervisory board of the bank accordingly.
X. AUDITS
Audits of Annual Financial Statements
Article 112
(1) Authorised auditors shall conduct an audit of the annual financial statements of the bank,
of the consolidated annual financial statements of a group of banks, and of the consolidated
annual financial statements of the entire group, if non-financial institutions are also members
of the group.
(2) The audit of statements from paragraph 1 of this Article shall be performed by two or
more natural persons authorised to carry out audits (hereinafter the "authorised auditors").
(3) A bank is obliged to deliver to the Croatian National Bank audited annual financial
statements, audited consolidated financial statements of a group of banks and audited
consolidated financial statements of the entire group within fifteen days of the date of issue of
the auditor's report on the audit of the annual financial statements, and at the latest within four
months after the expiration of the business year for which the statements have been made.
(4) The same auditing company may not undertake and a bank may not engage it to conduct
an audit of the financial statements of the bank if in the preceding year more than one half of
the total income of the relevant auditing company was generated by the audit of the financial
statements of that bank.
(5) The same auditing company may consecutively perform in the same bank or a bank may
consecutively engage the same auditing company for at most four audits of the financial
statements.
(6) The same auditing company may not simultaneously, that is, in the same year perform an
audit of the financial statements of a bank and provide consulting services to the same bank.
(7) If the same auditing company does conduct an audit of the financial statements of a bank
contrary to any provision of paragraphs 4, 5 and 6 of this Act, the Croatian National Bank
shall not accept the report for that year prepared by the relevant auditing company about the
audit of the financial statements of the bank.
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The Obligations of Authorised Auditors
Article 113
(1) It is the obligation of authorised auditors to provide opinions on whether annual financial
statements of the bank (not consolidated and consolidated) have been drawn up in accordance
with the regulations and standards of the profession.
(2) In the course of an audit, authorised auditors are obliged to immediately inform the
Croatian National Bank about an observed fact, which:
1) represents a serious violation of laws, regulations or provisions pursuant to which the
license to operate of the bank has been issued;
2) represents a serious fraud or embezzlement;
3) represents a materially significant change of the financial results shown in the
unaudited annual financial statement;
4) represents a serious violation of the by-laws of the bank;
5) as well as other facts and circumstances that might endanger the further business of the
bank.
(3) Authorised auditors are also obliged to inform the Croatian National Bank about each fact
from paragraph 2 of this Article, learnt during the performance of an audit in a dependant
company controlled by the bank.
(4) The disclosure of any fact by authorised auditors in accordance with paragraphs 2 and 3 of
this Article is not regarded as a violation of the regulations and provisions of the contract
between the auditors and the bank relating to the restriction on the disclosure of data, and they
shall not bear any responsibility that would otherwise arise out of this action.
The Content of an Audit as Required by the Croatian National Bank
Article 114
(1) In the procedure of an audit, authorised auditors first of all evaluate and provide opinions
or evaluations of the:
1) balance sheet;
2) profit and loss account;
3) changes to the capital;
4) cash flow;
5) notes on the financial statements;
6) amount and changes to special reserves and written-off claims;
7) amount of off-balance sheet liabilities;
8) compliance with risk management rules;
9) functioning of internal auditing;
10) information system of the bank in accordance with the internationally recognised
standards for auditing information systems;
49
11) correctness, accuracy and completeness of the statements as required by the Croatian
National Bank.
(2) The Croatian National Bank shall prescribe the form, the minimum scope and content of
the audit from paragraph 2 of this Article.
(3) The Croatian National Bank may request authorised auditors to provide additional
explanations regarding the conducted audit.
(4) If the auditing procedure or the report on the audit conducted are not performed or drawn
up in accordance with paragraphs 1 and 2 of this Article, the Croatian National Bank may
reject the report and demand that the audit be performed by auditors from another auditing
company at the expense of the bank.
(5) If the Croatian National Bank rejects the report on the conducted audit, the Croatian
National Bank in the following five years shall not accept the bank audit reports prepared by
that auditing company until further notice, of which that auditing company shall be informed
in advance.
XI. SUPERVISION OF BANKS
XI.1. GENERAL PROVISIONS
Supervision of Banks
Article 115
(1) The Croatian National Bank carries out supervision of the business of banks in accordance
with this Act, regulations adopted on the basis of this Act, other laws and international
treaties.
(2) In the performance of its supervisory function, the Croatian National Bank evaluates the
lawfulness and regularity of the bank's business, its ability to manage risks in its business, and
imposes measures for the rectification of established unlawful and irregular actions and
improvement of the situation in the bank.
(3) If another supervisory body is competent for the supervision of a person associated with a
bank, the Croatian National Bank may request the competent supervisory body to obtain data
required by the Croatian National Bank for the purpose of supervision of the bank.
(4) If another supervisory body is competent for the supervision of a person associated with a
bank, the Croatian National Bank may also participate in the control of operation of that
company, next to the competent supervisory body.
(5) Supervision of the business of banks may also be performed by other institutions in
accordance with the authorisations prescribed by law, within the framework of their
competence.
(6) All provisions regarding the supervision of banks are applicable as appropriate to the
supervision of branch offices and representative offices of foreign banks.
50
Reports and Information
Article 116
(1) In the performance of supervision, the Croatian National Bank may ask a bank to provide
reports and information about all issues, which are important, in view of the purpose of the
specific supervision, for an evaluation of whether the bank abides by the provisions of laws or
regulations adopted on the basis of laws and whether it does business in accordance with the
adopted internal rules.
(2) The Croatian National Bank may request reports and information from paragraph 1 of this
Article from members of the board of directors of the bank and from persons employed in the
bank.
(3) The Croatian National Bank may ask the persons from paragraph 2 of this Article to
prepare a written report about the issues from paragraph 1 of this Article or to provide a
statement about those issues. The term for preparing the reports may not be less than three
days.
Inspection Methods
Article 117
(1) Supervision of the business of banks is performed by analysis of the financial statements
and direct supervision in the bank.
(2) Employees of the Croatian National Bank (authorised pursuant to their employment
contracts) shall perform the supervision by analysing statements and other data that banks are
obliged to deliver to the Croatian National Bank according to the provisions of this Act within
the terms laid down in regulations adopted on the basis of this Act.
(3) Direct supervision or inspection is performed on the premises of the bank by access to
business books, documents and other documentation relating to the business of the bank and
by review of the technical, expert and organisational resources of the bank.
Persons Authorised for Direct Supervision
Article 118
(1) Direct supervision or inspection of the business of the bank is performed by expert
employees of the Croatian National Bank pursuant to authorisations of the Governor of the
Croatian National Bank (hereinafter the "authorised person").
(2) Apart from persons from paragraph 1 of this Article, the Governor of the Croatian
National Bank may also authorise an authorised auditor or other experts to perform specific
tasks related to the inspection of the business of the bank.
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Direct Business Inspection
Article 119
(1) A bank shall enable the authorised person at his/her request to carry out inspection of
business at the seat of the bank and at other locations at which the bank or another person
authorised by the bank performs activities and jobs that are supervised by the Croatian
National Bank
(2) A bank shall enable the authorised person, at his/her request, to inspect the business
books, business documentation and the administrative or business records, as well as to
inspect the information technology and other related technology, to the extent necessary to
carry out a direct inspection or to the extent prescribed by the law regulating direct
inspections.
(3) The bank shall present to the authorised person at his/her request hard copies of computer
print-outs, copies of business books, business documentation and administrative or business
books, and/or their electronic form on the medium requested by the authorised person.
Furthermore, the authorised person shall be ensured standard access to the system for data
base management used by the bank in order to carry out an inspection supported by computer
software.
(4) The authorised person shall inspect the business in paragraphs 1 and 2 of this Article on
business days. Whenever necessary in view of the scope or nature of the inspection, the
authorised person may inspect business outside the working hours of the bank.
Notification about Direct Supervision or Inspection of Business
Article 120
(1) A notification about direct supervision/inspection of business shall be delivered to the
bank at the latest eight days before the commencement of direct supervision/inspection of the
bank's business.
(2) Without prejudice to the provision of paragraph 1 of this Article, the authorised person
may deliver a notification about direct supervision/inspection of the business at the latest just
prior to the beginning of the inspection of the business.
(3) A notification about direct supervision/inspection of business shall include information
about the minimum that the bank is to prepare for the authorised persons who shall perform
the direct supervision/inspection, except in the case in paragraph 2 of this Article.
Conditions for Performance of Direct Supervision
Article 121
A bank shall to provide the authorised persons with adequate premises, equipment and other
conditions for the unhindered performance of the direct supervision/inspection, as well as
staff who shall provide access to documentation and its overview, and who shall co-operate
with the authorised persons.
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Inspection of Computer-run Business Books and Records
Article 122
(1) A bank that processes data using computers or that keeps its business books or other
records using computers shall provide expert and technical assistance, at the request of the
authorised person, for the inspection of its business books and records.
