January the 10th, 2021 - Croatian banks and banks throughout the wider region have taken some serious blows as a result of the ongoing pandemic, but just what determines the strength of those blows?

As Ana Blaskovic/Poslovni Dnevnik writes, Croatian banks and banks across the country’s region entered the coronavirus crisis in relatively good health as they were fairly adequately protected by capital and were engulfed in a trend of declining bad loans. However, the effects of the pandemic will continue to be profound, especially when it comes to the quality of bank portfolios, which will depend deeply on national measures put in place to try to mitigate the effects of the pandemic.

“The outlook for the quality of Croatian banks' assets in the coming period largely depends on a combination of economic recovery and state aid. Since the beginning of the pandemic, state measures to help businesses have played a key role in stabilising the quality of bank assets.

However, even an early cessation of state aid could lead to a sharp increase in contract default rates in the coming period,’’ they warned from Deloitte in the third edition of the Study on Mergers and Acquisitions in the Banking Sector in Central and Eastern Europe.

The body noted that lawmakers are encouraging the early detection of bad loans and securing provisions, and measures to mitigate the effects of the pandemic, such as a moratorium and selective relief for Croatian banks and others, could, at least to some extent, work to mask the real economic damage. Nevertheless, "huge future negative effects on the quality of bank portfolios and the profits of banks" are expected.

"The coming period will reveal the real extent of the damage caused by the material deterioration of certain clients, which is likely to further encourage consolidation in the banking market of Central and Eastern Europe," said Vedrana Jelusic Kasic, a partner in Deloitte's financial advisory department.

The real damage to Croatian banks in those throughout the region can be seen from the financial results for 2020 and “there is no doubt that coronavirus will leave a strong mark on the results of CEE banks over the next year as well”.

Among the key findings is that regional creditors entered the crisis with a strong capital position, averaging about 20 percent in 2019, up 0.2 points from a year earlier. The average profitability with a return on equity of 12.7 percent with a simultaneous return on assets of 1.5 percent was also stable.

"High levels of profitability due to further pressure on interest rates and provisions for credit placements will not be able to be maintained," the study said.

Nearly 60 percent of total assets are owned by the 15 largest regional groups. In terms of assets, the largest is still the Erste Group with 8.7 percent market share and a presence in 8 countries.

Erste is followed by the KBC Group (with a market share of 7.8%, presence in 4 countries) and the Italian UniCredit (with a market share of 6.5% and presence in 9 countries). The Hungarian OTP achieved the highest asset growth thanks to boasting an active M&A strategy.

The banking sector of Central and Eastern Europe entered a pandemic with only 7.2 percent of bad loans. Compared to 2018, this marks three-quarters of a percentage point less, which reflects many years of positive economic trends, portfolio cleansing and regulatory incentives.

"Overall, the shares of non-performing loans in the CEE at the end of 2019 were at their lowest levels ever, which put the regional banking sector in a relatively favourable position to face the economic challenges and consequences caused by the pandemic," said Deloitte.

As the good years have reflected on them, Croatian banks and those in the region cannot avoid the spillover effects of the ongoing pandemic, and the extent to which the sector will feel this will greatly depend on the range and scope of government measures.

Deloitte concludes that banks in the CEE region have recorded remarkable results in recent years thanks to a stable macro-environment that was interrupted by a pandemic in the first half of last year to the detriment of return on capital.

Resilience is crucial in times of economic shocks, and the banking sector in Central and Eastern Europe is still fragmented, with a significant number of smaller banks whose market share is virtually negligible.

"Small, less efficient and less resilient players may not be able to overcome the shock of capital and minimum acceptable profitability on their own, and we expect the consolidation trend to continue in the coming years and even accelerate due to the crisis caused by the pandemic," Deloitte said.

For the latest news from business in Croatia, follow the dedicated TCN section. 

ZAGREB, 10 January, HINA - The European-Mediterranean Seismological Centre (EMSC) reported on Saturday evening that a quake measuring 4.5 on the Richter scale was registered at 2229 hours Saturday 59 kilometres southeast of Zagreb, near Petrinja. The tremor, which was one in a series of aftershocks since the magnitude 6.2 earthquake which hit Sisak-Moslavina County southeast of Zagreb on 29 December, was felt in the capital city of Zagreb.

#potres (#earthquake) 09.01. u 22:29 kod Petrinje, M4.5. Izviješće slijedi u komentaru. Ako ste osjetili potres, molimo javite na https://t.co/E7EOdDpWtn pic.twitter.com/cnN84x3ULa

— Seizmološka služba HR (@seizmo_hr) January 9, 2021

The quake was also felt internationally, with reports from Belgrade and northern Bosnia and Herzegovina. 

