Governor, Deputy Governor and employees of the Croatian National Bank acted in compliance with regulations and ethical standards

Published: 13/1/2022

Given that the topic of the purchase and sale of bank shares, bonds and other securities is of a justified public interest, especially if such purchase or sale is done by the officials and employees of an institution in charge of supervising the operations of such banks, after having received numerous queries from the press and the citizens, the Croatian National Bank deems it necessary to inform the public that the CNB Governor Boris Vujčić, Deputy Governor Sandra Švaljek and other CNB employees acted in compliance with the regulations and ethical standards in force at the time when such actions were taken and that there have so far been no indications that they have been using inside information.

To be more precise, Boris Vujčić purchased shares of Riječka banka and Zagrebačka banka before he became the governor, deputy governor or the member of the CNB Council, when he was not subject to any statutory prohibition or restriction of purchasing shares of Croatian banks. He sold the shares in 2001, even though he was under no obligation to do so in accordance with the applicable regulations or ethical principles.

Sandra Švaljek purchased corporate bonds of Erste&Steiermärkische Bank d.d. in late 2012, at the time when she acted as the external member of the CNB Council, by consulting publicly available information contained in the issuer’s prospectus approved by the Croatian Financial Services Supervisory Agency. At the time, there were no regulations or other ethical standards imposing any prohibitions or any restrictions of the right to acquire bank bonds on the members of the CNB Council. Sandra Švaljek held the bonds for the agreed period of five years, until their maturity in 2017, when she was neither the member of the CNB Council nor employed with the CNB. The bonds had savings features equal to time deposits with a bank.

Croatia was not the member of the European Union at the time when Boris Vujčić and Sandra Švaljek purchased the shares and bonds concerned and thus no international regulations applied at the time that could have been breached by their actions.

Since its accession to the EU in mid-2013, Croatia has been continuously aligning its legal system with the EU law. The alignment process also includes the legislation governing the operations of the European Central Bank, whose member the CNB will become upon Croatia’s joining the euro area. By means of its own regulations, the Croatian National Bank has also been improving the ethical principles governing its work and operations, to be fully aligned with the law of the European Central Bank upon the introduction of the euro.

In accordance with the law and general acts, the CNB will take measures to inspect whether its employees have been acting lawfully in purchasing or selling bank securities and will actively engage with the Croatian Financial Services Supervisory Agency and other government institutions competent for verifying the lawfulness of operations and actions of the CNB’s officials and employees, in order to sanction any potential unlawful or unethical conduct.