ZAGREB, 26 April 2022 - The relevant APN agency has received a record 5,870 applications for subsidised housing loans and Construction, Physical Planning and State Assets Minister Ivan Paladina has announced additional funds for all the applications that will be approved.

Applications could be filed from 21 March to 22 April and in this, the seventh round, a new record number were filed. In the previous round, 4,739 were filed, a record at the time.

The government has set aside HRK 50 million for this purpose, but given the interest, Paladina said more funds would be necessary and that he discussed it with Finance Minister Zdravko Marić over the weekend.

"It was agreed that the funds will be ensured, so no one need worry as to whether there will be enough funds for all the applications that will be approved," he said in a press release.

Paladina said the subsidised house scheme would be analysed this year, taking into account the comments of real estate experts, notably regarding price hikes.

The record number of applications shows the importance of the scheme "whereby we are helping young families buy a home," he added.

The average approved subsidised loan is €78,000, the average repayment period is 22 years, and the average age of the beneficiary is 32.

The effective interest is 2.08% and the monthly instalment is HRK 3,035, including a HRK 1,020 subsidy, the ministry said.

In March, APN signed agreements on subsidised housing loans with 14 banks.

The eligibility criteria for applicants is that they are under 45 and that they are first-home buyers. Calculating the amount of subsidy depends on the location of the property covered by the scheme. Applicants in locations in underdeveloped and rural areas qualify for higher subsidisation.

In the families that use housing loan subsidies, roughly 5,000 children have been born since 2017, when the scheme was launched. Since then, more than 22,000 applications have been approved.

(€1 = HRK 7.5)

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

ZAGREB, 1 Oct 2021 - Total household loans in Croatia in August accelerated their growth on the year from 4.3% to 4.6%, with housing loans continuing to increase from 10.6% to 10.8%, according to data provided by the Croatian National Bank (HNB) on Friday.

Total lending by monetary institutions to domestic sectors (apart from the central government) in August fell by HRK 500 million or 0.2% compared to July and at the end of August they amounted to HRK 241.1 billion, the HNB reported.

The annual growth rate of total placements remained at 4.1%, the same as in July.

Total loans, which account for the majority of total placements, fell by HRK 400 million or 0.2% on the month, with loans to the business sector contracting by HRK 700 million or 0.8% and loans to other financial institutions falling by HRK 100 million or 0.6%.

On the other hand, household loans increased by HRK 300 million or 0.2%.

Year-on-year, housing loan growth accelerated from 10.6% to 10.8%, and the growth of cash loans increased from 0.6% to 0.8%, leading to accelerated growth in household loans from 4.3% to 4.6%.

Total household deposits up by HRK 37 billion on the year

Total deposits amounted to HRK 359 billion, HRK 8.6 billion or 2.5% up from July, whereas on the year they increased by HRK 37 billion or 11.5%.

Household deposits amounted to HRK 238.3 billion, up HRK 3.3 billion or 1.1% on the month and by HRK 19 billion or 8.6% on the year, the HNB reported.

(€1 = HRK 7.491380)

For more news on business, CLICK HERE.

ZAGREB, 2 Sept 2021 - Attorney Nicole Kwiatkowski, who represented holders of loans previously pegged to the Swiss franc who won a class action against banks, said on Thursday that banks would not cancel tacit overdrafts abruptly.

"That is not something banks could afford because... this case indicates very non-transparent behaviour by the banks with regard to tacit overdrafts, and I think (cancelling tacit overdrafts) would be too big a reputation risk," Kwiatkowski said in a comment on the Croatian National Bank's initiative to change regulations on overdraft to cap the interest rate on tacit overdrafts.

Bank clients in Croatia who use authorised overdraft have in the past two and a half years been charged HRK 350 million more than they should have, Jutarnji List daily reported in early August.

Clients using overdraft in their current accounts should be charged a maximum interest rate of 7.61% by their banks, however, banks have found a way to charge them close to 10%, without clients even being aware of it, the daily said.

Asked if there were grounds to sue banks and if they had mislead their clients, the attorney said that a decision on that could be made on a case-by-case basis.

"If a bank, having approved a tacit overdraft failed to inform its client of it and of the interest charged and the period during which it would be charged, there would be grounds to seek damages regarding the interest rate on overdraft," she said.

Kwiatkowski noted that the central bank should have reacted sooner because authorised overdraft was almost no longer a bank product, with banks having approved only tacit overdrafts.

The state should have controlled banking transactions more regularly to see what banks were offering their clients, she said.

For more on politics, CLICK HERE.

ZAGREB, 28 May 2021 - The European Investment Fund has approved a €35 million guarantee to the Croatian Bank for Reconstruction and Development (HBOR), allowing it to originate a portfolio of €50 million to mitigate the economic consequences of the COVID-19 pandemic, HBOR said on Friday.

HBOR will approve loans at interest rates reduced by 0.403 percentage points or only with bills of exchange and promissory notes as collateral.