The area of Petrinja and Sisak, where the quake occurred, is still recovering from a series of quakes, the most devastating of which was the 6.2 tremor of December 29, which has left many homeless, and thousands of homes destroyed.

Last night's quake was the strongest in recent days, but it was not an isolated tremor, with EMSC reported 45 other earthquakes in Croatia in the preceding 72 hours. 

For the latest information on the earthquake emergency, follow the dedicated TCN section. 

January 10, 2021 - A famous Hajduk fan song has brought love to two Petrinja earthquake volunteers. 

The earthquake that shook Petrinja, Sisak, Glina, and the surrounding area created huge material damage to the inhabitants of that area, but it also gave birth to some beautiful stories.

The entire country jumped to its feet, united in the desire to help people who were affected. One of the most touching stories comes from those on the ground volunteering.

Namely, 24 Sata reports that two volunteers, Jurica Gospodnetić and Danijela Bunčić, who you may have seen in photos from the affected area, did not know each other until the Petrinja earthquake.

But the two fell in love while helping others.

Namely, Jurica is from Split, and Danijela is from Petrinja. A photo of the couple embracing one another in volunteer gear quickly made its way around Croatia.

“We sat in a tent while we rested from volunteering, which is how we met a little earlier. Danijela had gotten up and left.

A cell phone started ringing, and the melody was 'Zbog Jedne Ljubavi' (Because of One Love), a famous Hajduk fan song. I thought it was my phone ringing, as I have the same melody. Nothing was clear to me. And then when she came back, our story began," Jurica said.

Both of their reflective volunteer vests say Torcida Hajduk 1950.

"My parents' house is damaged, as is my uncle's house and grandmother's house. But yes, being alive is most important. Since day one, we’ve both been here, only I was with the team from my street, coming here for groceries and driving around the villages. Just like him, we were each on our side," Danijela explained.

"Hajduk hasn't brought us the title in 15 years! At least they brought us this," Jurica shouted happily.

I have two more weeks of holiday, and I will volunteer as long as I can, and after that, we will see where life will take us," Jurica concluded. 

You can see photos of the happy couple at 24 Sata

For more on the Petrinja earthquake and to see how you can donate money, food, humanitarian, sanitary, and material aid, follow our dedicated section.

January 10, 2021 - A t-shirt campaign has been launched for GLG Petrinja (Petrinja Wind Orchestra) to raise enough money to repair the damage the institution suffered from the devasting earthquake on December 29, 2020. 

An earthquake doesn’t ask which building to tear down; family houses, administration buildings, hospitals… It doesn’t matter; it destroys everything that is in its way. Petrinja – a town, a home, and a place of many beautiful things that are now lost due to this earthquake (but not forever). The list of buildings that now lay in ruins is pretty long. The home of the wind orchestra of “GLG Petrinja” can also be found on this list. Unfortunately, working conditions weren’t great, but we never gave up. We were happy that we had a place where we could create and make others happy with our music. Although it wasn’t at its best, these walls were our everything: a place of laughter, happiness, joy, a place where you make friends, have great rehearsals, celebrations, gatherings… everything! Between these walls, you could find a different way of life. A life that not everyone gets a chance to experience. We are heartbroken because that place was a home to us and numerous other members that grew up inside those walls. That building is now useless. The orchestra has lost its home. That family with many children has lost everything… Music hasn't yet surrendered completely, but it is a question of time. All of you who know how and when orchestral music is made, precisely music created by “GLG Petrinja,” please help us in any way you can. Together we can restore that little bit of beauty that makes Petrinja known. Help us return the smiles that our music brought to the faces of our citizens. All for one musician, and one musician for all… that is where our strength and power lay.

The pure hearts of Croatians far and wide shine brightest in times of crisis, which we have seen on display in the aftermath of the Petrinja earthquake. While many channels for donations have opened in the last two weeks, a new t-shirt campaign has begun by Petrinja musicians to help repair the damage to the GLG Petrinja building. 

Namely, founded in 1808, GLG Petrinja is one of the oldest wind orchestras in Croatia. There are currently more than 60 active members, and several Petrinja citizens have played in the orchestra at some point. GLG Petrinja's current conductor is Josip Kapović from Metkovič, a tuba player in the Croatian Armed Forces Band.

TCN spoke to one of the campaign organizers and GLG Petrinja members, Iva Petračić, about how the idea and design came about. 

"My friend Vrban suggested that we make the shirts when he called me after the earthquake. I came up with the design with a few others that helped. A friend offered to assist with the graphic design, and now the shirt is here. I had all of the support from my orchestra and we really hope this will spread and that people will buy the shirt," said Petračić.

Along with the design, the t-shirt reads 'Vratimo glazbu tamo gdje pripada' (returning music where it belongs) with the time and date of the earthquake reflected. 

T-shirts cost 100 kuna each, and all proceeds will go directly to the GLG Petrinja.

