Application for authorisation to establish a branch of a third-country credit institution

The Application for authorisation to establish a branch of a third-country credit institution is to be submitted on the form Application for authorisation to establish a branch of a third-country credit institution, together with the following documents:

1. a certificate from the register of companies or other relevant register in the country where the third-country credit institution (founder) has its head office, not older than three months, indicating its legal form, date of the entry in the register, persons authorised to represent it and the scope of their powers or, if the credit institution is established in a country that does not keep such a register, legally valid documents on establishment certified in accordance with the regulations of the country where the credit institution has its head office, indicating its legal form, date of establishment, persons authorised to represent it and the scope of their powers;
2. the decision of the third-country credit institution (founder) to establish a branch;
3. a copy of the deed of establishment, memorandum or Articles of Association of the third-country credit institution (founder), certified in accordance with the regulations of the country where the credit institution has its head office;
4. data on the members of management and supervisory bodies of the third-country credit institution (founder);
5. an application for prior approval for persons who will be responsible for directing the business of the branch of the third-country credit institution;
6. audit reports of the third-country credit institution (founder) for the three preceding years of business;
7. a credible document indicating the owners of the institution and their rights in managing the third-country credit institution (founder);
8. a certificate from the register of companies or other relevant register in the country where legal persons who are holders of qualifying holdings in the third-country credit institution (founder) have their head office, including a list of natural persons who are the ultimate shareholders of these legal persons;
9. authorisation to provide banking and financial services granted to the third-country credit institution (founder) by the competent authority;
10. a list of banking and financial services the branch of the third-country credit institution intends to provide in the Republic of Croatia and a business plan for the first three years of business;
11. a relevant legal act of the competent authority in the Republic of Croatia where so required by the regulations governing the provision of financial services envisaged in the business plan referred to in item 10;
12. a list of persons connected with the third-country credit institution (founder) in the manner referred to in Article 16 of the Credit Institutions Act;
13. authorisation by the competent authority of the third-country credit institution (founder) to establish the branch or a statement by the authority in question that such authorisation is not required under the regulations of the country where the credit institution has its head office, not older than six months;
14. a statement by the third-country credit institution (founder) that the branch will keep all documentation relating to its business in the Croatian language and store it at the headquarters of the branch and will prepare financial statements in accordance with the Credit Institutions Act or regulations adopted under that Act, and the regulations of the European Union governing the operation of credit institutions;
15. information on the deposit insurance scheme of which the third-country credit institution (founder) is a member; and
16. other information listed in the form Application for authorisation to establish a branch of a third-country credit institution.

Deciding on the application

The Croatian National Bank may, within one month from the date of receipt of an application for authorisation to establish a branch of a third-country credit institution request additional information and documentation. If the Croatian National Bank has requested additional information or documentation, the date of their delivery will be deemed the date of receipt of a valid application.

The Croatian National Bank will refuse an application to establish a branch of a third-country credit institution if:

1. based on the data available to it and the documentation enclosed with the application, it assesses that the third-country credit institution (founder) does not have the adequate financial position or the appropriate organisational, technical and personnel structure to operate in accordance with the provisions of the Credit Institutions Act and the regulations of the European Union governing the operation of credit institutions through a branch it intends to establish;
2. in view of the regulations of the country where the third-country credit institution (founder) has its head office or practices relating to their implementation, it is likely that the exercise of supervision in accordance with the provisions of the Credit Institutions Act will be made difficult or prevented;
3. it assesses that the person responsible for directing the business of the branch of the third-country credit institution does not meet the criteria laid down for members of the management board of a credit institution prescribed in Article 38 of the Credit Institutions Act or regulations of the European Union governing the operations of credit institutions, in the part related to the rights and obligations of the management board members;
4. the third country in which the credit institution has its head office has no regulations preventing money laundering and/or if these regulations do not provide for effective supervision of the prevention of money laundering and if the third-country credit institution (founder) or holders of qualifying holdings in its capital are, in any way whatsoever, connected with terrorist financing or there are indications of it;
5. the Croatian National Bank has not concluded a cooperation agreement regarding supervision with the competent authority of the third country in which the credit institution that is the founder of the branch has its head office; or
6. credit institutions with head offices in the Republic of Croatia are not provided at least the same conditions for establishment of a branch in the country where the third-country credit institution (founder) has its head office as are provided to the third-country credit institution (founder) in the Republic of Croatia.

The Croatian National Bank will grant authorisation to establish a branch of a third-country credit institution under the condition that the third-country credit institution places a deposit of not less than HRK 40 million in the account with a credit institution which has its head office in the Republic of Croatia. The funds deposited are held in the account until the entry of the branch of the third-country credit institution (founder) in the register of companies, at which time they are transferred to the settlement account of the branch held with the Croatian National Bank. These funds are deemed to be own funds within the meaning of the Credit Institutions Act. A third-country credit institution (founder) may increase the amount of own funds by payment in cash to the account of the branch held in the Republic of Croatia.

