July the 3rd, 2022 - A group of Hvar students have been awarded for their creativity in a game designed to work on financial literacy skills by Hanfa (The Croatian Financial Services Supervisory Agency).

Croatian students from up and down this country certainly pack a punch when it comes to innovation, creativity and coming up with very impressive ideas. With financial literacy being a burning issue among the younger population, these students certainly stand out from the crowd when it comes to money management skills.

As Poslovni Dnevnik writes, a game called Desitudo created by a group of Hvar students attending the Petar Hektorovic Elementary School on the aforementioned Dalmatian island recently won in a competition called "Financial literacy through play", which was conducted by the Croatian Financial Services Supervisory Agency (Hanfa). The school won the prize - a smart board - with the winning game designed by these talented Hvar students.

Elementary schools from across the Republic of Croatia participated in the competition, and eighteen applications were received in total. As part of the competition, upper elementary school students and their mentors had to design a board game with the aim of raising the level of students' financial literacy.

The committee for the evaluation of the works pointed out that the students put in a lot of effort, employed their skills in terms of creativity, but also knowledge, and they are extremely satisfied that financial literacy is being considered from an early age to be extremely important as a skill to develop for life.

The game designed and brought to life by the Hvar students from the aforementioned winning school stood out for its creativity, good examples and learning outcomes. The game primarily helps students to recognide the differences between wants and needs and helps them to manage their money more responsibly.

For more, make sure to check out our dedicated Made in Croatia section.

ZAGREB, 16 June 2022 - A global seminar of the International Association of Insurance Supervisors (IAIS) opened in Dubrovnik on Thursday, bringing together over 350 participants from 70 countries.

The two-day seminar is being hosted by the Croatian Financial Services Supervisory Agency (HANFA), whose president, Ante Žigman, said that insurance companies are under great pressure from inflation and increasing interest rates as well as from climate change. "Catastrophic events, such as floods, hailstorms, wildfires and earthquakes, are largely covered by insurance, so insurance companies have to cope with that," he noted.

Žigman also mentioned cybernetic risks, which are not tangible but do great harm to the industry and the IT sector. "This risk is only growing in the present geopolitical circumstances. Coupled with the COVID-19 pandemic, it is important to provide insurance to businesses facing such threats. Insurance enables a smooth running of business and companies are insured against the risks they are facing," he added.

IAIS Secretary-General Jonathan Dixon said that the seminar would focus on the implementation of the key reforms launched after the global crisis of 2008, primarily through the Insurance Capital Standard with common global regulatory rules. 

The topics will also include financial stability and risk at the present time of Russia's military invasion of Ukraine, climate and cyber risks, and financial inclusion.

For more, check out our business section.

ZAGREB, 19 April 2022 - The Croatian financial services sector's exposure to systemic risks slightly decreased at the end of 2021, primarily due to the strong economic recovery, but a further decrease in the sector's vulnerability is being hampered by accelerated inflation and the escalation of geopolitical risks, HANFA said on Tuesday.

A more significant recovery and decrease in vulnerability of the sector is being hampered by accelerated price increases, which is reducing household purchasing power and slowing down consumption. Another source of uncertainty is the still present COVID-19 measures and the escalation of geopolitical risks relating to the war in Ukraine and sanctions imposed on Russia, the Croatian Financial Services Supervisory Agency (HANFA) said in its Macroprudential Risk Scanner.

This publication provides insight into the process of identifying, assessing and monitoring the evolution of systemic risks in the financial services sector so that appropriate measures can be promptly taken to prevent their materialisation and the impairment of financial system stability.

ZAGREB, 30 March 2022 - The Croatian Financial Services Supervisory Agency (HANFA) has granted permission to the Japanese Toyota Tsusho Corporation to enter the leasing market in Croatia, HANFA reported on Wednesday.

The Japanese Toyota Tsusho Corporation has been granted permission to establish a leasing company that will operate as Toyota Tsusho Leasing Croatia d.o.o. and to acquire a qualified share of 100% of equity in Toyota Tsusho Leasing Croatia d.o.o.

