Credo banka – a special case

Published: 24/11/2011

Given the natural interest of the public in the banking sector movements, particularly expressed by savings depositors and other clients of smaller banks attracting strong attention after the authorisation of Credo banka d.d. Split has been withdrawn, the Croatian National Bank considers it proper to communicate the following information:

All banks operating in Croatia under the authorisations granted by the Croatian National Bank, irrespective of their size and of whether their shareholders are domestic or foreign persons, are obliged to comply with Croatian laws and subordinate legislation and are subject to the supervision of the CNB. For the purpose of increasing the banking system transparency, all banks are obliged to submit their business operation reports to the central bank within the prescribed time limits. The Croatian National Bank publishes the processed and consolidated reports at its website upon expiry of each quarter, in order to provide an insight into the most relevant indicators of the condition and performance of each bank operating in the domestic market to all interested parties, especially the users of their services.

From a perspective of banking supervision, a particularly important indicator is capital adequacy, by which a bank ensures regular settlement of its liabilities. The minimum prescribed capital adequacy ratio for the Croatian banking system is 12 percent (which is more than, e.g. in the EU Member States). For obvious reasons, the maintaining of this rate is particularly important for smaller banks that are not part of strong banking systems capable of providing additional capital to support such a bank in the event of difficulties.

Therefore, the central bank supervisors view the approaching of this rate to the prescribed minimum as a warning signal and a reason for requiring from the management and supervisory boards of such banks to carry out a recapitalization by investments of existing or new shareholders and, possibly, to implement other measures towards stabilising the operation. It is exclusively under these circumstances that the central bank is currently conducting stricter supervision of four smaller banks also mentioned in the reply of the responsible CNB vice governor to a TV presenter's question.

However, it is worth mentioning that the situation in these banks is by no means equal to the conditions and reasons that led to withdrawing the authorisation and initiating compulsory winding-up proceedings of Credo banka d.d. According to both capital adequacy and liquidity indicators, the situation in these banks is stable and it is in no respect comparable to the condition of the bank in Split whose authorisation has been withdrawn.