(2) The bank shall provide the authorised person with everything necessary, to enable him/her
to gain insight into:
1) all the established procedures for controlling the information system at the levels:
(a) of the bank, (b) management functions, (c) individual business processes, and
(d) transactions;
2) procedures for development, acquisition and maintenance of the information
system;
3) policies and procedures for the security of the information system and data
protection.
(3) Any change to software shall be documented chronologically with the date of change. The
documentation shall also show any change in the form of the database.
Inspection Report
Article 123
(1) After the inspection of the business of the bank is completed, the authorised persons shall
prepare a report about the inspection carried out.
(2) The Croatian National Bank shall, in a written decision, prescribe procedures relating to
the report about the performed supervision.
(3) Rulings rendered by the Croatian National Bank are final and an administrative dispute
cannot be initiated against them.
XI.2. SUPERVISORY MEASURES
XI.2.1. General provisions
Supervisory Measures
Article 124
(1) Any unlawful and irregular actions discovered shall be rectified by means of supervisory
measures and activities undertaken to improve the situation in the bank. As part of the
activities to improve the situation in the bank, special conditions for the business of the bank
may be determined.
(2) In the event any unlawful and irregular actions are discovered, supervisory measures are
ordered in a ruling rendered by the Governor of the Croatian National Bank.
53
(3) Without prejudice to paragraph 2 of this Article, in the event of serious violations of laws
and regulations or in the event when direct supervision cannot be continued in the bank, the
Governor of the Croatian National Bank may instruct the bank to take specific measures to
rectify the specific unlawful and irregular actions, which the bank is obliged to perform
without any delay.
(4) In the event of violations of laws and regulations or in situations where the financial state
of the bank is such that further business operations are uncertain, in a written decision or
ruling the Croatian National Bank shall:
1) prohibit the bank from rendering specific banking services and other financial
services;
2) appoint a provisional administration;
3) revoke the operating license;
4) initiate involuntary liquidation of the bank; and
5) decide whether a bankruptcy petition should be filed before the competent court.
(5) The Croatian National Bank shall prescribe detailed terms and conditions for the
implementation of supervision and the issuance of supervisory measures.
XI.2.2. Remedying Unlawful and Irregular Actions
Rulings for the Remedying of Unlawful and Irregular Actions
Article 125
(1) The Governor of the Croatian National Bank shall render a ruling by which he/she orders
the bank to rectify any unlawful and irregular actions if it is established during the inspection
procedure of the bank that:
1) a member of the board of directors does not have the consent from Article 26 of this
Act;
2) the bank is rendering other financial services for which it has not obtained a license
from the Croatian National Bank or is performing an activity it is not permitted to
perform according to this Act;
3) the bank is violating risk management rules;
4) the bank is violating regulations about the keeping of business books and drawing up
of statements, internal auditing or annual statement audits;
5) the bank is violating its obligation to report and inform;
6) the bank is violating other provisions of this Act or regulations adopted on the basis of
this Act or the provisions of other laws regulating the business of the bank.
(2) The ruling from paragraph 1 of this Article sets a term within which unlawful and
irregular actions are to be rectified.
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Reports on the Rectification of Unlawful and Irregular Actions
Article 126
(1) A bank shall rectify established unlawful and irregular actions within the term set in the
ruling from Article 125 of this Act and deliver to the Croatian National Bank a report
describing measures taken to rectify the unlawful and irregular actions. With the report shall
be enclosed documents and other evidence showing that the established unlawful and
irregular actions have been rectified.
(2) Within the term of 30 days from the receipt of the report from paragraph 1 of this Article,
the Croatian National Bank shall assess whether the established unlawful and irregular actions
have been rectified. If it is established that the established unlawful and irregular actions have
not been rectified, the Croatian National Bank shall issue new measures by means of a ruling.
(3) The Croatian National Bank may repeat the inspection of the business to the extent
necessary before rendering the ruling from paragraph 2.
(4) If the report is incomplete, the Croatian National Bank shall request the bank to
supplement the report and set a term within which the report is to be supplemented.
Measures for the Implementation of Risk Management Policies
Article 127
(1) If in the performance of an inspection of the business of the bank the Croatian National
Bank establishes that the bank is violating regulations and rules on risk management, it may:
1) issue a written warning to the bank:
2) request the convocation of a session of the board of directors and the supervisory board in
order to discuss and reach an agreement on measures to rectify irregularities and the
improvement of the situation in the bank;
3) request the board of directors and the supervisory board to convoke a shareholders'
meeting of the bank.
(2) If in the course of an inspection of the business of the bank the Croatian National Bank
establishes that the bank is seriously violating regulations and rules on risk management, in a
ruling for the rectification of established unlawful and irregular actions it may order:
1) measures for securing the minimum capital of the bank from Article 64 or for securing the
minimum capital adequacy rate from Article 65, paragraphs 2 and 3 of this Act;
2) measures for compliance with the provisions of this Act and regulations adopted on the
basis of this Act, the purpose of which is to improve the situation in the bank or which
anticipate special conditions for the business of the bank;
3) measures determining conditions for the business of the bank, and which may include the
lowest or highest interest rates, claim and liability maturity dates and other conditions;
4) measures demanding full or partial discontinuation of dividend payments or any other
form of payment of profit;
5) measures for decreasing the bank’s operating expenses, including restrictions on salaries
and other earnings of responsible persons and employees of the bank;
6) measures restricting the growth of the bank's assets, including off-balance sheet risk
items;
55
7) measures demanding from the bank or its dependant companies to change, decrease or
stop performing a specific activity, which according to the Croatian National Bank has
caused significant losses for the bank or which represents a serious risk for the bank;
8) measures that have to be adopted and implemented by the bank with the objective of:
- better risk management,
- better collection of mature claims,
- improvement of the accounting-information system,
- improvement of the operation of the internal control and internal auditing systems,
- restriction of the credit granting rate and reduction or restriction of the bank's exposure,
- changes in the structure of services rendered by the bank, and
- other measures for the implementation of risk management rules;
9) sale of shares or business shares in other legal persons or the sale of other assets of the
bank;
10) the prohibition of the acquisition of shares or business shares of other legal persons, the
establishment of new branch offices or expansion of the business network in any other
way, and the prohibition of entering into any new transactions;
11) the prohibition of receiving new deposits;
12) the prohibition of granting new credits or rendering banking or other financial services to
persons with insufficient credit worthiness, certain shareholders of the bank, members of
the board of directors and the supervisory board, associated companies or investment
funds managed by the management company with which the bank is associated;
13) the convocation of a meeting of the shareholders of the bank;
14) the suspension of one or several responsible persons;
15) shareholders with qualified shares in the bank to decrease that share by a percentage set by
the Croatian National Bank, and
16) the revocation of the appointment of the chairman or member of the board of directors of
the bank and immediately inform the supervisory board of the bank thereof, which is
obligated to appoint a chairman, i.e., the missing members of the board of directors within
the term of 30 days.
(3) It is deemed that a bank is seriously violating regulations and the rules of risk management
if:
1) it does not have the minimum capital from Article 64 or the minimum capital
adequacy rate from Article 65, paragraphs 2 and 3 of this Act;
2) it has not organised its business or it does not keep its business books, business
documentation and other business records in a way that enables verification at any
time whether the bank does business in accordance with the regulations and rules on
risk management;
3) it does not adopt policies and procedures that are in compliance with legal regulations
and international standards, for an appropriate valuation of balance sheet and offbalance sheet items;
4) it renders other financial services for which it has not obtained a license from the
Croatian National Bank or it performs activities which it must not perform under this
or any other law;
5) it concludes legal transactions on the basis of which the bank becomes exposed to a
specific person contrary to the provisions of this Act;
6) it concludes fictitious transactions with the intention of incorrectly depicting the
financial state or exposure of the bank;
7) it pays out profit contrary to the provisions of Article 88 of this Act;
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8) it frequently violates obligations to report on time and correctly to the Croatian
National Bank as prescribed by this Act or regulations adopted on the basis of this Act;
9) it performs transactions that may jeopardise its liquidity or solvency;
10) it does not meet the obligations related to the deposit insurance system.
Measures in the Event of a Decrease in the Capital Adequacy Rate below the Minimum
Article 128
(1) With respect to banks with a capital adequacy rate lower than the minimum rate, and
higher or equal to 3/4 of the rate from Article 65, paragraphs 2 and 3 of this Act, the Croatian
National Bank shall take one or several of the following measures:
1)
2)
3)
4)
prohibit any form of payment of profit;
order a decrease in the bank's expenses;
restrict the growth of the bank's assets, including off-balance sheet risk items;
prohibit the bank from acquiring shares or business shares of other legal persons,
establish new branch offices or expand the business network in any other way, and
prohibit the bank from moving into any new transactions;
5) prohibit any increase in exposure towards a single person;
6) instruct the board of directors of the bank to propose to the shareholders' meeting to
render a decision on the infusion of additional capital and the implementation of that
decision.