SUPPORT GLG PETRINJA HERE

For more on the Petrinja earthquake and to see how you can donate money, food, humanitarian, sanitary, and material aid, follow our dedicated section.

ZAGREB, 9 January, 2021 - The Bosnian towns of Dubica and Srebrenica on Friday sent a total of 22 containers to Petrinja, and the delivery of the donation to the quake-hit area was organised within "Banija Is Our House" humanitarian initiative of the Serb National Council (SNV).

Addressing the ceremony of the handover of the donation, Serb Orthodox Metropolitan of Zagreb and Ljubljana Porfirije said in Petrinja that the Serb Orthodox Church (SPC) would continue to tirelessly help the local community.

He recalled that after providing humanitarian relief to quake victims, it would also be necessary to help them reconstruct their homes.

The dignitary who visited Petrinja, Glina and their environs said that the 29 December devastating quake "wreaked Biblical havoc" and expressed condolences to the families of the seven people who lost their lives in the disaster. 

The Banija Is Our House humanitarian initiative, which has raised over HRK 500,000 and €27,000 for earthquake victims, held its inaugural meeting in Petrinja on Friday, bringing together representatives of the Serbian Orthodox Church, the Serb National Council (SNV) and other Serb organisations in Croatia.

Aid for the victims is arriving also from Serbia and Bosnia and Herzegovina, the SNV said, adding that trucks with construction material and 72 container homes were being delivered in cooperation with the Red Cross and the relevant services.

For the latest information on the earthquake emergency, follow the dedicated TCN section. 

ZAGREB, 9 January, 2021 - Croatia's Justice and Public Administration Ministry will propose to the Croatian Public Notaries' Chamber that notaries should postpone completion of enforced collection actions concerning debtors in the areas hit by the 29 December devastating quake, the Vecernji List daily wrote on Saturday.

After the authorities declared a state of disaster due to the 6.2 magnitude earthquake, enforcement debtors are entitled to request postponement of the proceedings under Article 65 of the enforcement legislation.

In addition, there is also a possibility of deferral of enforcement actions provided that all the parties in the proceedings have agreed on the postponement in compliance with Article 69 of that law, the daily says while quoting a source from the ministry.

The government also notes that measures for suspension of enforcement and other measures to assist citizens impacted by the quake were being prepared.

For the latest information on the earthquake emergency, follow the dedicated TCN section. 

ZAGREB, January 9, 2021 - In the last 24 hours the Red Cross has distributed 12,600 tonnes of food in Sisak-Moslavina County, Minister Tomo Medved, who heads the task force for dealing with the aftermath of the 29 December quake, told the press on Saturday morning.

In the last 24 hours, 12,600 tonnes of food has been distributed, including 18,580 hot meals for the population in the quake-affected area and 2,377 meals to emergency services and personnel on the ground, Medved told the specialised radio broadcast dedicated to the developments in Sisak-Moslavina County since the devastating quake and aftershocks.

He added that a viable plan was being devised to have long-term solution for providing food and meals and thanked all cooks, chefs and hospitality businesses that arrived in the county immediately after the quake to help in preparing meals for people who were left homeless in the disaster.

On Friday, 86 heaters plus five gas-powered generator units were also delivered, and 295 psychological counseling services were offered, while the relevant services visited 11 villages, hamlets and settlements in 24 hours, Medved said.

Currently, 1,914 members of emergency services are being deployed in the area concerned. Those are personnel of the Civil Protection, Firefighting Community, the HGSS Mountain Rescue Service, Red Cross, police, army service people, engineers and so on.

Commenting on the local economy, Medved said that the meat processing company Gavrilovic did its business as usual.

Additional HRK 160 million for job-retention scheme for quake-affected businesses

The government has in the meantime set aside 160 million kuna to help businesses in the quake-hit area. They will be covered by the job-retention grants of 4,000 kuna per employee per month.  An estimated 20,000 workers are likely to be encompassed by this measure, and thus HRK 160 million should be set aside for this purpose in the first two months of 2021.

Prefab containers being provided

Medved said that to date 297 mobile homes had been dispatched to the quake-hit county, and an additional 70 containers were expected to arrive from Turkey to Croatia in the course of Saturday or Sunday. He also praised private donations and initiative to provide temporary accommodation for quake victims. 

Thus about 550 different types of objects have to date been made available for the temporary accommodation, according to Medved.

One-off grants for quake-affected households

The Labour Ministry has set aside the necessary amount of financial aid for quake-affected households, and single-person households are entitled to one-off grant in the amount of 2,500 kuna and households with more members can apply for a grant of HRK 3,500. So far, 2,800 applications have been received and a half of them have been processed.

(€1 = HRK 7.5)

For the latest information on the earthquake emergency, follow the dedicated TCN section. 

