Featured Product

    IMF Publishes Reports on the 2017 Article IV Consultation with Croatia

    January 16, 2018

    IMF published staff report and selected issues report in context of the 2017 Article IV consultation with Croatia. The staff report highlights that the conservative prudential policies of the Croatian National Bank (CNB) have thus far paid-off with regard to the banks’ ability to withstand the Agrokor crisis.

    The staff report reveals that the results of CNB’s stress-testing of banks’ exposure showed that the banking system could absorb significant write-offs of Agrokor’s debt due to the system’s high capital buffers. With respect to nonperforming loans (NPLs), the authorities have over time taken various measures to incentivize their reduction, including through the facilitation of write-offs of fully provisioned NPLs during 2017, via the amended tax legislation. However, market-based solutions, such as NPL sales, seem to be the preferred option to banks thus far. There is no immediate need to tighten macro-prudential measures (MPMs) absent signs of overheating in the real estate market. CNB used various MPMs prior to the adoption of the Capital Requirement Directive IV of the EU. The main MPMs include the capital conservation buffer, structural systemic risk buffers, higher capital charge on other systemically important institutions (O-SII), strict definition of residential property, and higher risk-weights on exposures secured by mortgages on commercial real estate. Going forward, it is vital to continue to maintain conservative prudential policies and banking supervisory vigilance, including by considering revisiting MPMs, should the pace of real estate price increases accelerate.

    The selected issues report focuses on issues related to bank credit and NPL resolution. The report reinforces that NPLs and how they are handled, in addition to the real growth, are important determinants for credit. These findings are supported by the cross-country analysis and corroborated by other studies. The Croatian authorities have taken several initiatives over the years to gradually resolve legacy NPLs. Croatian banks have high NPL ratios compared to peers, but provisions have improved, and the un-provisioned part is, on average, fully covered by excess capital. Banks have the option to renegotiate and restructure the NPL, sell the NPL, or collect and write-off the NPL.

     

    Related Links

    Keywords: Europe, Croatia, Banking, NPLs, Stress Testing, Article IV, IMF

    Featured Experts
    Related Articles
    News

    OCC Revises Minimum Threshold for Banks to Conduct Stress Tests

    OCC issued the final rule that amends its company-run stress testing requirements under the 12 CFR 46 in Code of Federal Regulations.

    October 10, 2019 WebPage Regulatory News
    News

    US Agencies Update Management Interlock Rules Under DIMIA

    US Agencies (FDIC, FED, and OCC) issued a final rule that increases the thresholds in the major assets prohibition for management interlocks for purposes of the Depository Institution Management Interlocks Act (DIMIA).

    October 10, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Rules to Closely Match Bank Risk Profiles

    US Agencies (OCC, FED, and FDIC) finalized rules that tailor the regulations for domestic and foreign banks to more closely match their risk profiles.

    October 10, 2019 WebPage Regulatory News
    News

    CPMI-IOSCO and FSB on Governance Arrangements for OTC Derivatives

    CPMI and IOSCO published a report that identifies key criteria, functions, and bodies for the governance arrangements.

    October 09, 2019 WebPage Regulatory News
    News

    EIOPA Launches Field Test on Templates Under 2020 Solvency II Review

    EIOPA, as part of the 2020 Solvency II reporting and disclosure review, launched a field test on the revised and newly proposed reporting templates.

    October 09, 2019 WebPage Regulatory News
    News

    US Agencies Adopt Rule on Appraisals for Real Estate Transactions

    US Agencies (FDIC, FED, and OCC) adopted the final rule to amend regulations requiring appraisals of real estate for certain transactions

    October 08, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Amendments to Simplify Volcker Rule

    US Agencies (CFTC, FDIC, FED, OCC, and SEC) finalized amendments to the regulations implementing section 13 of the Bank Holding Company Act, also known as the Volcker Rule.

    October 08, 2019 WebPage Regulatory News
    News

    EC Report Explores Application and Challenges of Blockchain Technology

    The Joint Research Center of EC published a report exploring the challenges and impact of distributed ledger technologies.

    October 08, 2019 WebPage Regulatory News
    News

    BIS and SNB Sign Agreement on Innovation Hub Center in Switzerland

    BIS and SNB signed an operational agreement on the BIS Innovation Hub Center in Switzerland.

    October 08, 2019 WebPage Regulatory News
    News

    ECB Issues Results of Sensitivity Analysis of Liquidity Risk for Banks

    ECB published results of 2019 stress test on sensitivity analysis of liquidity risk.

    October 07, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3958