(2) With respect to banks with a capital adequacy rate lower than 3/4, and higher than or equal
to 1/4 of the minimum rate from Article 65, paragraphs 2 and 3 of this Act, the Croatian
National Bank shall take, apart from the measures mentioned in paragraph 1 of this Article,
one or several of the following measures:
1) demand that the bank or its dependant companies change, decrease or stop performing
a specific activity, which according to the Croatian National Bank has caused
significant losses for the bank or which represents a serious risk for the bank;
2) order that the bank should suspend one or several persons with special rights and
responsibilities;
3) demand that interest rates on received deposits should not exceed the market interest
rate for similar amounts and maturity dates;
4) put a restriction on salaries and other earnings of persons with special rights and
responsibilities and employees of the bank;
5) order the sale of shares or liquidation of the bank or the sale of shares or business
shares or liquidation of some other legal person, in the capital of which the bank
participates, if it is established that there is danger of the subordinate bank or some
other legal person becoming insolvent and that it represents a significant risk for the
bank;
6) order the sale of the bank’s tangible assets.
(3) In the event of decrease of the capital adequacy rate below the minimum rate from Article
65, paragraphs 2 and 3 of this Act, apart from measures from paragraphs 1 and 2 of this
Article, the Croatian National Bank may take the measures from Article 124 and 127 of this
Act.
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XI.2.3. Revocation of License
Reasons for the Revocation of the License to Render Banking and Financial Services
Article 129
(1) Apart from the cases in Article 39 of this Act, the Croatian National Bank may also
revoke the bank's license to render banking and other financial services in the following cases:
1)
2)
3)
4)
5)
6)
7)
if the bank does not meet conditions related to capital adequacy and other business
conditions in accordance with risk management regulations;
if the bank in any way prevents the performance of supervision of its business;
if the bank does not enforce the orders given in a ruling for the rectification of
unlawful and irregular actions and measures for improving the situation;
if a measure from Article 127, paragraph 2, item 16 of this Act is been issued against
the bank, and the supervisory board does not appoint new members of the board of
directors within the term set for the enforcement of the measure;
if there are reasons for the revocation of the consent to acquire a qualified share from
Article 22 of this Act;
if the bank does not meet obligations relating to deposit insurance;
if the bank does not meet technical, organisational, human resources or other
conditions for rendering banking services.
(2) Within the term of three days from the rendering of the decision, the Croatian National
Bank is obliged to deliver a ruling to the bank on the revocation of the ruling on the operating
license.
(3) The Croatian National Bank is obliged to publish the ruling on revocation of the license to
operate in the Official Gazette, deliver it to the competent commercial court, and organise a
press release.
Revocation of the License to Render Certain Financial Services
Article 130
(1) If the bank does not meet technical, human resources, organisational or other conditions
for rendering certain types of financial services, the Croatian National Bank may in a written
decision, in place of revoking the license, revoke the bank's license to render services for
which it does not meet the conditions.
(2) The provisions of Article 129 of this Act are appropriately applied to the prohibition to
render certain types of services.
Liability for Damages
Article 131
Employees of the Croatian National Bank, members of the Council of the Croatian National
Bank or any persons authorised by the Croatian National Bank, shall not be held liable for
damages arising from the performance of the duties from this Act, the Law on the Croatian
National Bank, and regulations adopted on the basis of those laws, unless it is proven that
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they have performed or failed to perform a specific action out of wilful misconduct or gross
negligence.
XII. REPORTING
Regular Reporting
Article 132
(1) The bank shall inform the Croatian National Bank about the following facts and
circumstances immediately after they have occurred:
1) A change of data relating to the seat and address of the bank;
2) convocation of a shareholders' meeting and all decisions rendered at that meeting;
3) recalls and appointments of members of the board of directors and the supervisory
board;
4) the intended opening, moving, closing or temporary termination of operation of a
branch office or representative office or changes in the types of services rendered by
the branch office;
5) each planned change in the equity capital of the bank by 10 per cent or more;
6) discontinuation of certain banking or other financial services;
7) other facts and circumstances about which the bank is obliged to report to the Croatian
National Bank under this Act.
(2) The board of directors of the bank shall immediately inform the Croatian National Bank
about the following events:
1)
2)
3)
if the bank's liquidity or solvency is jeopardised;
reasons for the termination or revocation of the license to render banking services or
reasons for the prohibition to render certain other financial services;
if the financial state of the bank changes to the extent that the bank no longer has the
minimum capital from Article 64 or the minimum capital adequacy rate from Article
65, paragraphs 2 and 3 of this Act.
(3) The bank shall report to the Croatian National Bank without any delay about all facts that
are entered in the court register, including each submitted application for entry of data in the
court register, as well as about each entry of a change of data in the court register.
Reporting at the Request of the Croatian National Bank
Article 133
At the request of the Croatian National Bank, the bank shall deliver reports and information
about all questions important for the implementation of supervision or for the performance of
other tasks from within the competence of the Croatian National Bank.
Regulation on Reporting
Article 134
The Croatian National Bank may determine the content, form and manner of reporting from
Article 132 of this Act.
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XIII. PROVISIONAL ADMINISTRATION
A Decision on Provisional administration
Article 135
(1) The Croatian National Bank shall render a decision on the appointment of a provisional
administration of the bank in the following cases:
1) if the bank has been instructed to take measures from Article 128, paragraphs 2 and 3
of this Act, and the bank has not started to implement or has not implemented the
measures within the term set for their implementation;
2) if the capital adequacy rate falls below 1/4 of the minimum rate from Article 65,
paragraphs 2 and 3 of this Act.
(2) The Croatian National Bank may also appoint a provisional administration of the bank if a
shareholder against whom the measure from Article 127, paragraph 2, item 15 of this Act was
issued does not abide by the instruction of the Croatian National Bank. In that case, the
Croatian National Bank may in the manner set out in Article 142 of this Act sell the shares of
the bank of those shareholders who have qualified shares in the bank.
(3) By way of derogation from the provisions of paragraph 1 of this Article, if the Croatian
National Bank establishes the existence of facts indicating that the situation in the bank is
very likely to improve, it may postpone the rendering of a decision on a provisional
administration.
(4) By way of derogation from the provisions of paragraph 1 of this Article, if the Croatian
National Bank evaluates that the appointment of a provisional administration would not result
in the improvement of the situation in the bank, it shall file a bankruptcy petition.
(5) In its written decision on the appointment of a provisional administration, the Croatian
National Bank shall determine the reasons for the appointment of a provisional
administration, the number of members, the type and scope of activities performed and/or
managed by a specific member of the provisional administration and the term of the
provisional administration, which may not exceed one year, as of the date of the service of the
ruling to the bank.
Members of the Provisional Administration
Article 136
(1) The provisional administration shall have at least two members.
(2) Members of the provisional administration are appointed and recalled from their duties by
the Council of the Croatian National Bank at the proposal of the institution competent for
deposit insurance.
(3) If the institution competent for deposit insurance does not propose the appointment and
recall of members of the provisional administration within the term set in the request sent by
the Croatian National Bank, the Council of the Croatian National Bank shall render a decision
on the appointment and recall of members of the provisional administration.
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Entry in the Court Register
Article 137
(1) A decision on the appointment of a provisional administration is entered in the court
register. The change of persons authorised to represent the bank is entered in the court register
simultaneously with the entry of the decision to appointment of a provisional administration.
(2) An application for the entry of data from paragraph 1 of this Article shall be submitted by
the provisional administration within the term of three business days from the date of the
rendering of the decision. The decision on introducing the provisional administration shall be
enclosed with the application.
Legal Consequences of the Provisional administration
Article 138
(1) During the period under the provisional administration, the activities of the supervisory
board shall be performed by a special body appointed by the Croatian National Bank.
(2) The Croatian National Bank is entitled to provide instructions to the provisional
administration about the way in which the business of the bank should be conducted.
(3) The provisions of this Act relating to members of the board of directors apply also to
members of the provisional administration, unless the Croatian National Bank determines
otherwise in its instruction from paragraph 2 of this Article.
(4) On the date of delivery of a decision on the appointment of a provisional administration,
all competencies and powers of the current members of the board of directors, the supervisory
board of the bank, as well as the competencies of the shareholders' meeting of the bank
terminate, except the competencies from Article 141 of this Act.
(5) Decisions from within the competence of the shareholders' meeting, except the
competencies from Article 141 of this Act, shall be rendered by the Croatian National Bank.
Powers during the Term of the Provisional administration
Article 139
(1) Current members of the board of directors, other authorised persons with special powers
and responsibilities and other employees of the bank shall provide the provisional
administration immediate access to the overall business and other documentation of the bank
and prepare reports about the transfer of business.
