Calculation base for subscription of compulsory CNB bills broadened

Published: 27/9/2007

Amendments to the Decision on the Purchase of Compulsory CNB Bills broadened the calculation base for subscription of compulsory CNB bills in cases where the growth of placements to residents (exclusive of placements to the Republic of Croatia or government funds) exceeds the permissible rate.

Over the past few months the implementation of the said Decision yielded the expected results by slowing down the growth of banks' lending. However, in an attempt to go around this restrictive measure, some banks have turned to their existing or newly established companies, using them to increase placements by granting consumer or other loans, credit card loans, via the transfer of receivables or some other legal transaction on the basis of which legal persons owned by these banks become creditors. Foreign sources of funds, in the majority of cases obtained from foreign (co-)owners of these banks and companies, have also been used for such purposes.

Therefore, resulting from the said amendments to the Decision on the Purchase of Compulsory CNB Bills, as of 1 October such forms of lending by legal persons with head offices in Croatia, controlled by a bank or an owner of a qualifying holding, who is a financial institution, shall be included in the calculation of the permissible growth rate of 0.5% per month. The starting calculation base for these categories of placements shall be the balance as at 30 September 2007.