At the meeting held on Tuesday, February 23, 1999 the Council of the Croatian National Bank, chaired by Governor Dr. Marko Škreb, decided to appoint a temporary administrator for Croatia banka d.d. Zagreb. He will control the adequate use of the special liquidity loan which the central bank decided to grant to Croatia banka in order to enable faster stabilization of Croatia banka's operation. The temporary administrator appointed to Croatia banka is Mr. Adolf Matejka, Executive Director for Central Banking Operations of the CNB. He will assume all authorities of the management board and supervisory board of Croatia banka on Wednesday, February 24, 1999.

Citizens' savings deposits and other deposits kept with Croatia banka will remain frozen in the bank (that has been blocked for ten days already) just for another few days, that is, until the necessary administration procedure related to the liquidity loan is completed. As of Monday, March 1, all bank's branches will continue their regular operation. This means that Croatia banka's savers will have their deposits at free disposal again. The Council of the CNB is appealing herewith to Croatia banka's depositors to refrain from running to bank's windows as soon as they are opened, since also in the following days and weeks their money will be made available to them according to their needs, that is pursuant to the conditions agreed upon in their contracts with the bank. By acting in the recommended way, depositors would facilitate the stabilization of the situation in the bank which, according to available indicators, suffers serious liquidity problems, but is not insolvent.

In light of the available records showing that Croatia banka has problems with liquidity, but is solvent, the Council of the CNB believes that this bank should be helped to overcome its difficulties with the liquidity injection from the central bank. However, taking into consideration the amount of the liquidity loan and the fact that, as presumed, bank's problems have been caused and the confidence of its depositors disturbed - to a large extent - due to misunderstandings and conflicts between the members of the management board and the supervisory board, the Council of the CNB believes that, despite financial help from the central bank, members of the boards would not be able to stabilize the operation of the bank, especially not in the acceptable period and without causing further damage.

Thus, the Council of the CNB appointed a temporary administrator for Croatia banka for a period of up to six months and decided on sending central bank inspectors in the bank. The aim of this control is to obtain an insight in weak points, omissions and mistakes related to the management of the bank, as well as to the management of resources entrusted to it. The correction of these mistakes is one of the preconditions for the bank's sound and more careful operation in future where greater attention has to be paid to the solvency and liquidity of the bank. Only in this way will the savers and other depositors of the bank always have their money at disposal.

Croatia banka was founded at the end of 1989 in Zagreb. It has about 20 branch offices in Croatia. The level of its quarantee capital and the value of its assets rank this bank approximately 11th on the list of Croatian banks. Total household savings in this bank amount to approximately 850 million kuna.