(2) Current members of the board of directors of the bank shall provide the provisional
administration or an individual member of the provisional administration all statements or
additional reports about the business of the bank.
(3) A member of the special board of directors is entitled to remove any person preventing
his/her work, and depending on the circumstances of each case, request the assistance of the
Ministry of Internal Affairs.
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Reports by the Provisional administration
Article 140
(1) The provisional administration shall deliver a report to the Croatian National Bank at least
once in three months about the financial state and the conditions under which the bank is
doing its business under the provisional administration.
(2) The provisional administration shall deliver to the Croatian National Bank at the latest six
months after its appointment a report about the financial state and the conditions under which
the bank does its business, together with an evaluation of the economic stability of the bank
and possibilities for its further business, including:
1) an evaluation of the willingness of the bank's shareholders to secure the coverage of
losses of the bank by additional resources;
2) the possibilities for covering the remaining losses of the bank (after the possibility
from item 1 of this paragraph has been exhausted);
3) unforeseen expenses that may have an impact on the bank's obligations;
4) an evaluation of possible measures for remedying the financial difficulties of the bank,
together with an evaluation of the expenses of the implementation of those measures;
5) an evaluation of the conditions for the initiation of involuntary liquidation or
bankruptcy of the bank.
(3) The term for the delivery of the report from paragraph 2 of this Article may be even
shorter if so determined by the Croatian National Bank in its decision on the introduction of a
provisional administration.
Increase of the Equity Capital of the Bank with the Aim of Securing the Bank's
Economic Stability
Article 141
(1) If on the basis of a report by the provisional administration of the bank from Article 140
of this Act the Croatian National Bank evaluates that in order to secure the minimum capital
of the bank from Article 64 or the minimum capital adequacy rate from Article 65, paragraphs
2 and 3 of this Act, or in order to remedy the causes of non-liquidity and/or insolvency of the
bank it is necessary to increase the equity capital of the bank by new financial investments, it
shall instruct the provisional administration to convoke a shareholders' meeting of the bank
and move to render a decision on the increase of the equity capital.
(2) The provisional administration shall publish notification of the shareholders' meeting at
which a decision is to be rendered on the increase of the equity capital from paragraph 1 of
this Article at the latest within the term of eight days following the receipt of the instruction
of the Croatian National Bank from paragraph 1 of this Article, and the shareholders' meeting
shall be held at the latest within fifteen days from the publication of the notification.
(3) At the moment of notification of the shareholders' meeting, shareholders are to be
cautioned about the legal consequences of Article 142 of this Act.
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The Right of Redemption of the Bank's Shares
Article 142
(1) If the shareholders' meeting of the bank rejects the proposal from Article 141, paragraph 1
of this Act or if the emission of shares of the bank in accordance with the decision rendered
by the shareholders' meeting further to the proposal from Article 141, paragraph 1 of this Act
does not succeed, the Croatian National Bank may instruct the provisional administration of
the bank to organise a sale of the existing shares of the bank to interested new investors with
the aim of changing the existing ownership structure of shareholders.
(2) In the event from paragraph 1 of this Article, the provisional administration is obliged to
announce a public auction for the sale of the existing shares of the bank within 60 days of the
date of the rendering of the decision by the Croatian National Bank.
(3) In the notification about the public auction, the provisional administration shall determine
the initial price for the shares, which is equal to their book-keeping value, determined on the
basis of the bank's audited financial statements.
(4) At the public auction, the provisional administration of the bank shall sell shares of the
bank to investors who offer the highest price above the initial price, provided that they meet
the conditions for the acquisition of a qualified share from Article 20 and 21 of this Act. If at
the public auction nobody accepts the initial price, the provisional administration of the bank
shall offer the shares at a price which is 10 per cent lower than the initial price and shall
continue to decrease the offered price for the same percentage of the initial price until one or
several investors state that they would be prepared to purchase the offered shares.
(5) Within the framework of the decision on the sale of the existing shares of the bank, the
provisional administration of the bank may anticipate additional conditions for new investors
with respect to the infusion of additional capital in the bank.
(6) Simultaneously with the notification about the auction, the provisional administration of
the bank shall issue an order to the Central Depository Agency to enter the prohibition of the
right to dispose with the shares of the bank in the central register.
(7) The Central Depository Agency shall transfer the bank's shares to investors when the
Croatian National Bank informs it that the investors have performed their obligations towards
former shareholders, including the obligation relating to the infusion of additional capital, if
the investors have undertaken that obligation.
Assessment of the Results of the Provisional administration
Article 143
(1) If the Council of the Croatian National Bank assesses that during the period under the
provisional administration the financial state of the bank has improved to the extent that the
bank has reached the minimum capital from Article 64 and the minimum capital adequacy
rate from Article 65, paragraphs 2 and 3 of this Act and that it is duly meeting its mature
obligations, the Council of the Croatian National Bank shall instruct the provisional
administration to convoke a shareholders' meeting.
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(2) A new supervisory board is elected at the shareholders' meeting, by which the powers of
the provisional body terminate. The supervisory board shall appoint a board of directors of the
bank after the Croatian National Bank has given its consent. On the date of appointment of
the board of directors, the powers of the provisional administration cease.
(3) If the Council of the Croatian National Bank assesses that during the period under the
provisional administration the financial state of the bank has not improved to the extent that
the bank has reached the minimum capital from Article 64 and the minimum capital adequacy
rate from Article 65, paragraphs 2 and 3 of this Act and that it is not capable of duly meeting
its mature obligations, it shall render a decision on the initiation of involuntary liquidation or
a decision on the establishment of reasons for the filing of a bankruptcy petition.
(4) In the event from paragraph 3 of this Article, the Council of the Croatian National Bank
may also render a decision on the extension of the term of the provisional administration for a
term of no more than six months if there are no conditions for the initiation of bankruptcy
proceedings against the bank or if the Croatian National Bank assesses that in the ensuing six
months the bank would be capable of reaching the minimum capital from Article 64 and the
minimum capital adequacy rate from Article 65, paragraphs 2 and 3 of this Act and duly
meeting its mature obligations.
XIV. LIQUIDATION OF THE BANK
XIV.1. VOLUNTARY LIQUIDATION OF THE BANK
Initiation of Voluntary Liquidation Proceedings
Article 144
(1) The shareholders' meeting of the bank may render a decision to terminate the bank.
(2) Before rendering the decision from paragraph 1 of this Article, the board of directors and
the supervisory board of the bank shall carry out preliminary consultations with the Croatian
National Bank.
(3) The liquidators of the bank are obliged to inform the Croatian National Bank about the
decision from paragraph 1 of this Article on the first business day after it has been rendered.
(4) The bank is obliged to publish the decision from paragraph 1 of this Article in Official
Gazette and in at least two daily newspapers in the Republic of Croatia.
The Course of the Voluntary Liquidation Proceedings
Article 145
(1) The procedure of voluntary liquidation of the bank, unless regulated otherwise by this Act,
is governed by the provisions of the Company Act on liquidation of joint stock companies.
(2) The procedure of liquidation of the bank shall be executed also when the shareholders'
meeting of the bank renders a decision under which the activity of the bank as a joint stock
company is to be changed, so that the company shall no longer provide banking services.
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Liquidators of the Bank in the Voluntary Liquidation Proceedings
Article 146
(1) The bank shall have at least two liquidators.
(2) Only a person who meets the conditions for appointment as a member of the board of
directors of a bank in accordance with Article 25 of this Act may be appointed liquidator of
the bank.
Application of the Provisions of this Act during the Course of Voluntary Liquidation
Article 147
(1) A bank which is undergoing voluntary liquidation proceedings shall comply with the
provisions of this Act in the appropriate manner.
(2) The Croatian National Bank may determine the manner of application of the provisions of
this Act in the events from paragraph 1 of this Article.
Informing the Croatian National Bank
Article 148
If they establish that the assets of the bank in liquidation shall not be sufficient to meet all
creditors' claims against the bank in liquidation, the liquidators are obliged to file a
bankruptcy petition and immediately inform the Croatian National Bank thereof.