This is the first time a Japanese group has entered the leasing market in Croatia, HANFA said in a press release.

HANFA also reported that N3 Capital Partners has been given approval to establish and operate a small company for the management of alternative investment funds, which will be the first of its kind and will be established under the amended Alternative Investment Funds Act.

Currently, there are 35 alternative investment funds operating in Croatia and another four are in the process of being established. The net assets of the active alternative investment funds amount to nearly HRK 5 billion, HANFA said.

For more, make sure to check out our business section.

ZAGREB, 18 March (2022) - The net asset value of Croatia's mandatory pension funds (OMF) at the end of February amounted to HRK 129.99 billion, down HRK 3.1 billion or 2.35% compared to January, reflecting negative financial trends amid the escalation of geopolitical tension, the HANFA supervisory agency said on Friday.

"The increased macroeconomic uncertainty in the first half of February resulted in an increase in global risk premiums, which was negatively reflected on valuations on financial markets, both foreign and domestic. The escalation of geopolitical tension in the second half of February created an additional external shock to the price of share and bond securities on international markets. Consequently, OMFs' net assets decreased by HRK 3.1 billion or 2.35% in February and amounted to HRK 129.99 billion at the end of the month," the Croatian Financial Services Supervisory Agency - HANFA's February report said.

The negative trends on financial markets caused by the war in Ukraine have also affected the Mirex monthly yields which had a negative prefix in February for all categories.

The annual Mirex yield is still positive, HANFA said.

Four mandatory pension funds had 2,119,135 members in February, which is 3,585 or 0.17% more than in January.

In February 4,517 new members were registered with OMFs, with 96.5% having been automatically assigned by the Regos central insuree registry, while 932 members were erased from funds due to retirement or death, HANFA said.

At the end of February, bonds continued to be the dominant form of investment by OMFs, amounting to HRK 83.6 billion, a share of 64.3%, up 2.3 percentage points month-on-month.

At the same time, investments in shares decreased by 1.1 percentage points and amounted to HRK 26.5 billion, a share of 20.4% in OMF assets.

Of the other forms of investments, the most prominent were investments in investment funds, amounting to HRK 15.4 billion, a share of 11.85%, HANFA reported.

Net assets of voluntary funds, UCITS decrease as well

At the end of February, there were also eight open-end voluntary pension funds (ODMF) with 355,599 members and 20 closed-end voluntary pension funds (ZDMF), with 46,024 members.

Total monthly payments into voluntary pension funds (DMF) amounted to HRK 64.7 million, which is 17% less m-o-m. At the same time, total monthly payments made by voluntary pension funds amounted to HRK 32.5 million or 3.7% less m-o-m.

As a result of negative market valuations, net assets in DMFs in February decreased by HRK 209.8 million or 2.68% and amounted to HRK 7.62 billion, HANFA said.

Bonds accounted for the largest portion of the investment portfolio of DMFs, with a 54.4% share of total net assets, followed by investments in shares, accounting for 24.8% and investment funds with 12%.

In February a total of 95 UCITS (open-end investment funds with a public offering) operated in Croatia, with total net assets of HRK 18.97 billion, down HRK 2.1 billion or 10.1% month on month.

For more, check out our business section.

ZAGREB, 15 March 2022 - Consumers should invest in the financial products and services they understand, and to do that, one should study them well - this was one of the messages of the conference "Consumer in the Digital Finance World", held in Zagreb on Tuesday.

The conference was organised on the occasion of World Consumer Rights Day by the ministries of economy and finance, the Croatian National Bank (HNB) and the HANFA regulatory agency for the supervision of financial services.

HANFA Steering Board vice-president Ilijana Jeleč said that digitalisation provided a number of opportunities for consumers as well as pitfalls.

Access to financial services is simpler but there is a large amount of information which is not easy to absorb and consumers are not always willing to sufficiently study the services they buy, she said, noting that this was especially problematic when purchasing financial services and products.

