At its meeting held on Wednesday, June 16, 1999, the Council of the Croatian National Bank, chaired by Governor dr. Marko Skreb, reviewed the report on the situation in Croatia banka d.d. Zagreb and on prospects for profitable future operation of the bank. The report was presented by Mr. Adolf Matejka, CNB Executive Director for Central Banking Operations, who was appointed temporary administrator for Croatia banka d.d. Zagreb and assumed all the authorities bank's management board, supervisory board and shareholders' assembly in February this year. Taking into consideration all relevant indicators related to the balance sheet, liquidity and saving deposits in Croatia banka, as well as positive results related to the reduction of bank's operating costs, collection of claims and withdrawal of saving deposits that were recorded since the appointment of temporary administrator to this bank, the CNB Council proposed to the Croatian Government, as a feasible solution to the situation in the bank, the rehabilitation of Croatia banka. Members of the Council believe that measures aiming at the rehabilitation of this bank would create good preconditions for a possible merger of Croatia banka with an other financial institution, as well as preconditions for further reduction of its operating costs and strengthening of human resources. This would provide foundations for ensuring long-term stability and safety of savers and other creditors of the bank.

Additionally, the Council of the CNB decided to appoint temporary administrators to Agroobrtnicka banka d.d. Zagreb and Hrvatska gospodarska banka d.d. Zagreb. These decisions were made on the basis of supervisors' reports which showed that disturbances in the operation of these banks occured for a significant period of time - Agroobrtnicka banka has been unable to meet its financial obligations due to its blocked giro-account since February 25, 1999 and Hrvatska gospodarska banka since March 15, 1999. Management Boards of these banks have been unable to overcome the difficulties on their own, not even with a help of usual liquidity credits granted by the central bank. Snjezana Prevendar has been appointed temporary administrator to Agroobrtnicka banka and Sanja Petrinic-Turkovic to Hrvatska gospodarska banka. They will assume all authorities of the previous management board, supervisory board and shareholders' assembly of the bank. Temporary administrators are appointed for a period of six months. Within a period of 90 days they have to submit to the CNB a report on the situation in the bank and on the possibilities for bank's stable and profitable operation in the future.

At its Wednesday meeting, the Council of the CNB decided to propose to commercial courts the initiation of bankruptcy proceedings for Trgovacko-turisticka banka d.d. Split, Stedionica Gold d.o.o. Split and Stedionica Mediteran d.o.o. Split. On the basis of results of examinations conducted in the aforementioned bank and two savings banks, these financial institutions were ordered to introduce measures to improve the financial situation and remove irregularities in their operation. The corrected financial reports showed that by the end of 1998 these financial institutions had potential losses which considerably exceeded the level of their guarantee capital. In addition, they have not been able to meet their financial obligations due to blocked giro-accounts. None of these institutions managed to ensure the necessary recapitalization in the prescribed period. Taking into account all these facts, the CNB Council concluded that there are no prospects for these financial institutions to continue operating in accordance with regulation and with principles of sound and stable banking practice. Also, the Council estimated that the rehabilitation of these financial institutions pursuant to the Banking Law is not feasible. Trgovacko turisticka banka and savings banks Gold and Mediteran are small financial institutions - their share in total assets of the banking system is measured in basis points.

At the Wednesday meeting the CNB Council made several other decisions acting in accordance with its authorities. One of the most important decisions is definitely the one describing the form, minimal scope and content of the audit and auditor's statements. This decision was made, as set forth in the Banking Law, for the purpose of providing realistic, solid and comparable auditor's opinion about banks' financial statements submitted to the Croatian National Bank and external users, special reports submitted only to the central bank, as well as about other main indicators of the level of organization and efficiency of commercial banks.