XIV.2. INVOLUNTARY LIQUIDATION OF THE BANK
Reasons for the Initiation of Involuntary Liquidation
Article 149
(1) The Croatian National Bank shall render a decision on the initiation of involuntary
liquidation in the following events:
1) if on the basis of the report from Article 140, paragraph 2 of this Act it is evaluated
that during the term under the provisional administration the financial state of the bank
did not improved to the extent that the bank would reach the minimum capital from
Article 64 and the minimum capital adequacy rate from Article 65, paragraphs 2 and 3
of this Act and that there are no conditions for the initiation of bankruptcy
proceedings;
2) if the shareholders' meeting rejects the proposal of the decision from Article 141,
paragraph 1 of this Act, if the first sale of shares pursuant to a decision rendered by the
shareholders' meeting further to the proposal from Article 141, paragraph 1 of this Act
fails, if there are no conditions to exercise the right of redemption from Article 142 of
this Act or conditions to initiate bankruptcy proceedings;
3) if the bank's license to render banking services has been revoked, because of the
reasons mentioned in Article 39, paragraph 1, item 2 through 5 of this Act;
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4) if it is evaluated that the implementation of voluntary liquidation proceedings could
cause damage to the bank's creditors;
5) if the consent of a member of the board of directors to perform the function of a
member of the board of directors has been revoked or if a member of the board of
directors has not performed the function of a member of the board of directors for
more than six months, and the supervisory board has not appointed a new member of
the board of directors within a further term of three months in accordance with this
Act, and the bank therefore is lacking at least two members of its board of directors.
(2) The Croatian National Bank shall render a decision on the initiation of involuntary
liquidation within no more than thirty days from:
1) in the event from paragraph 1, item 1 of this Article, the expiration of the term for the
receipt of the final report of the provisional administration from Article 140, paragraph
2 of this Act;
2) in the event from paragraph 1, item 2 of this Article, the date on which the
shareholders' meeting rejected the proposal from Article 141, paragraph 1 of this Act
or the date on which the term for subscription and payment for the shares further to
the unsuccessful first sale expired;
3) in the event from paragraph 1, item 5 of this Article, the expiration of the three-month
term for the appointment of a new member of the board of directors.
(3) When the Croatian National Bank establishes that the conditions from paragraph 1 of this
Article have been met, at the same time as rendering a decision on the initiation of
involuntary liquidation, it shall also render a ruling on the revocation of the operating license.
The Decision on Involuntary Liquidation
Article 150
(1) By a decision from Article 149 of this Act, the Croatian National Bank shall appoint as
liquidator the institution competent for deposit insurance.
(2) The Croatian National Bank shall publish the decision on the institution of involuntary
liquidation proceedings in the Official Gazette, in at least two daily newspapers in the
Republic of Croatia, and deliver it to the competent commercial court.
(3) The Croatian National Bank shall forward the decision on involuntary liquidation of the
bank to the institution competent for deposit insurance within the term of three days from the
date it is rendered.
(4) As soon as it receives the decision from paragraph 1 of this Article, the institution
competent for deposit insurance is obliged to take all measures necessary to protect the rights
of the bank's creditors.
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The Liquidators of the Bank in Involuntary Liquidation Proceedings
Article 151
(1) The institution competent for deposit insurance is obliged to appoint two or more
liquidators within eight days from the receipt of the decision from Article 150 of this Act.
(2) Only the person who meets the conditions for the appointment as member of the board of
directors of the bank in accordance with Article 25 of this Act may be appointed liquidator of
the bank.
The Legal Consequences of Involuntary Liquidation
Article 152
(1) On the date of the rendering of a decision on involuntary liquidation, all competencies and
powers of members of the board of directors and members of the supervisory board of the
bank terminate, as well as the powers of the shareholders' meeting.
(2) During the involuntary liquidation proceedings, the competencies of the supervisory board
of the bank and the shareholders' meeting of the bank are performed by the institution
competent for deposit insurance.
Involuntary Liquidation Proceedings
Article 153
The procedure for the involuntary liquidation of a bank, unless regulated otherwise by this
Act, is governed by the provisions of the Company Act on liquidation of joint stock
companies.
Informing the Croatian National Bank
Article 154
(1) If they establish that the assets of the bank in liquidation shall not be sufficient to meet all
the creditors' claims against the bank in liquidation, the liquidators are obliged to file a
bankruptcy petition and immediately inform the Croatian National Bank thereof.
(2) At the request of the Croatian National Bank, the institution competent for deposit
insurance is obliged to deliver a report about the course of the liquidation proceedings.
Application of the Provisions of this Act during the Course of Involuntary Liquidation
Article 155
(1) The bank in liquidation undergoing involuntary liquidation proceedings shall duly comply
with the provisions of this Act.
(2) The Croatian National Bank may determine the manner of application of the provisions of
this Act in the events from paragraph 1 of this Article.
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XV. BANKRUPTCY OF A BANK
Application of the Provisions on Bankruptcy Proceedings
Article 156
Unless regulated otherwise by this Act, the bankruptcy of a bank is governed by the
provisions of the Bankruptcy Act.
Reasons for Bankruptcy
Article 157
The Croatian National Bank shall render a decision on the establishment of reasons for the
filing of a bankruptcy petition in the following events:
1)
if it has established during the performance of supervision/inspection of the bank that
the bank is insolvent;
2)
if on the basis of a report from Article 140, paragraph 2 of this Act it evaluates that
the bank is insolvent;
3)
if in the liquidation proceedings it is established that the assets of the bank shall not
be sufficient to meet all creditors' claim against the bank, and the liquidator has not
complied with the provisions of Article 148 or Article 154, paragraph 1 of this Act.
Institution of Bankruptcy Proceedings
Article 158
(1) The Croatian National Bank shall file a bankruptcy petition before the competent court
within three business days following the rendering of a decision on the establishment of
reasons for the filing of a bankruptcy petition in writing. The decision on the establishment of
reasons for the filing of a bankruptcy petition shall be enclosed with the petition.
(2) The bankruptcy petition may be also filed by the bank's creditors or by the bank itself.
(3) The court shall render a decision on the bankruptcy petition within 15 days of the receipt
of the petition from paragraphs 1 and 2 of this Article and inform the Croatian National Bank
thereof.
The Board of Directors in Bankruptcy
Article 159
(1) In the course of bankruptcy proceedings against the bank, the bankruptcy administration
shall have at least two members. The bankruptcy administration shall be appointed by the
court at the proposal of the institution competent for deposit insurance.
(2) Persons appointed as members of the bankruptcy administration must meet the conditions
necessary for the appointment of bankruptcy trustee in accordance with the Bankruptcy Act.
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(3) If there are reasons to recall any member of the bankruptcy administration, before taking a
decision on his/her recall, the court shall inform the institution competent for deposit
insurance of its reasons, and call on the institution to provide a statement about the reasons for
recall within a term that may not be shorter than three nor longer than eight days.
Remuneration and Compensation of the Expenses of the Bankruptcy Administration
Article 160
(1) The provisions of the Bankruptcy Act about the list of bankruptcy trustees and about the
remuneration and compensation of expenses of bankruptcy trustees do not apply to members
of the administration in the bankruptcy of banks.
(2) The remuneration and compensation of the expenses of the bankruptcy administration are
determined by the institution competent for deposit insurance, and are borne as a cost of
bankruptcy.
Assembly of Creditors
Article 161
(1) The provisions of the Bankruptcy Act about the assembly of creditors are not applied in
the bankruptcy proceedings of banks.
(2) The committee of creditors has all the authorisations of the assembly of creditors in
accordance with the provisions of the Bankruptcy Act.
Preliminary Proceedings
Article 162
(1) If bankruptcy proceedings have been institute following a petition by the Croatian
National Bank, the provisions of the Bankruptcy Act are not applied regarding the institution
of the preliminary proceedings, the obligation to provide data during the preliminary
proceedings, the interim bankruptcy trustee, the hearing for giving statements on the
institution of bankruptcy proceedings, the evaluation of the economic and financial state of
debtors, and cases in which an evaluation of the economic and financial state of debtors shall
not be ordered.
(2) The provisions of the Bankruptcy Act regarding debt take-over are applied in the
appropriate manner throughout the bankruptcy proceedings.
Terms for Filing Claims and Scheduling the Investigatory Hearing
Article 163
(1) The term for filing claims, set in the ruling on the institution of bankruptcy proceedings,
may not exceed twenty days.
(2) In the ruling on the institution of bankruptcy proceedings, the bankruptcy council shall set
a hearing for creditors at which the filed claims are investigated (investigatory hearing). No
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less than eight nor more than thirty days may pass from the last day of the term for filing
claims before the investigatory hearing.
Subsequent Filings
Article 164
Claims filed after the expiration of the term for filing may be investigated at the investigatory
hearing if so moved by the bankruptcy administration. Claims filed after the expiration of the
term for filing, which have not been investigated at the investigatory hearing and claims filed
at the latest within the term of one month following the first investigatory hearing, but not
later than the publication of the notification of the final hearing, may be investigated in
accordance with the conditions prescribed by the provisions of the Bankruptcy Act regarding
the submission of subsequent filings.
Citizens' Claims against a Bankrupt Bank based on Foreign Currency Deposits
Article 165
On the date of the institution of bankruptcy proceedings, citizens' claims shall be terminated
against the bankrupt bank based on foreign currency deposits, which have been transformed
into the public debt of the Republic of Croatia under special regulations, and these citizens, in
accordance with those regulations, are issued with bonds of the Republic of Croatia in
exchange for their foreign currency deposits.
