The national reference rate of the average financing cost of the Croatian banking sector (NRR) is one of the reference rates used for financial products and contracts in the Republic of Croatia, including credit contracts concluded with consumers. With the expiry of the period provided for by the transitional provisions of Regulation (EU) No 2016/1011, the main precondition for further application of NRR from 1 January onwards became its alignment with the said Regulation.
The Consumer Credit Act prescribes that where variable interest rates have been contracted, credit institutions have to define the parameter that they observe in the context of reaching a decision on the correction of the variable interest rate, which has to be clear and known to consumers. Credit institutions may opt for one of the parameters prescribed in the Consumer Credit Act – reference interest rates (EURIBOR, LIBOR), NRR, yield on T-bills of the ministry of Finance, or the average interest rate on household deposits in the relevant currency. The national reference rate is one of the most important reference interest rates in the Republic of Croatia and has thus far been calculated and published by the Croatian Banking Association (HUB). The share of loans granted with NRR in total loans with a variable interest rate totalled 29% in September 2019 (i.e. HRK 46bn of credit institutions' loans granted with a variable interest rate).
The above-mentioned Regulation prescribes a regulatory framework for the calculation of benchmarks used in financial markets to ensure their integrity and accuracy. Due to the importance of the NRR for the domestic financial market and in order to ensure continuity and independence of its calculation and publication, and with a view of the fact that the Croatian Banking Association does not presently meet the criteria set out for benchmark administrators, the Croatian Banking Association will publish its last NRR calculation, relating to the fourth quarter of 2019, in February 2020, in accordance with its publication calendar. From the first quarter 2020 onwards, the NRR will be calculated and published by the Croatian National Bank.
The calculated rates will be published for the first time in May 2020 in accordance with the set publication calendar. The CNB will also publish the NRR calculation methodology on its website. The new role of the CNB in the calculation of the NRR and the usage of data submitted to the CNB by banks and savings banks within the framework of regular reporting are regulated in more detail in the Draft Act on Amendments to the Credit Institutions Act on which public consultation has been completed.