The EIF guarantee stems from the Pan-European Guarantee Fund (EGF), a €25 billion guarantee facility set up by the European Investment Bank Group in 2020 to accelerate the post-COVID-19 recovery of the European economy.

The EGF guarantee will allow HBOR to offer loans to Croatian SMEs and small mid-caps under more favourable terms, including reduced interest rates or lower collateral requirements. The loans will available to SMEs and small mid-caps operating in some of the hardest hit sectors of the Croatian economy, including tourism and manufacturing.

For more about business in Croatia, follow TCN's dedicated business section.

ZAGREB, October 18, 2020 - The moratorium on debt enforcements ends on Monday, October 19, and according to available data, citizens owe the biggest amount of money to financial institutions.

Citizens owe the biggest amount of money to banks, which includes loans and credit card bills, so the debt to the financial sector amounts to 35% of the total debt.

The most common creditors are from the telecommunications sector, but the total debt to them accounts for less than 5%.

Utility debts, including water, gas and electricity bills, make up 1.6% of the total debt.

Enforcement to be carried out in three phases

Debt enforcement will be conducted in three phases, starting on October 19, November 20 and January 20.

In the first phase, enforcement decisions made on the basis of applications received by June 30 will be issued, those received by August 31 will be issued in the second phase, and in the third phase decisions made on the basis of applications received by October 18 wil be issued.

Most citizens owe up to HRK 10k

Data from the Financial Agency's (FINA) system for execution of enforcement over monetary assets have shown that the largest number of enforcement debtors, 109,000 or 46% of citizens with blocked bank accounts, owed up to HRK 10,000, while the total amount of their debt was HRK 396 million.

For every third enforcement debtor, the creditor is a bank or another financial institution, FINA has said.

FINA's data have also shown that 1,475 citizens owe as much as HRK 6.7 billion, or 40.2% of the total debt of citizens, which amounts to HRK 16 billion.

Among them, there are even those who owe about HRK 30 million.

There are 101,500 citizens who owe more than HRK 10,000 but less than HRK 100,000, and their total debt is HRK 3.6 billion.

Amendments to Act on Execution of Enforcement over Monetary Assets

On April 18, FINA stopped executing enforcement over monetary assets of a total of 244,865 enforcement debtors who are natural persons. The execution of 1,089,620 enforcement procedures was halted, and the total amount of uncollected debt was HRK 23.9 billion.

Mid-July, the government extended the moratorium on enforcement over monetary assets of citizens and natural persons, as well as on the execution of all enforcement procedures.

Prime Minister Andrej Plenkovic said on Wednesday in a government session that he expected there would be fewer enforcements than before the measures were adopted.

This week, amendments to the act on execution of enforcement over monetary aseets were put to public consultation, and Justice and Public Administration Minister Ivan Malenica said that the government had shown that it was sensitive about social matters since enforcement procedures would be about HRK 600 cheaper, and Christmas and Easter bonuses, as well as other social benefits, would be exempt from enforcement.

Association of enforcement debtors: Amendments are unfair

An assocation of enforcement debtors said on Saturday that national security had to be taken into account when working on the act on execution of enforcement at such extraordinary times, and said that amendments to that law could not be accepted because the law was unfair and carried too many risks.

The association said in its press release that it was impossible to predict all social implications the "new normal" would have, noting that the coronavirus pandemic was redefining the face of the world and Croatia.

(€1 = 7.57 HRK)

ZAGREB, June 29, 2020 - Household loans totalled HRK 133.9 billion at the end of April 2020, breaking a month on month growing streak that had continued since the start of 2018, while the annual growth continued, according to data from the Croatian National Bank (HNB).

Household loans fell by 1.1% from March 2020 and rose by 4.8% compared with April 2019. The positive annual growth rates have been present since September 2017, showing a tendency to slow in 2020.

"Considering the dented optimism, expectations and deteriorations on the labour market, as well as a greater aversion to risk, we expect credit demand to weaken in the coming months due to new developments" triggered by the coronavirus crisis, Raiffeisen Bank (RBA) says in an analysis of the HNB data.

Analysed by currency structure, the share of loans denominated in the national currency, the kuna, remained at 54.4%, the same as in March. Kuna loans totalled HRK 72.9 billion, with the annual growth rate slowing to 8.2%. This broke their double-digit annual growth rates that had continued since November 2015.

Foreign currency-pegged loans reached HRK 61 billion, up by 1% from April 2019. Most of these loans were denominated in euro, and their growth was driven by foreign exchange movements as the euro exchange rate against the kuna increased by 1.9% compared with April last year.

By type of credit, the largest share (43.7%) accounted for housing loans, totalling HRK 58.5 billion and growing at an annual rate of 7.2%. This type of credit has been on the rise since November 2017. General-purpose cash loans rose at an annual rate of 6.4% in April, compared with a growth rate of 9.1% in March.