Postponement of the Investigatory Hearing
Article 166
An investigatory hearing scheduled in the ruling on the institution of bankruptcy proceedings
may be postponed at most twice, provided that a new investigatory hearing is held within
thirty days from the rendering of the ruling on postponement.
Investigations and Statements about Filed Claims
Article 167
The bankruptcy administration is obliged to investigate all filed claims by the time of the
investigatory hearing and provide a statement about them at that hearing.
Sale of the Assets of a Bankrupt Bank
Article 168
(1) The bankruptcy trustee is obliged to liquidate in parts the assets of the bankrupt bank
within five years as of the date of institution of bankruptcy proceedings. For the purposes of
this paragraph, the assets of the bank shall mean all forms of assets making the capital assets
of the bankrupt bank, except the monetary means.
(2) If all assets of the bank in bankruptcy are not liquidated within the term from paragraph 1
of this Article, the bankruptcy council shall order, within a further term of 30 days, the
institution of proceedings for the sale of the assets of the bankrupt bank as a whole, as moved
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by the bankruptcy trustee. No consent of the bank's creditors is required for the rendering of
the decision from this paragraph.
(3) Pursuant to the decision from paragraph 2 of this Article, the bankruptcy trustee shall take
the necessary action for the sale of the assets of the bankrupt bank as a whole at a public
auction. In the notification about the public auction, the bankruptcy trustee shall set the initial
price for the property in the amount of its book-keeping value. If at the public auction no one
accepts the initial price, the initial price shall be decreased by 10 per cent and shall continue
to be decreased by the same percentage of the initial price until one of the purchasers accepts
the offered price.
(4) After the assets of the bankrupt bank have been sold according to the procedure from
paragraph 3 of this Article or if the sale of the assets has failed, at the latest within 180 days,
counting from the date of the rendering of the decision from paragraph 2 of this Article, the
bankruptcy council shall rule on the conclusion of the bankruptcy proceedings, pursuant to
which the bank shall be deleted from the court register, and as of that date the bank shall cease
to exist.
Informing the Croatian National Bank
Article 169
The court shall also deliver a copy of the report by the bankruptcy trustee about the course of
the bankruptcy proceedings to the Croatian National Bank.
Claims with Seniority in Payment
Article 170
(1) Claims with seniority in payment are as follows:
1) claims of employees of the bankruptcy debtor of the Croatian Institute for Medical
Insurance and the Croatian Institute for Pension Insurance, which are under law
mandatorily met as contributions from salaries and on salaries, except claims that have
to be met under law as expenses of the bankruptcy proceedings or as other obligations
of the bankruptcy estate,
2) claims of the Croatian National Bank, claims arising out of taxes and other claims
forming part of the revenues of the state budget and of the budgets of the units of local
administration and self-government,
3) the difference of citizens' claims between the overall amount of deposits, checking and
giro accounts and deposits on foreign currency accounts, and the amount paid out
pursuant to deposit insurance with the State Agency for Deposit Insurance and Bank
Rehabilitation,
4) claims of natural and legal persons who are not shareholders of the bankrupt bank,
5) claims of the State Agency for Deposit Insurance and Bank Rehabilitation based on
insured deposits pursuant to a separate law,
6) claims of the owners of hybrid and subordinate debt instruments issued under the
condition that in the event of bankruptcy claims arising therefrom they shall have the
right of priority over the rights of shareholders and owners of other hybrid and
subordinate debt instruments.
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(2) If after the finalisation of the bankruptcy proceedings and settlement of all debts, any
means are left in the bankruptcy estate, the means shall be distributed amongst the
shareholders of the bank in accordance with the statute of the bank or other by-laws of the
bank.
XVI. CUSTOMER PROTECTION
The Meaning of the Term
Article 171
According to the provisions of this Act, the term customer means any natural person – or
citizen who is the beneficiary of banking services from Article 3 of this Act, as well as other
financial services from Article 6 of this Act, provided that the other financial services are
rendered by a bank.
Contracting Services
Article 172
(1) A bank is obliged to conclude a contract with the customer on rendering specific banking
services from Article 3 of this Act.
(2) Before concluding the contract from paragraph 1 of this Article, the bank is obliged to
present or make available to the customer all material conditions of the contract, showing the
rights and obligations of the contractual parties.
(3) The contract from paragraph 1 of this Article shall be concluded in written form. After it is
concluded, the bank is obliged to provide at least one copy to the customer.
(4) The contract from paragraph 1 of this Article may be concluded by the use of electronic
signature, unless the use of a personal signature in documents on paper or a legalisation of the
personal signature is prescribed by a separate law or pursuant to a law adopted by a
regulation.
Announcement of General Operating Conditions
Article 173
(1) The bank is obliged to make available at a suitable location within its business premises
information about conditions for rendering services to customers.
(2) Apart from the mandatory informing of citizens as laid down in paragraph 1 of this Act
about conditions for services rendered, the bank may also make the information available in
some other suitable way.
(3) The information from paragraph 1 of this Article, in relation to the granting of loans,
comprises the following data:
1) the valid nominal annual rates of simple and default interest;
2) the manner of calculating the interest (application of relative or compound interest
rate);
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3) the conditions under which the rates of simple and default interest may be changed
throughout the use or repayment of the loan;
4) compensation or commissions (except interest at the declared nominal rate), charged by
the bank to the beneficiary of the loan;
5) the effective interest rate reflecting the total price of the loan, calculated in accordance
with the regulations of the Croatian National Bank;
6) the amount of repayment of the principal and interest (including other expenses, as
well) for the presumed amount of the loan, repayment terms, the number and amount of
instalments;
7) conditions for savings or money deposits with the bank, if that is a condition precedent
for the loan;
8) the possibility and conditions for setting-off the loan and the savings deposits or money
deposit from the preceding item;
9) security instruments for the repayment of the loan and other conditions of the bank.
(4) The information from paragraph 1 of this Article in relation to the receipt of deposits is
taken to comprise the following data:
1) the valid nominal annual interest rates;
2) the manner of calculating the interest (application of relative or compound interest
rate);
3) conditions under which interest rates may be changed;
4) compensation for keeping the account and other similar compensation or commissions
if the bank charges them at the expense of the depositor;
5) the effective interest rate reflecting the total return on deposit, calculated in accordance
with the regulations of the Croatian National Bank;
6) basic information about deposit insurance.
Regulations about the Content of a Contract
Article 174
The Croatian National Bank may determine:
1) the uniform way of calculating and showing the price of loans and deposits (effective
rates from Article 173, paragraph 3, item 5, and paragraph 4, item 5;
2) other mandatory elements of contracts on loans and monetary deposits, as well as
annexes to those contracts.
Informing Customers
Article 175
(1) A bank is obliged to inform its customers in the agreed way, and at least once a year, or
to make available to customers data about the balance on their loans or deposit accounts.
(2) In the event of a variable interest rate, the bank is obliged to inform the customer about
changes in that rate before the change becomes applicable through the means of mass
media or in some other appropriate manner.
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Customers’ Complaints
Article 176
(1) If the customer believes that the bank is not abiding by the conditions from the contract on
the rendering of banking and other financial services, it may send his/her complaint to:
1)
2)
3)
4)
5)
the relevant organisational unit of the bank;
the internal auditing department in the bank;
a company or association for consumer protection;
the competent department of the regional unit of the State Inspectorate; or
other competent bodies.
(2) Within the framework of its supervisory powers over banks, the Croatian National Bank is
authorised to verify whether the bank generally complies with good business practices,
published general operating conditions, and contracts concluded with its clients, but is not
obliged to resolve individual complaints from the bank's clients.
Application of Separate Laws
Article 177
Apart from the provisions of Article 171 through 176 of this Act, the rights of clients of the
bank (natural persons) are also protected pursuant to a separate law that regulates consumer
protection, whereby it is necessary to abide by the provisions of this Act relating to the
obligation of keeping banking secrets.
XVII. HOUSING SAVINGS BANKS
Housing Savings Banks
Article 178
The provisions of this Act apply to housing savings banks established under the provisions of
the Law on Housing Savings and State Incentives for Housing Savings, unless regulated
otherwise by other laws.
Capital
Article 179
(1) The minimum amount of the required equity capital for the establishment of a housing
savings bank is HRK 20 million.
(2) The guarantee capital for a housing savings bank may not be less than the minimum
amount of the equity capital from paragraph 1 of this Article.
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Protection of the Title
Article 180
No one may use the word "savings bank" or derivatives of that word for designating business
activities or company names, except housing savings banks and other banks from Article 190,
paragraph 4 of this Act, unless permitted by another law.
