Provision of financial services by a credit institution
In accordance with Article 62 of the Credit Institutions Act, a credit institution which has its head office in the Republic of Croatia, or a branch of a third-country credit institution, is obligated, prior to the entry in the register of companies of financial services it intends to provide and which are not covered by authorisation, to obtain authorisation from the Croatian National Bank to provide such services.
Article 8 of the Credit Institutions Act defines core and additional financial services which may be provided by credit institutions subject to authorisation of the Croatian National Bank to provide such services. It should be noted that the said provision and the provisions regarding the obligation to obtain authorisation from the Croatian National Bank for the provision of financial services apply only to credit institutions and not to undertakings which are not credit institutions and which intend to provide services listed in Article 8 of the Credit Institutions Act.
Core financial services are as follows:
- taking of deposits or other repayable funds;
- lending, including consumer credit, mortgage credit and, where permitted by a special law, financing of commercial transactions, including export financing based on the purchase at a discount without recourse of non-current, non-matured receivables collateralised with a financial instrument (forfeiting);
- repurchase of receivables with or without recourse (factoring);
- financial leasing;
- issuance of guarantees or other commitments;
- trading for own account or for the accounts of clients in:
- money market instruments;
- transferable securities;
- foreign exchange, including currency exchange transactions;
- financial futures and options;
- exchange and interest-rate instruments;
- money transmission services in accordance with special laws;
- credit reference services, such as collection, analysis and provision of information on the creditworthiness of legal and natural persons that conduct their business independently;
- issuing and administering other means of payment, if the provision of such services is not considered the provision of services within the meaning of item (7) of this paragraph and in accordance with the Payment System Act;
- safe custody services;
- money broking;
- participation in issues of financial instruments as well as the provision of services relating to issues of financial instruments in accordance with the law governing the Capital Market Act;
- portfolio management and advice;
- safekeeping of financial instruments and services related to the safekeeping of financial instruments in accordance with the Capital Market Act;
- advice to legal persons on capital structure, business strategy and related issues as well as the provision of services relating to mergers and the acquisition of shares and holdings in other companies;
- issuance of electronic money; and;
- investment and ancillary services and activities prescribed by the Capital Market Act and not included in services referred to in items (1) to (16).
Additional financial services are as follows:
- activities related to the sale of insurance policies in accordance with the law governing insurance;
- payment systems management services in accordance with the provisions of a special law;
- other services which a credit institution may provide in accordance with the provisions of a special law; and
- other services or activities that are, in terms of the manner of the provision and risk to which a credit institution is exposed, similar to core financial services.
Application for authorisation to provide financial services
A credit institution which intends to provide financial services additional to those for which it has been authorised by the Croatian National Bank is obligated to submit an application using the form for authorisation to provide financial services. The following documents and information have to be enclosed with the Application for authorisation to provide financial services:
- draft amendments to the Articles of Association of a credit institution;
- a business plan for the first three years of business, including balance sheets, profit and loss accounts, the types of business planned, the appropriate organisational, technical and personnel structure of the credit institution, accounting policies and the organisation of the internal audit function;
- a relevant legal act of the competent authority authorising the provision of specific financial services where so required by the regulations governing the provision of specific financial services set out in the credit institution's business plan (e.g. investment services governed by the Capital Market Act, representation governed by the Insurance Act);
- the business strategy of the credit institution;
- a credit institution's business plan with projections of financial statements (balance sheet, profit and loss account) for the next three years;
- drafts of internal bylaw regulating the provision of financial services for which authorisation is required;
- a description of changes in the organisational structure of the credit institution;
- a description of changes in information technology of the credit institution; and
- other information listed in the application form Application for authorisation to provide financial services.
Deciding on the application
The Croatian National Bank may, within one month from the date of receipt of an application for authorisation to provide financial services request additional documentation. If the Croatian National Bank has requested additional documentation, the date of its delivery will be considered the date of receipt of a valid application.
The Croatian National Bank is obligated to issue a decision on the application for authorisation to provide financial services within 60 days of the delivery of a valid application. However, if the application for authorisation to provide financial services is submitted together with the application for authorisation, the time limit for taking a decision is six months from the date of receipt of a valid application or maximum 12 months from the date on which the application was submitted.
The Croatian National Bank may refuse an application for authorisation to provide financial services:
- where it is evident from the documentation and other available information that the credit institution fails to meet the technical, personnel, organisational and other requirements for the provision of individual types of core and additional financial services;
- where the Croatian National Bank has imposed supervisory measures on the credit institution and the introduction of a new service could adversely affect the implementation of these supervisory measures; or
- where the credit institution fails to meet specific requirements for the provision of financial services laid down in any other regulation governing the provision of financial services envisaged in the credit institution's business plan.
Annulment and revocation of the decision
The Croatian National Bank will annul a decision on authorisation to provide financial services where a credit institution obtained the authorisation on the basis of false or inaccurate documentation or false presentation of data relevant to its operation.
Where a credit institution ceases to meet the technical, personnel, organisational and other requirements for the provision of individual types of financial services, the Croatian National Bank may adopt a decision to revoke authorisation to provide those financial services for which the credit institution no longer meets the requirements.
The Croatian National Bank will adopt a decision to revoke the decision on the authorisation to provide all or individual financial services if the credit institution no longer meets the requirements laid down in other regulations governing the provision