Croatian National Bank adopts measures to provide for liquidity

ZAGREB, March 20 (Hina) – The Croatian National Bank (HNB) has adjusted its approach on the supervision of the business of commercial banks to enable them to provide for liquidity and thus prop up the economy during the crisis caused by COVID-19.

According to a press release issued by the central bank on Friday, the measures taken to respond to disruptions in the economy are in compliance with the positions of the European Bank Authority (EBA) and the European Central Bank (ECB). The EBA states on its website that along with national competent authorities (CAs) and the European Central Bank, “it is coordinating a joint effort to alleviate the immediate operational burden for banks at this challenging juncture.”

“The EBA recommends CAs to make full use, where appropriate, of the flexibility embedded in the regulatory framework to support the banking sector,” says the EBA which is is part of the European System of Financial Supervision.

On the same track, HNB has opted for a flexible approach in the application of the existing regulatory framework in these extraordinary circumstances so as to enable banks to give an important contribution to efforts to mitigate the social and economic consequences of the coronavirus pandemic.

Therefore, HNB has postponed some of its supervising activities such as implementing stress tests on commercial lenders.

Credit institutions in Croatia have been instructed on how to make use of liquidity reserves in the next 12 months and how to classify the current and future exposure to borrowers who have been servicing their debts in an orderly manner until now.

Thus, credit institutions can allow the postponement of the servicing of debts, restructure credit obligations for their customers, as well as approving rolling over current loans into new ones.

HNB will issue instructions to commercial banks to retain last year’s profit and to apply some of the recommended austerity measures.