XVIII. ASSOCIATION OF BANKS
Association of Banks
Article 181
(1) Banks may join together in an association of banks, established as an economic interest
association or in some other form of association of commercial subjects in accordance with a
separate law.
(2) Apart from tasks prescribed by the statute, an association of banks may:
-
organise a system of deposit insurance with suretyship above the amount laid down
in the Deposit Insurance Act;
organise exchanges of information about credit-worthiness for the purposes of
protection against credit risks;
carry out expert training of the banks’ employees and issue certificates of completed
professional training.
(3) Banks may not conclude any written or verbal contracts with other banks or bank
associations that might restrict the principle of free market competition in banking.
(4) For the purposes of the implementation of paragraph 3 of this Article, an association of
banks shall send its statute to the Croatian National Bank, as well as any and all agreements,
arrangements and other general acts.
(5) For the purposes of the implementation of paragraph 3 of this Article, a bank shall deliver
to the Croatian National Bank any and all agreements, arrangements and other general acts
concluded with other banks.
XIX. PENAL PROVISIONS
Misdemeanours by Banks
Article 182
(1) A bank shall be fined for a misdemeanour in an amount between HRK 500,000.00 and
1,000,000.00 if:
1)
2)
the bank renders other financial services for which it has not obtained a license from
the Croatian National Bank (Article, 6, paragraph 2);
the bank performs activities that are not banking services, other financial services and
accessory banking services, and which have not been placed within the competence
of the bank by another law;
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3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)
19)
20)
21)
22)
23)
24)
25)
26)
27)
the bank provides loan financing or issues suretyship contrary to the provisions of
Article 17 of this Act;
the preferred shares of the bank exceed the limitation from Article 18 of this Act;
the bank obtains shares or business shares in another bank or another financial
institution contrary to the provisions of Article 19 of this Act;
the bank enables a shareholder to vote contrary to the provisions of Article 22 of this
Act;
the bank violates the provisions on the board of directors and employment of
members of the board of directors from Articles 23 and 24 of this Act;
the bank violates the provisions of Article 27 of this Act;
the bank has a supervisory board, which is comprised contrary to the provisions of
Article 30, paragraphs 1 and 2 of this Act;
the bank starts to render banking services in a member state of the European Union
contrary to the provisions of Article 41 or Article 42 of this Act;
the bank establishes a branch office abroad without obtaining a license from the
Croatian National Bank for the establishment of a branch office;
the calculation of the guarantee capital is performed contrary to the regulations
adopted on the basis of Article 63 of this Act;
the bank acts contrary to the provision on the amount of the guarantee capital from
Article 64 of this Act;
the banks acts contrary to the provisions on the minimum amount of capital adequacy
from Article 65, paragraphs 2 and 3 of this Act;
in calculating the weighted risk assets the bank acts contrary to the regulations
adopted on the basis of Article 66 of this Act;
in planning and implementing risk management measures the bank acts contrary to
the provisions from Article 67 of this Act;
in measuring, evaluating and risk management the bank acts contrary to the
regulations adopted on the basis of Article 68 of this Act;
the bank does not evaluate credit risk on a continuous basis and does not provide
provisions for the coverage of losses in accordance with the regulations adopted on
the basis of Article 69 of this Act;
the bank acts contrary to the provisions of Article 70 of this Act,
the bank acts contrary to the provisions of Article 75, Article 76 and Article 77 of this
Act on permissible exposure;
the bank concludes a legal transaction, which would cause or increase the exposure of
the bank towards persons in a special relationship with the bank contrary to Article
78, paragraph 2 of this Act;
in managing its assets and liabilities the bank acts contrary to the provisions of
Article 79 of this Act;
the bank violates the provisions of Article 81, paragraph 3 of this Act;
the bank acts contrary to the provisions on the limitation of investment from Article
82 and Article 83 of this Act;
the bank performs an investment without the prior consent of the Croatian National
Bank from Article 83, paragraphs 1 and 2 of this Act;
in the course of the establishment of a legal person the bank violates the provisions of
Article 84, paragraph 5 of this Act;
the bank fails to deliver to the Croatian National Bank a report with the content,
within the term and in the manner determined in the regulations adopted on the basis
of Article 87 of this Act;
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28) the bank pays out profit or advance of profit contrary to the provisions of Article 88
of this Act;
29) the bank does not immediately adopt measures for securing the minimum capital and
the minimum capital adequacy rate and informs the Croatian National Bank thereof in
accordance with Article 89 of this Act;
30) as the superior bank in a group of banks, the bank does not prepare and deliver
consolidated financial statements in the manner, within the scope and with the content
set in the regulation adopted on the basis of Article 94, paragraph 3 of this Act, or if
at the request of the Croatian National Bank from Article 94, paragraph 4, or Article
95 of this Act it does not perform a consolidation of individual items or individual
transactions, i.e., groups of transactions or complete consolidation of financial
statements;
31) the bank does not deliver to the Croatian National Bank notifications and information
in accordance with Article 96 of this Act;
32) the bank does not deliver to the superior bank in a group of banks information
necessary for consolidation,
33) the bank keeps business books, draws up book-keeping reports, values book-keeping
items or draws up financial statements contrary to the provisions of Articles 101, 102,
103 or 104 of this Act or contrary to the regulations adopted on the basis of Article
105 of this Act;
34) the bank does not organise internal auditing in accordance with Articles 106, 107 or
108 of this Act;
35) the bank does not deliver to the Croatian National Bank an audited annual report or
audited consolidated annual report within the term prescribed in Article 112,
paragraph 3 of this Act;
36) the bank does not provide the documentation showing changes to software or changes
in the form of the data base in accordance with Article 122, paragraph 3 of this Act;
37) the bank does not inform the Croatian National Bank about facts and circumstances
from Article 132, paragraphs 1 and 3 of this Act;
38) the bank does not deliver to the Croatian National Bank reports and information from
Article 133 of this Act;
39) the bank acts contrary to the provisions on contracting services from Article 172 of
this Act;
40) the bank acts contrary to the regulations adopted pursuant to Article 174 of this Act;
41) the bank does not inform its customers in accordance with the provisions of Article
175 of this Act;
42) the bank concludes an agreement contrary to Article 181, paragraph 3 of this Act;
43) the bank does not deliver to the Croatian National Bank acts from Article 181,
paragraph 5 of this Act;
44) the bank does not adjust its business to the provisions of Article 190, paragraphs 2
through 7 of this Act.
(2) The responsible person from the board of directors of the bank shall be fined for the
misdemeanour from paragraph 1 of this Article in an amount between HRK 10,000.00 to
50,000.00.
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(3) The bank shall be fined for a misdemeanour in an amount between HRK 50,000.00 and
100,000.00 if:
1)
2)
the bank fails to inform the Croatian National Bank in accordance with Article 132,
paragraph 1, or Article 133 of this Act, or in accordance with the regulations adopted
on the basis of Article 143 of this Act;
the bank does not enable the authorised person to carry out an inspection as laid down
in Articles 119 through 122 of this Act.
(4) The responsible person from the board of directors of the bank shall be fined for the
misdemeanour from paragraph 3 of this Article in an amount between HRK 1,000.00 to
5000.00.
Misdemeanours by Members of the Supervisory Board and Other Misdemeanours by
Members of the Board of Directors
Article 183
(1) A member of the board of directors of the bank shall be fined for a misdemeanour in an
amount between HRK 1,000.00 and 5,000.00 if he/she:
1)
2)
3)
does not immediately inform the supervisory board about circumstances from Article
28 of this Act;
concludes a legal transaction that would cause or increase the exposure of the bank
towards persons in a special relationship with the bank contrary to Article 78,
paragraph 2 of this Act;
does not immediately inform the Croatian National Bank about circumstances from
Article 132, paragraph 2 of this Act.
(2) A member of the supervisory board of the bank who does not immediately inform the
Croatian National Bank about circumstances from Article 32, item 3 of this Act shall be fined
for a misdemeanour in an amount between HRK 5,000.00 and 25,000.00.
Misdemeanours by Other Persons
Article 184
(1) A legal person who uses the word "bank" or a derivative of that word contrary to the
prohibition from Article 2, paragraph 3 of this Act shall be fined for the misdemeanour in an
amount between HRK 50,000.00 and 500,000.00.
(2) The responsible person within the legal person who has committed the misdemeanour
from paragraph 1 of this Article shall be fined for the misdemeanour in an amount between
HRK 5,000.00 and 25,000.00.
(3) A legal person who renders banking services contrary to the prohibition from Article 5 of
this Act shall be fined for the misdemeanour in an amount between HRK 50,000.00 and
500,000.00.
(4) The responsible person within the legal person who has committed the misdemeanour
from paragraph 3 of this Article shall be fined for the misdemeanour in an amount between
HRK 5,000.00 and 25,000.00.
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(5) A natural person who renders banking services contrary to the prohibition from Article 5
of this Act shall be fined for the misdemeanour in an amount between HRK 4,000.00 and
40,000.00.
