Keywords

consolidation, banking, banks

In October and November 2004, a research team of the Croatian National Bank conducted the fourth comprehensive survey of banks operating in Croatia. The survey gathered information about bankers' estimates and views of the current situation and trends in Croatian banking and its environment, which are compared in this paper with estimates based on CNB statistical data. The main conclusion of the analysis is that silent consolidation of the banking sector has continued, mostly through bank mergers and acquisitions, while only a few banks actually exited the market. In the last two years banks have been fully dedicated to household lending and non-interest income sources in their corporate business, which is a trend that should hold steady for some time. At the same time, banks will have to make considerable efforts to improve their risk management processes as even the most advanced of them have not yet attained the level that will soon be required under the new international standards. Bankers hold that improved legal protection of creditors and coordination of monetary and fiscal policies are challenges stemming from the environment that could boost Croatian banking system development. As banks vary greatly in the range of services they offer, one should also take account of forecasts that fierce competition among banks will continue, additionally lowering the price and expand the range of their services.