Thursday, 3 March 2022

Resolution Prevents Negative Scenario, Sberbank Croatia Continues Operating Normally

ZAGREB, 3 March 2022 - The head of the Croatian Deposit Insurance Agency (HAOD), Marija Hrebac, said on Thursday that the resolution of Sberbank Croatia had prevented a negative scenario, that the bank had been saved and that it is continuing to operate normally. 

Due to a rapid deterioration of liquidity, the European Central Bank announced on Monday that Sberbank Croatia "is failing or likely to fail" and notified the Single Resolution Board (SRB), the central resolution authority within the Banking Union.

The SRB adopted a decision on a two-day moratorium on the operations of Sberbank Croatia, which ended at midnight on Tuesday. A decision on launching its resolution was made before the expiry.

The Single Resolution Board decided with the Croatian National Bank (HNB) as the national resolution authority to start the resolution of Sberbank Zagreb, and the Croatian Postal Bank (HPB) became its new owner.

The HPB said on Wednesday that Sberbank Croatia was about to begin operating under the name Nova Hrvatska Banka (New Croatian Bank).

Hrebac said the crisis was resolved owing to coordinated action between national and European bodies, the role of the state, and the media having conveyed relevant messages to prevent panic.

Sberbank has been saved and is normally continuing with its operations and all its clients are safe, Hrebac said, recalling that if the bank had gone bankrupt, clients with deposits insured under the national deposit insurance scheme of up to €100,000 would have been paid, which would have required around HRK 3.8 billion. In addition to that, the bank also holds deposits amounting to more than 100,000 euros as well as deposits not covered by the deposit insurance scheme, i.e. those by financial institutions.

Asked if Sberbank's liquidation would have meant the loss of around four billion kuna of uninsured deposits, Hrebac said that they would not have been lost and that all clients would have been able to access their money because Sberbank was a good, highly capitalized credit institution.

Those clients would have obtained their deposits through bankruptcy proceedings, she said but noted that such proceedings take time.

Answering a reporter's question, Hrebac said that one could not speak about Sberbank Croatia's nationalization because the decisions were not made by the state.

The HPB paid HRK 71 million for Sberbank Croatia, and the former owners, if they want to, may appeal against the price is too low, and if found to be right, they would be paid the difference from the Single Resolution Fund, she said, underlining again the importance of accession to the Single Resolution Mechanism because it has funds worth more than €55 billion.

Had the bank gone bankrupt, what would have been left for shareholders at the end of the process, after the payment of creditors' claims, she wondered, adding that "no payments have been made to shareholders in any of the bankruptcy proceedings so far."

Sale of Croatia Banka not completed or suspended 

Asked if the process of the sale of Croatia Banka had come to a halt, Hrebac said that it had neither been completed nor suspended, stressing that the bank had in the meantime significantly stabilized its business and was meeting all regulatory demands.

"The process is ongoing," she said, recalling that two binding offers had been submitted for Croatia Banka and noting that the bank was very stable.

Croatia Banka is fully owned by HAOD, which launched its sale in July 2020.

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