Where a third-country credit institution (founder) intends to begin to provide other services that are not covered by the authorisation to establish a branch of the third-country credit institution within the territory of the Republic of Croatia, it has to apply to the Croatian National Bank for authorisation to provide such services before entry of such services in the register of companies.

Branches of third-country credit institutions may be entered in the register of companies after obtaining authorisation from the Croatian National Bank.

A third-country credit institution (founder) may establish only one branch within the territory of the Republic of Croatia. If a third-country credit institution (founder) wishes to operate in more than one location within the territory of the Republic of Croatia, it may open one or more organisational units.

The provisions of the Credit Institutions Act and regulations adopted under that Act and the provisions of Regulation (EU) No 575/2013 relating to the following apply mutatis mutandis to branches of third-country credit institutions:

1. the credit institution's management board (Articles 36 to 44);
2. governance arrangements (Articles 98 to 100);
3. risk management system (Articles 101 to 103);
4. internal control systems (Articles 104 to 108);
5. outsourcing of business activities (Articles 109 to 111);
6. capital adequacy (Articles 112 to 115);
7. capital buffers and capital conservation measures (Articles 116 to 144);
8. approvals for exposures (Articles 145 to 147);
9. specific conditions for holdings of tangible assets and capital of other legal persons (Articles 148 and 149);
10. sale of placements (Article 150);
11. reporting to the Croatian National Bank (Articles 151 to 154);
12. banking secrecy (Articles 156 to 158);
13. business books and financial statements (Articles 159 to 164);
14. public disclosure (Articles 165 to 167);
15. external audit (Articles 168 to 174);
16. supervision of credit institutions (Articles 175 to 190 and Articles 199 and 200);
17. supervisory measures (Articles 217 to 234);
18. dissolution and reorganisation (Articles 246 to 249, Articles 263 and 276 and Articles 345 to 357);
19. consumer protection (Articles 300 to 312);
20. the decision-making procedures of the Croatian National Bank (Articles 322 to 328); and
21. minor offences (Articles 360 to 367).

A third-country credit institution (founder) has to insure deposits with its branches operating within the territory of the Republic of Croatia in its home country. The scope and level of coverage for deposits with branches of third-country credit institutions may not exceed the scope and level laid down in deposit insurance regulations in the Republic of Croatia. Where there is no deposit insurance scheme in the country where the credit institution has its head office or if the scope and/or level of coverage for deposits are lower than in the Republic of Croatia, a branch of a third-country credit institution has to join the deposit insurance scheme in the Republic of Croatia.

Expiry, annulment and revocation of decision

Authorisation to establish a branch of a third-country credit institution will expire:

1. where the competent authority revoked or annulled the third-country credit institution's (founder's) authorisation, as of the date of revocation or annulment of authorisation;
2. where the third-country credit institution (founder) ceases to exist in the country where it has its head office or under the regulations of that country loses its business capacity, or the competent court removes the third-country credit institution (founder) from the register of companies or other relevant register, or the institution loses the right to dispose of its assets, as of the date when one of the reasons arises;
3. where the third-country credit institution (founder) adopted a decision on winding-up of the branch;
4. where the Croatian National Bank adopted a decision on the compulsory winding-up of the branch of the third-country credit institution; or
5. where a competent court adopted a decision to open bankruptcy proceedings against the branch of the third-country credit institution.

The Croatian National Bank will annul authorisation of a third-country credit institution (founder) to establish a branch where a credit institution obtained authorisation to establish a branch on the basis of false or inaccurate data, which were relevant for obtaining authorisation to establish a branch.

The Croatian National Bank will revoke authorisation to establish a branch of a third-country credit institution (founder):

1. where conditions for refusal of the application for authorisation to establish a branch arise;
2. where the branch of the third-country credit institution fails to meet the requirements relating to deposit insurance laid down in the law governing deposit insurance;
3. where the branch of the third-country credit institution does not commence its activities within six months of the issue of authorisation;
4. where the branch of the third-country credit institution ceases to operate for more than six months;
5. where the branch of the third-country credit institution does not operate in accordance with applicable regulations of the Republic of Croatia and regulations of the European Union governing the operation of credit institutions; or
6. where the branch of the third-country credit institution fails to meet its financial obligations in the Republic of Croatia.

Where the competent authority of a third-country credit institution (founder) annuls or revokes authorisation to provide a certain financial service, the credit institution is obligated to notify the Croatian National Bank thereof. The Croatian National Bank will annul or revoke authorisation of a branch of a third-country credit institution to provide such service within the territory of the Republic of Croatia.

The Croatian National Bank may order a branch of a third-country credit institution whose assets and contingent liabilities reported in its audited annual financial statements exceed 5% of total assets and contingent liabilities of all credit institutions in the Republic of Croatia to continue its operation in the Republic of Croatia as a credit institution.

A third-country credit institution (founder) may apply for removal of a branch of the third-country credit institution from the register of companies only upon settlement of all obligations arising from the operation of the branch.