Continuing the 131^st meeting held on March 24, 1999, the Council of the Croatian National Bank examined today the situation in Neretvansko gospodarska banka d.d. Ploče and Invest štedionica d.d. Zagreb. The results of on-site examinations conducted in these financial institutions and the analysis of their financial reports indicate that they have had problems in the business operation recently, have not complied with regulation and have not implemented the corrective measures recommended by the Croatian National Bank. They also do not have the adequate level of capital, and cannot meet their financial obligations, since their giro accounts have been blocked for some time. Both Neretvansko gospodarska banka and Invest štedionica had been granted an intervention loan, but the loan was not paid back when it came due. Having reviewed the situation in these two financial institutions, the CNB Council estimated that they have no chance of recovery which would enable their stable future operation and decided to propose the initiation of bankruptcy proceedings against both financial institutions.

At the 132^nd meeting held today, the Council of the CNB made the Decision on the Transfer of Banks' and Savings Banks' Accounts from Zavod za platni promet (Agency for Domestic Payments) to the Croatian National Bank and on the Implementation of the Croatian Gross Settlement System. Pursuant to this decision, the Croatian National Bank will start keeping settlement accounts of banks and savings banks operating in Croatia as of April 6, 1999. To enable the interbank market to adjust to the approaching implementation of the Gross Settlement System, i.e. to create the necessary preconditions for the functioning of this system, the CNB Council made several decisions. One of these - the Decision on the Overnight Trading on the Interbank Market - is regulating the transactions on the market in the first phase of the development of the interbank trading. The Decision on Short-term Intervention Loans is defining the conditions under which intervention loans can be approved - the maturity period is reduced to one day and the possibility of prolongation of this period abolished.

At its meeting held on Wednesday, the CNB Council made a number of decisions related to prudential supervision, aiming at adapting the Croatian prudential regulation to ground principles of the Basle Committee for Banking Supervision and international accounting standards, as well as to the new Croatian Banking Law. These decisions are defining the new chart of accounts for banks, categorization of loans and off-balance sheet items, calculation of bank's exposure, capital adequacy, weighted assets and bank's capital. They are also prescribing the level and establishment of provisions for potential losses. Due to these decisions, as estimated by the CNB Council, the supervisory function of the Croatian central bank will be strengthened and the legal framework of the Croatian banking system improved.

The Council of the Croatian National Bank approved at its Friday meeting the regulations prescribing the procedures and criteria for accepting the nomination of candidates for the chairman or member of the management board of a bank i.e. savings bank. The CNB Council also agreed with the regulations on the banking exam, defining the content, deadlines and procedures for taking the exam, as well as the criteria that a candidate for the chairman or member of the management board of a bank or a savings bank has to fulfill in order to sit for this exam.