ZAGREB, 9 January, 2021 - Homeland Movement leader Miroslav Skoro on Saturday supported the Voice of Entrepreneurs association in criticising the extension of coronavirus restrictions which were affecting businesses, notably bars and restaurants.

"We are talking a billion kuna in revenues which could have been generated in the last month alone. Advent is the time when people spend more. It was an irrational decision because people working in this sector are now out in the field cooking and handing out thousands of meals to earthquake victims and they are in direct contact. On the other hand, the government, who imposed these rigorous epidemiological measures on movement, lifted these measures at the time of this disaster," Skoro told the press during a visit to the earthquake-hit Banovina region.

It is normal that bar and restaurant owners are angry over "double standards" used by the government and the national coronavirus response team, he said.

The Voice of Entrepreneurs appealed to the government on Friday to say what businesses could expect after January 8 when the coronavirus restrictions imposed for the Christmas and New Year holidays expired. The restrictions have in the meantime been extended until the end of the month. 

Before his tour of Banovina, Skoro had visited a warehouse in Kutina where Homeland Movement volunteers were distributing parcels with food, clothing and other necessities for earthquake victims. 

He said that the Homeland Movement had distributed about 1,200 tonnes of food and hygiene products. He added that aid was still coming in and that some donors wanted to distribute aid only through the Homeland Movement, citing an aid delivery worth one million euro that recently arrived from Austria.

Skoro also said that his party would support an initiative to set up a commission of inquiry into post-war reconstruction, after it emerged that many of the houses repaired after the 1991-1995 Homeland War had collapsed in the 29 December earthquake that struck the Banovina region. He, however, recalled that previous such commissions had worked along the lines "if you don't want to establish facts, set up a commission."

For the latest information on the earthquake emergency, follow the dedicated TCN section. 

ZAGREB, 9 January (Hina) - Construction Minister Darko Horvat said on Saturday that hospitality workers were preparing 15,000 hot meals a day for earthquake victims in Petrinja and that this work would be assigned to the state-owned company Pleter which has the necessary resources.

"The number of hot meals cooked on a daily basis now exceeds 15,000, which in our opinion is unsustainable. As of Monday, this work will be assigned to the state company Pleter which has all the necessary resources," Horvat told the press during a visit to Sisak. He was asked whether hospitality workers would continue cooking and distributing food for those in need.

"We will ensure greater certainty in food preparation," Horvat said, adding that volunteers would remain on the ground until it was decided that they were no longer needed.

Horvat said that the government had secured HRK 160 million for small businesses that were forced to suspend their operations because of the earthquake. He said that single persons would receive a one-off allowance of up to HRK 2,500 and families of up to HRK 3,500.

Horvat said that 297 state-owned container homes had been installed in the earthquake-hit areas, adding that 70 container homes, donated by the Turkish government, were arriving in the Italian northern Adriatic port of Trieste today and would be dispatched to Petrinja, Glina and Sisak already today.

For the latest information on the earthquake emergency, follow the dedicated TCN section. 

ZAGREB, 9 January, 2021 - Eighteen container homes donated by Turkey arrived in Lekenik on Saturday to be used for the accommodation of people left homeless by a devastating earthquake that struck central Croatia on 29 December, the Turkish Embassy said, adding that another 16 containers would be delivered later in the day.

A shipment of containers arrived two days ago and were delivered to Glina (12), Sisak (6), Lekenik (6) and Hrvatska Kostajnica (6).

Turkey has pledged 100 container homes for earthquake victims in Croatia. A total of 64 containers are expected to arrive on Saturday and the remaining 36 in the coming days.

Earlier this week, the government in Ankara announced an additional 100 container homes, which are expected to come soon, the Turkish Embassy said in a statement.

In Lekenik, the shipment was welcomed by Turkish Ambassador Mustafa Babur Hizlan and State Secretary at the Croatian Ministry of the Interior Irena Petrijevcanin Vuksanovic.

Shortly after the earthquake, which caused extensive property damage in Sisak-Moslavina County, Turkish authorities contacted Croatian authorities offering the necessary assistance given that Turkey has a lot of experience with earthquakes.

Turkey's Cooperation and Coordination Agency (TIKA) has delivered 500 blankets, 272 electric heaters, 480 tents as well as food and hygiene products.

Ten experts from the Turkish Disaster and Emergency Management Authority (AFAD) have been present in Croatia since 4 January helping with the relief effort.

The Turkish Embassy said Turkey is "a true friend" of Croatia, as confirmed by the Turkish president in conversation with his Croatian counterpart, and that "it is time for brotherhood".

The Turkish Ministry of Foreign Affairs has extended condolences to the families of the people killed and wished a speedy recovery to those injured in the disaster.

For the latest information on the earthquake emergency, follow the dedicated TCN section.