(6) A person in a special type of relationship with the bank who concludes a legal transaction
that would cause or increase the exposure of the bank to risk contrary to Article 78, paragraph
2 of this Act shall be fined in an amount between HRK 4,000.00 and 40,000.00.
(7) A liquidator who acts contrary to Article 148 and 154 of this Act shall be fined for the
misdemeanour in an amount between HRK 50,000.00 and 500,000.00.
(8) A legal person who uses the words "savings bank" or a derivative of those words contrary
to the prohibition from Article 180 of this Act shall be fined for the misdemeanour in an
amount between HRK 50,000.00 and 500,000.00.
(9) The responsible person within the legal entity who has committed the misdemeanour from
paragraph 8 of this Article shall be fined for the misdemeanour in an amount between HRK
5,000.00 and 25,000.00. An association of banks that fails to deliver to the Croatian National
Bank the by-laws from Article 181, paragraph 4 of this Act shall be fined for the
misdemeanour in an amount between HRK 50,000.00 and 500,000.00.
Misdemeanours by Subordinate Companies
Article 185
(1) The subordinate company in a group of banks that fails to deliver to the superior bank in
the group of banks data necessary for consolidation shall be fined for the misdemeanour in an
amount between HRK 50,000.00 and 500,000.00.
(2) The responsible person in the subordinate company who has committed the
misdemeanour from paragraph 1 of this Article shall be fined for the misdemeanour in an
amount between HRK 4,000.00 and 40,000.00.
Misdemeanours by Auditors
Article 186
An auditor who does not immediately inform the Croatian National Bank about circumstances
from Article 113 of this Act shall be fined for the misdemeanour in an amount between HRK
5,000.00 and 50.000,00.
Misdemeanours by Members of the Provisional administration
Article 187
A member of a provisional administration shall be fined for a misdemeanour in an amount
between HRK 5,000.00 and 25,000.00 if:
1)
within the term of three months after appointment, he/she does not deliver to the
Croatian National Bank a report about the financial state and conditions of the bank's
business (Article 140, paragraph 1 of this Act);
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2)
3)
within the term of nine months after appointment, he/she does not deliver to the
Croatian National Bank a report from Article 140, paragraph 2 of this Act;
in the event from Article 141, paragraph 1 of this Act, he/she does not announce the
convocation of a shareholders' meeting and its agenda within the term set in Article
141, paragraph 2 of this Act.
Misdemeanours related to the Obligation to Keep Banking Secrets
Article 188
(1) A bank that violates the obligation of keeping banking secrets shall be fined in an amount
between HRK 50,000.00 and 500,000.00.
(2) The responsible person in the bank that has committed the misdemeanour from paragraph
1 of this Article shall be fined for the misdemeanour in an amount between HRK 5,000.00
and 25,000.00.
(3) The natural person from Article 99, paragraph 1 of this Act who has violated the
obligation of keeping banking secrets shall be fined for the misdemeanour in an amount
between HRK 5,000.00 and 25,000.00.
Limitation Period
Article 189
(1) Misdemeanour proceedings against a bank, against a member of the board of directors or
the supervisory board, against the subordinate bank in a group of banks, against an auditor,
against the provisional administration and other persons for the misdemeanours determined in
this Act cannot be initiated after the expiration of the term of 3 years from the date of the
writing of the report of the Croatian National Bank, in which the irregularity or unlawfulness
in the business was established.
(2) The limitation period is discontinued by any action of the competent body taken to
prosecute the perpetrator of the misdemeanour. The limitation period starts to run again after
each such discontinuation, but the misdemeanour proceedings cannot be conducted after the
expiration of twice the period set in paragraph 1 of this Article.
XX. TRANSITIONAL AND FINAL PROVISIONS
The Adjustment of Banks
Article 190
(1) Banks that are entered in the court register on the date of entry into force of this Act and
that have an operating license, i.e., a license to render banking and financial services, shall
continue with their business as banks under this Act pursuant to the obtained license.
(2) If the bank from paragraph 1 of this Article wishes to render other financial services,
which are not entered as activities in the court register, it is obliged to carry out the procedure
anticipated by this Act.
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(3) Banks shall adjust their business within the term of one year from the effective date of this
Act, specifically:
-
equity capital according to the provisions from Article 15 of this Act;
shares according to the provisions of Articles 16, 17, 18 and 19 of this Act;
the board of directors and procurators according to the provisions of Articles 23,
24 and 25 of this Act;
members of the supervisory board according to the provisions of Article 30 of this
Act;
guarantee capital according to the provisions of Article 64 of this Act;
investment in the capital of non-financial institutions according to the provisions
of Article 82, paragraph 2 of this Act;
investment in the capital of one non-financial institution according to the
provisions of Article 83, paragraph 1 of this Act.
(4) By way of derogation from the provisions of paragraph 3, sub-paragraph 1 of this Article,
former savings banks, which by 31 December 2001, in accordance with Article 119 of the
Banking Act (Official Gazette No. 161/98), increased their equity capital and obtained a
license to operate as banks, and the equity capital of which is lower than the amount set in
Article 15 of this Act, are obliged to increase their equity capital to an amount not lower than:
- HRK 25 million by 31 December 2003;
- HRK 30 million by 31 December 2004;
- HRK 35 million by 31 December 2005;
- HRK 40 million by 31 December 2006.
(5) When the bank from paragraph 4 of this Article increases its equity capital, so that it is not
lower than the amount set in Article 15 of this Act, it is obliged to apply to the Croatian
National Bank, in accordance with the provisions of this Act, for a license to render banking
and/or other financial services.
(6) Until the license to render banking and/or other financial services is obtained, the bank
from paragraph 4 of this Article does business according to the operating license it has
obtained.
(7) The guarantee capital of the bank from paragraph 4 of this Article as of 31 December 2003
may not be lower than the minimum amount of the equity capital from paragraph 4 of this
Article.
(8) Banks are obliged to deliver to the Croatian National Bank a report on the adjustment of
their business to paragraph 3 of this Article at the latest within one month from the expiration
of the term from paragraph 3 of this Article.
(9) Banks are obliged to adjust their by-laws to comply with the provisions of this Act and the
regulations of the Croatian National Bank adopted pursuant to this Act within six months
from the effective date of this Act or within six months from the date of entry into force of
this Act.
(10) If the bank from paragraph 1 of this Article does not abide by the provisions from
paragraphs 2 through 7 of this Article, the Croatian National Bank may revoke the bank’s
operating license.
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Procedures
Article 191
(1) All procedures for obtaining licenses and consents instituted before the effective date of
this Act shall be completed in accordance with the provisions of the Laws valid until the date
of entry into force of this Act.
(2) Bankruptcy and liquidation proceedings in banks and savings banks instituted according to
the provisions of the Bankruptcy Act or the Company Act shall be completed in accordance
with the provisions of these Acts, except in the part relating to the sale of the assets of a
bankrupt bank or savings bank as laid down in Article 168 of this Act, and the term shall
begin from the date this Act comes into force.
The Termination of the Validity of Regulations
Article 192
(1) On the date of entry into force of this Act, the Banking Act (Official Gazette No. 161/98)
shall cease to be valid.
(2) The Croatian National Bank shall adopt regulations based on this Act within six months
from the date of entry into force of this Act.
(3) Until the adoption of regulations based on this Act, the regulations adopted on the basis of
the Banking Act (Official Gazette No. 161/98) shall be applied appropriately.
The Commencement of the Application of Certain Provisions
Article 193
(1) The provisions of Article 13, paragraph 2, Article 20, paragraph 5, Articles 41 through 44,
Articles 47 through 50, Article 58, paragraph 3, item 2, Article 59 and 60 of this Act shall
become applicable as of the date of full-time membership of the Republic of Croatia in the
European Union.
(2) Until the application of the provisions from paragraph 1 of this Article,
1) Article 21 of this Act applies to decisions related to the consent to the person of a
member state of the European Union for the acquisition of a qualified share;
2) the provision of Article 45 of this Act applies to the performance of banking services of
banks in the member states of the European Union;
3) the provisions of Articles 51 through 56 of this Act apply to the performance of
services of banks from the member states of the European Union in the Republic of
Croatia;
4) the provisions of Article 58, paragraph 3, item 3 of this Act apply to the delivery of
data to the supervisory bodies of the member states of the European Union.
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(3) The provisions of Chapter VI, except the provisions of Article 96 of this Act, are
applicable as of 1 January 2003.
Effectiveness
Article 194
This Act shall enter into force on the eighth day after its publication in the Official Gazette,
unless determined otherwise in Article 193 of this Act.
Class: 450-02/01-01/03
Zagreb, 3 July 2002
CROATIAN PARLIAMENT
President
of the Croatian Parliament
Zlatko Tomčić
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