Six banks dominating the market

Published: 11/2/2004

At its session held on Wednesday, the Council of the Croatian National Bank, chaired by Governor, Dr Željko Rohatinski, analysed recent economic and monetary developments and a report on the banking system in third quarter of 2003 and adopted several decisions within its sphere of competence.

Available data on price developments and the exchange rate stability continue to be satisfactory, indicating that the central bank was again successful in achieving its main objective in 2003. There have been no changes in this respect from the beginning of this year that would suggest any change in course. However, balance of payments data are not encouraging. Despite last year's noticeable increase in exports (10.2 percent at constant prices), the foreign trade deficit reached, according to preliminary data, around 8 billion US dollars, an increase of 38 percent over the previous year. A little less than half of the foreign trade deficit growth can be attributed to cross-currency changes (a fall in the average value of the dollar against the euro stood at 19.7 percent annually).

A similar reason can be given in explanation of total foreign debt that reached 23.6 billion US dollars until year-end. At current rate of exchange, this is an increase of 8.2 billion dollars compared with end-2002. However, the exchange rate effects excluded, this is still a high growth of 5.4 billion US dollars. Taking into consideration this year's planned borrowing, or the expected budget deficit for this year and the possible ways of its bridging, the members of the Council, the central bank's highest body, focused particularly on the analysis of the ways that monetary policy can help maintain macroeconomic stability, without negative effects on overall economic conditions in the country.

Following the mergers of Riječka banka and Erste & Steiermärkische Bank and Splitska banka and HVB Bank Croatia in the third quarter of last year, the total number of banks operating in Croatia has fallen to 43 banks. Of the total number of banks in the country, 20 are foreign-owned and they account for about 90 percent of the total banking system assets. A total of six banks and banking groups dominate the market and they account for a high 83.5 percent of total banking assets.

Total banking system assets increased by 5.05 percent, total loans granted by 3.97 percent and deposits by 4.76 percent during the observed quarter.

Members of the Council of the Croatian National Bank agreed to issue an approval to Validus d.d., a Varaždin-based company, to acquire a majority voting stock in Brodsko Posavska banka d.d. Slavonski Brod. Approval to acquire over 75 percent of voting stock in Križevačka banka d.d. Križevci was granted to Goran Delić from Križevci.

The Council of the CNB agreed with management board appointments proposed by supervisory boards of several banks including the appointment of Sanja Martinko as Member of the Management Board of Nova banka d.d. Zagreb, Duško Miculinić as President and Dražen Kurpis as Member of the Management Board of Primorska banka d.d., Rijeka, Hans Christian Vallant as President of the Management Board of Raiffeisen stambena štedionica d.d., Zagreb and Igor Lukačić as Member of the Management Board of Banka Sonic d.d. Zagreb.