Since those services and products usually imply long-term investments, it is very important to study them before buying them, she said, mentioning also investment fraud on social networks and offers for investments in cryptocurrencies.

Jeleč said that HANFA had warned on a number of occasions that such investments were not regulated and were very speculative, advising consumers to avoid highly risky, speculative products and invest in what they understand.

Underlining the importance of consumer education, she said HANFA was investing significant effort in that regard, was cooperating with schools and universities on youth education and had launched a portal called "Novac za sutra" to inform citizens about financial services and improve their financial literacy.

Minister underlines importance of consumer protection associations

Economy Minister Tomislav Ćorić pointed to the 2021-2024 National Programme for Consumer Protection and the new law on consumer protection, to go into force on 28 May, as documents addressing problems faced by consumers living in the digital society.

He said the ministry's services last year answered more than 6,000 phone calls by consumers and replied to more than 3,000 queries.

He underlined the important role of consumer protection associations, notably in the context of the coming introduction of the euro, set for 1 January 2023, noting that the ministry had granted HRK 350,000 to strengthen their institutional capacity.

Consumer protection central principle of euro introduction bill

The State Secretary at the Finance Ministry, Stjepan Čuraj, commenting on the euro introduction bill, noted that the principle of consumer protection and the ban on unjustified price increases had central place in the bill.

Speaking of financial literacy, Čuraj said that according to an OECD survey from 2019, financial literacy in Croatia had increased mildly compared to 2015, when a survey on that topic was carried out by the HNB and HANFA.

The average grade for the financial literacy of consumers in the OECD survey was 12.3 out of 21 points or 59%, while in the 2015 survey it was 56%. However, despite the improvement, the lack of financial competence and skills was the biggest among young people aged 18-29, Čuraj said.

HNB official: Elderly most evident victims of digital revolution

Data by the European Commission show that in the first week of the coronavirus pandemic the use of digital applications in banking grew by 72%.

Commenting on this, HNB vice governor Bojan Fras said that it was interesting that those figures did not change more significantly after the relaxation of COVID-19 restrictions.

The digital revolution suits equally banks and their clients, Fras said, but noted that elderly citizens were the most evident victims of the digital revolution, being unwilling to use not only online banking services but also ATMs and bank cards.

Speaking of consumer complaints, Fras said that the HNB in 2021 received and processed 906 complaints and that none referred to digital banking services.

ZAGREB, 27 Jan 2022 - The HANFA regulator is checking the accounts of 725 current and 463 former employees of the central bank as well as other available accounts, with 529 transfers involving 26,940 stocks of credit institutions having been determined for 58 of the 1,188 former and current employees.

This was stated on Thursday by the head of the Croatian Financial Services Supervisory Agency (HANFA), Ante Žigman, at a thematic session of the parliament's Finance and State Budget Committee, entitled "HNB employees' trading in securities of banks supervised by the central bank", which was also attended by Croatian National Bank (HNB) Governor Boris Vujčić and his deputy Sandra Švaljek.

Žigman said that those transfers, registered by the Croatian depository agency SKDD, did not mean that all those stocks were traded but rather that the SKDD registered any change to the legal status of a transaction, such as transfer from one broker to another.

"That should be underlined, so that one does not think that all those stocks were traded," he said.

On 10 January, the Index news portal said that in the past 20 years more than 40 HNB employees had traded in the securities of banks supervised by the HNB, with more than 400 transactions worth more than HRK 10 million having been registered.

After that, on 12 January, HANFA launched an inspection to determine if HNB employees had violated the Market Abuse Regulation and the Capital Market Act, and if they had traded in banks' securities based on insider information.

HANFA said at the time that violation of the HNB Act and HNB's internal rules by HNB employees by trading in credit institutions' securities does not necessarily constitute market abuse in the sense of the Capital Market Act and Market Abuse Regulation.

