Factsheet for measure
HR-2020-12/398
–
Updated
– measures in Croatia
Banks will not take enforcement measures to collect debts from companies or citizens
Banke neće poduzimati mjere prisilne naplate
Background information
Foreclosure is something banks and other financial institutions try to avoid in every possible way. The foreclosure percentage is still small in relation to the number of housing loans. Even when after the foreclosure process has begun, an out of court settlement is still possible. The Croatian Banking Association was working on a bank conciliation center as well as on the promotion and effectiveness of out of court settlements via conciliation. However, according to official figures, financial institutions have a significant part of foreclosures. Insurance companies have no other ways of collecting payments, whereas banks are able to talk with clients, reschedule debts, allot grace periods.
Content of measure
In order to preserve the financial stability and liquidity of business entities in the Republic of Croatia, credit institutions shall adopt in their internal acts a decision not to take enforcement measures (foreclosure, activation of collateral) to collect debt from their debtors (natural and legal persons) for three consecutive months starting in April 2020. Credit institutions shall conscientiously and promptly consider and approve requests by clients (citizens and entrepreneurs) for a deferral of payment for at least three months, whose creditworthiness is severely impaired in the current circumstances by the loss or reduction of permanent sources of income. Credit institutions shall, at the time of the deferral of payment, only apply regularly agreed interest without additional charges or fees.
Credit institutions will implement the mentioned measure towards their clients which did not settle the three installments - annuities of their credit obligations, provided that this does not put them as creditors at a disadvantage compared to other creditors. Credit institutions shall conscientiously and promptly consider and approve requests by clients (citizens and entrepreneurs) for a deferral of payment for at least three months, whose creditworthiness is severely impaired in the current circumstances by the loss and/or reduction of permanent sources of income, and for the clients whose revenue were substantially reduced compared to the revenues in the previous period.
Updates
The following updates to this measure have been made after it came into effect.
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06 October 2021
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The Croatian National Bank and the Croatian Banking Association issued to banks in Croatia suggestions on moratoriums. However, at the end, it was still unknown, whether the respect of the suggestion was the good will of the banks or no. From the suggestion, it was not understandable whether the moratorium applied to all bank customers without exception or only to those which demanded the moratorium. Furthermore, it was not explained what was included in moratorium: principal, interest or both. The Croatian Banking Association underline that they took a proactive approach and proposed a number of economic measures aimed at helping citizens, as well as small, medium-sized enterprises and large companies whose businesses have been affected by the COVID-19. There were no legal regulations of the Government of the Republic of Croatia that would oblige banks to implement measures. Such ambivalent stipulation resulted in various attitudes towards the commencement and cessation with the implementation of the measure. Of course, financial insecurity caused serious problems to many citizens as well as to a significant number of companies in business community.
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Use of measure
It could be expected around 20,000 possible clients who will apply for such possibility.
Contents
Target groups
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Workers
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Businesses
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Citizens
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Does not apply to workers
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Applies to all businesses
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Applies to all citizens
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Actors and funding
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Actors
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Funding
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Company / Companies
Other social actors (e.g. NGOs)
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No special funding required
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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No involvement as case not in social partner domain
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No involvement as case not in social partner domain
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Form
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Not applicable
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Not applicable
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Social partners' role in the
implementation, monitoring and assessment phase:
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No involvement
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Main level of involvement: Company level
Involvement
Social partners were not involved in design, implementation and monitoring of the measure, primarily due to the nature of the measure.
Views and reactions
Due to the nature of the measure, social partners were not involved. Trade Unions are quite critical regarding the banking system, but this time they fully supported mentioned measure.
Sources
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19 March 2020: Hrvatska udruga banaka (The Croatian Banking Association) (2020). Iduća tri mjeseca banke neće poduzimati mjere prisilne naplate
(www.hub.hr)
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01 April 2020: Stav banaka prema prisilnoj naplati (The Attitude of Banks towards Enforcement Measures)
(lider.media)
