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COVID-19 EU PolicyWatch

Database of national-level responses

Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case HR-2020-12/398 – measures in Croatia

Banks will not take enforcement measures to collect debts from companies or citizens

Banke neće poduzimati mjere prisilne naplate

Country Croatia , applies nationwide
Time period Temporary, 19 March 2020 – 30 June 2020
Type Company practices
Category Supporting businesses to stay afloat
– Deferral of payments or liabilities
Author Predrag Bejalovic (IJF) and Eurofound
Case created 08 April 2020 (updated 30 April 2020)

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.

Use of measure

It could be expected around 20,000 possible clients who will apply for such possibility.

Target groups

Workers Businesses Citizens
Does not apply to workers Does not apply to businesses Applies to all citizens

Actors and funding

Actors Funding
Company / Companies
No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement as case not in social partner domain No involvement as case not in social partner domain
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Company level

Involvement

N/A

Views and reactions

Due to the nature of the measure, social partners were not involved.

Sources

  • 19 March 2020: Hrvatska udruga banaka (The Croatian Banking Association) (2020). Iduća tri mjeseca banke neće poduzimati mjere prisilne naplate (www.hub.hr)

Citation

Eurofound (2020), Banks will not take enforcement measures to collect debts from companies or citizens, case HR-2020-12/398 (measures in Croatia), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.