As for possible violation of the HNB Act and HNB's internal rules, HANFA does not have the authority to launch an inspection, the agency said at the time.

Vujčić: No indication of insider trading

HNB Governor Vujčić said in his introductory address today that the HNB does not have indications that its employees had traded in securities based on insider information, which is a criminal offence, but he recalled having called on HANFA to investigate the matter and also having asked for internal checks to be made for 41 persons.

An internal inspection is currently under way into 31 persons, but it is not as nearly as thorough as inspections by HANFA because the HNB does not have access to SKDD data, said Vujčić.

On the other hand, five HNB employees who hold stocks and are not among the 41 employees have also come forward, Vujčić said.

There is no legal ban on holding bonds, says Švaljek

The current deputy governor, Sandra Švaljek, was in 2012 an external member of the HNB Council and at the time she invested in the Erste Bank corporate bonds. She said at today's session that neither at that time nor currently there were any legal restrictions for the Council's members to hold bonds.

Švaljek said there was a significant difference between shares and bonds and that possessing bonds has the nature of saving, explaining that she had not traded in those bonds but held them until their maturity, and that the yield earned had been defined in the relevant prospectus.

Švaljek said that she had been informed by her personal banker about the possibility of purchasing those bonds, and emphasised that the HNB Council had never discussed such matters.

"I am confident that this case has nothing to do with market manipulation regarding the bonds that I used to hold at the time when I was not employed in the HNB."

Responding to media claims about possible wrongdoing, the central bank said recently that Vujčić bought stocks of Riječka Banka and Zagrebačka Banka in the 1990s, when he was still not HNB vice governor or HNB Council member, and when the HNB Act did not forbid the HNB governor and HNB Council members to own stocks of the banks supervised by the HNB.

The HNB emphasised that it was the new HNB leadership that in 2000 initiated changes to the HNB Act which forbid the governor, HNB Council members and HNB executive directors to own stocks and shares in banks supervised by the HNB. Vujčić thus sold his stocks of Erste&Steiermärkische Bank, which in the meantime bought Riječka Banka, and of Zagrebačka Banka, in March 2001, a month before the entry into force of the HNB Act, which was reported by the media at the time.

Švaljek, who between 2000 and 2013 was an external member of the HNB Council, bought corporate bonds of Erste&Steiermärkische Bank on 23 November 2012 and held them until their maturity in 2017.

"As already stated, there is no legal restriction that would forbid a member of the HNB Council to own bonds of legal persons to which the HNB issues operating licences or whose operations it oversees," the HNB said, adding that Švaljek did not violate any legal regulations.

ZAGREB, 21 Nov, 2021 - The insurance market in Croatia in 2020 with total gross premiums of HRK 10.68 billion (€1.4 billion) written by insurers, slightly increased by HRK 12.9 million (€1.72 million) or 0.1% year on year, the Croatian Competition Agency (AZTN) reported on Friday.

"Compared to 2019 when they amounted to just over HRK 10.66 billion, in 2020 a stagnation in gross premiums was registered. When a precise analysis is conducted, only a symbolic growth of HRK 12.9 million was registered in gross premiums written or by a mere 0.1%" AZTN said following a survey which indicated that 15 insurance companies did business on the domestic market,  tweo fewer than the year before.

For the sake of comparison, in 2019 insurance companies registered an increase in gross premiums of 6.5% year-on-year, AZTN noted whose survey is based on publicly released data by the Croatian Insurance Bureau (HUO) and the Croatian Financial Services Supervisory Agency (HANFA).

The largest market share, of 25.1%, was held by Croatia Osiguranje.

It was followed by Euroherc, which along with Adriatic Osiguranje and Agram Life, are part of the Agram conncern. Together they account for 25.6% of the market with a growing trend. In 2019 they accounted for 23% of the market.

Allianz Hrvatska ranked third, accounting for 10.7% of the market. The Wiener Osiguranje VIG with a share of 9% and Generali with 7.3% of the market follow.

