In that context, Sberbank d.d. operating in Croatia and owned by Sberbank AG headquartered in Austria, and thus indirectly owned by the parent undertaking Sberbank Russia, majority-owned by the Russian Federation, faced exceptionally strong deposit outflows already on 24 February 2022, which is why the European Central Bank (ECB), which directly supervises the bank, announced on 28 February 2022 that Sberbank d.d. was failing or was likely to fail (the same assessment was made for the parent undertaking Sberbank AG from Austria and for the Slovenian subsidiary). Based on the assessment by the ECB, the Single Resolution Board (SRB), the central resolution authority in the banking union, adopted a decision on a two-day moratorium, and based on that decision, the CNB adopted the Decision on the two-day suspension of payments. Considering that the failure or the winding-up of the bank was likely to damage financial stability and result in significant losses for depositors and, particularly, small businesses, and thus for the Republic of Croatia too, and that the previously drafted resolution plan envisaged resolution rather than winding-up of the bank in the event of its failure, the sale of the bank was assessed as the only efficient resolution strategy given the circumstances. Hence, during the moratorium, acting in line with the order by the SRB, the CNB organized the process of collecting binding bids for the purchase of the bank's shares. Subsequently, on 1 March 2022, the SRB adopted the decision on the opening of resolution proceedings against Sberbank d.d. Croatia, and, due to the fact that Hrvatska poštanska banka (HPB) submitted the highest bid in the collection process, it ordered that 100% of the bank's shares should be transferred from the then owner to HPB. On Wednesday, 3 March, the first day following the opening of resolution proceedings, it was announced that the bank would continue to operate under the name Nova hrvatska banka and the pressure on deposit withdrawal rapidly subsided. Resolution proceedings ended on 13 April 2022 and the new management and supervisory board were appointed. It is noteworthy that the SRB adopted the decision on the resolution of the Slovenian subsidiary concurrently with the decision on the resolution of Sberbank d.d., while it was decided that the parent undertaking in Austria would be wound up.

The proceedings resulted in a rapid and timely avoidance of contagion spillover to other banks and helped maintain confidence into the Croatian banking system. It is necessary to note that Sberbank d.d. was a liquid and solvent bank which did not get into difficulties due to mismanagement; rather, it was the reputational damage that triggered the sudden strong deposit outflow. The resolution of Sberbank d.d. through the sale of the bank to a new owner prevented the negative impact of the bank’s failure on the financial stability in Croatia. In addition, high costs which would have otherwise been incurred by the depositors and the Croatian Deposit Insurance Agency have been avoided, as in the event of winding up, all insured deposits up to the amount of EUR 100,000.00 would have had to be paid out, while depositors with larger deposits would have lost a portion of their savings.

EU response to the Russian invasion of Ukraine

The European Union responded to the Russian invasion of Ukraine by introducing a series of comprehensive severe sanctions designed to curtail the Russian leadership's ability to finance the war and diminish Russia's economic base. Six packages of sanctions were introduced, targeting the financial, trade, energy, transport, technological and military sector, along with sanctions aimed at the media and individuals and entities whose activities support Russia's aggression against Ukraine; the sixth package of sanctions includes an embargo on the import of oil from Russia. Sanctions have been imposed against Belarus as well on account of the country's participation in the Russian military aggression against Ukraine.

EU Council sanctions targeting finance include:

• excluding ten Russian and four Belarusian banks from the SWIFT system, the world’s dominant financial messaging system;
• prohibiting transactions with the central banks of Russia and Belarus and freezing their foreign reserves held in the EU;
• prohibiting investments in projects co-financed by the Russian Direct Investment Fund;
• restricting access to EU capital markets for certain Russian banks and companies;
• prohibiting the financing of (lending to and purchasing securities issued by) key Russian state-owned and private banks;
• prohibiting all transactions with Russian state-owned companies;
• prohibiting the provision of credit rating services to all natural and legal persons from Russia;
• prohibiting cryptocurrency deposits above EUR 10.000,00 and prohibiting the provision of other crypto asset services to Russian citizens, residents and legal entities;
• prohibiting the supply of euro banknotes to Russia and Belarus;
• prohibiting the acceptance of new deposits of Russian and Belarusian citizens and residents exceeding EUR 100,000.00 in EU banks;
• prohibiting the holding of accounts by Russian and Belarusian clients in EU central securities depositories;
• prohibiting providing advice on trusts to wealthy Russians, making it more difficult for them to store their wealth in the EU.

To ensure the efficient implementation of EU Council sanctions in the territory of the Republic of Croatia, shortly after the beginning of Russian aggression against Ukraine, the Government of the Republic of Croatia adopted a new decision on the formation of the standing group for the application and monitoring of the implementation of international restriction measures, whose work, partly related to the financial sector under the competence of the CNB, includes the participation of CNB representatives. The standing group actively coordinates and monitors the application of EU Council sanctions pursuant to the Act on International Restriction Measures.

In addition to the comprehensive sanctions imposed on Russia and Belarus and the financial and material assistance provided to Ukraine, the European Union is helping Ukraine by accepting a large number of Ukrainian citizens that fled from Ukraine into EU territory, including Croatia. To facilitate the adjustment to the out-of-the-ordinary situation that the Ukrainians fleeing Ukraine found themselves in, the CNB recommended to banks to provide the service of opening a basic account free of charge to Ukrainian refugees having legal residence in the territory of the Republic of Croatia, as well as to enable them to make ten free national or cross-border transactions without any fees.

Finally, considering the strong interest of Croatian citizens and companies in aiding Ukraine, the Croatian National Bank provides below the link to a special account held with the National Bank of Ukraine to which funds (in various currencies) may be donated in a simple way for the purpose of providing humanitarian aid to Ukraine.