CNB Council: Completion of resolution proceedings against Sberbank d.d. – under resolution

Published: 13/4/2022

At its session today, the CNB Council discussed current economic and financial developments and adopted a monetary policy projection for the period 2022-2025. The agenda also included analysing the report on the banking sector condition in 2021 and adopting the decision on the CNB’s financial statements for 2021. The Council also adopted several other decisions on matters falling within its competence.

According to available monthly data, real economic activity growth accelerated in the first quarter, although the annual growth rate could decrease from the previous quarter. Economic growth is expected to decelerate towards the end of the year, primarily due to the adverse indirect and direct economic impacts of the Russian invasion of Ukraine. The global prices of energy products and other raw materials jumped and became volatile. Assuming that the war in Ukraine will last for a relatively short period and that the prices of energy products and raw materials in the world market will gradually normalise, the CNB has downgraded its forecast for annual real GDP growth in 2022 under the baseline scenario from 4.1% projected in December 2021 to 3.2%. Consumer price inflation continued to accelerate early in the year as a result of the high prices of energy products and other raw materials, disturbances in supply chains, which led to a rise in the prices of some intermediate goods, such as semiconductors, and high freight rates. Average inflation for 2022 is projected at 5.4% (compared with 2.6% in 2021).

The current and capital account balance deteriorated in the last quarter of 2021 from the same period in the previous year, principally due to the growing profits of banks and enterprises owned by non-residents. However, the balance considerably improved annually in 2021 because of a strong recovery of income from tourist spending of foreign guests. Due to the growth of energy product prices, the current and capital account surplus is expected to be lower this year than in the previous year, but remain relatively high at 5.0% of GDP. Banks’ free reserves continued to reach record highs, reflecting the continuation of expansionary monetary policy, which also contributed to a further decrease in corporate and household financing costs. The annual growth of bank placements accelerated to 4.0% in February on the back of the stepped-up growth of lending to non-financial corporations, while the growth rate of household lending held steady at the previous month’s level. The growth of housing loans continued to decelerate, whereas the growth of general-purpose cash loans accelerated slightly. The strong economic recovery last year caused the public debt to GDP ratio to fall sharply to 79.6% at the end of 2021, with the deficit down slightly in the first two months of this year from the same period last year. Under the baseline scenario, the nominal budget balance is expected to improve and general government debt is expected to decrease in 2022.

The CNB Council adopted a decision on the completion of resolution proceedings against Sberbank d.d. – under resolution on 13 April 2022 at 23:59:59. As a result of the transfer of shares to the new shareholder and the appointment of the resolution administration, all the resolution measures required for Sberbank's liquidity situation to improve and further deposit outflow to be prevented were implemented, so that the reasons for the continuation of resolution proceedings against the Bank have ceased to exist.

The CNB Council granted approval for the appointment of Tadija Vrdoljak as Chairman and of Ognjen Brakus and Boris Bekavac as Members of the Management Board of Sberbank d.d. after the completion of resolution proceedings.   

The Council also granted approval to the Supervisory Board of Croatia Banka dd. to appoint Katarina Stanić as Member of the Bank’s Management Board.

In accordance with the request of Croatia banka d.d. the Council adopted a decision to update its authorisation by erasing from it the provision of the following financial services: execution of orders on behalf of clients; dealing on own account; placing of financial instruments on a firm commitment basis and services related to placing of financial instruments on a firm commitment basis.

At the request of Karlovačka banka d.d., the CNB Council adopted a decision to update its authorisation by erasing from it the provision of the additional financial service: activities related to the sale of insurance policies.

Finally, the CNB Council adopted a decision granting authorisation to Privredna banka Zagreb to merge by acquisition PBZ stambena štedionica.