In 2020 a  total of seven insurance companies registered an increase in written gross premiums on the year, including two companies that do business via their branch offices Sava Osiguranje and Adriatic Slovenica.

That is considerably less compared with 2019 when there were as many as 14 insurance companies on the market.

For more on business, follow TCN's dedicated page.

For more about Croatia, CLICK HERE.

ZAGREB, 15 Sept, 2021 - Abolishing the second pension pillar could, in the long run, result in higher public expenditure for pensions and a lower standard for pensioners, the Croatian Financial Services Supervisory Agency's board chairman, Ante Žigman, said on Wednesday. 

Addressing a conference, organised by the Hanza Media company on pensions, Žigman said that the pension reform was the biggest economic reform in Croatia's recent history and that it had been lasting for 20 years and had shown huge resilience, while being supported by both left and right governments.

He underscored that at the end of August the net assets of the mandatory pension funds (OMF) amounted to HRK 128 billion, an increase of almost HRK 9 billion compared to 2020. One-third of that is from payments while two-thirds of that amount is from yields.

He recalled that a lot of European countries had launched pension reforms twenty years ago but only Croatia and Bulgaria have managed to maintain the established system whereas in other countries significant amendments to reforms have been made due to the negative consequences of the global financial crisis.

A European Commission analysis on the future of pension systems to 2070 indicated that the gap between pension costs and contribution paid in will widen in those countries that abolished the second pillar.

In Croatia, the share of public costs for pensions in GDP should increase until 2030 and after that, it should begin to decrease, he said.

"The results without a doubt indicate that keeping the second pillar and combined pension allowances from the first and second pillar certainly contribute to a better status for pension recipients and lower public expenditure for pensions," Žigman underscored.

Aladrović: Demographic challenge is a pressing issue

Labour and  Pension System Minister Josip Aladrović said that the system needs to be upgraded so as to make it easier for management companies to  make investments which would result in greater prosperity for (pension) fund members.

Aladrović illustrated the complexity of the pension system saying that 40 years ago there were four people employed to one pensioner whereas now that ratio is 1 to 1.3.

"This illustrates the challenges of the demographic trend Croatia is faced with," said Aladrović, underscoring that the demographic challenge is the most pressing one in the entire European Union.

He underscored that compulsory pension funds have savings of €17-18 billion and those savings represent an opportunity to improve Croatia's economic prosperity as well as an opportunity to meet the objectives of adequate pension allowances and the pension system's sustainability.

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 8 March, 2021 - Women account for 16% of management board members of the companies listed on the Zagreb Stock Exchange and for 22% of supervisory board members, the Croatian Financial Services Supervisory Agency (HANFA) said on Monday, citing data from the court register.

In a statement marking International Women's Day, HANFA said that its corporate governance code shows that Croatia and the EU are still far from gender equality on the management and supervisory boards of listed companies.

According to HANFA, there has been a considerable change in the gender structure of the supervisory boards of companies listed on the Zagreb Stock Exchange over the last decade, with the share of women increasing from 18% in 2010 to 35% in 2019. However, their share again declined in 2020 to 22% due to the delisting of some of the companies. 

At the same time, the gender structure of management boards did not change considerably, ranging between 12 and 17%. Last year, 16% of management board members were women.

In recent decades, efforts have been made at EU level to increase the presence of women on companies' management and supervisory boards, mostly through adoption of different recommendations and by encouraging companies to adopt their own rules to achieve a balance in the gender structure of management and supervisory boards.

HANFA joined those efforts in October 2019 by adopting a new corporate governance code which provides that every five years the supervisory board of a company must define a target share of women on the management and supervisory boards, which must be achieved during the next five-year period. The code does not specify the percentage, but requires companies to set it by themselves in their annual report.

HANFA Governing Council chairman Ante Žigman noted that equality between men and women was one of the fundamental values of the European Union, but that despite efforts to achieve 40% female representation by 2020, the data was still unsatisfactory.