ZAGREB, Dec 8 (Hina) – Croatia has one of the most stable deposit insurance systems in the European Union, the State Agency for Deposit Insurance and Bank Resolution (DAB) said on Tuesday ahead of the entry into force of the new law on deposit insurance and compulsory liquidation of credit institutions on January 1.
The new law is aligned with EU directives. It shortens the duration of bankruptcy proceedings for credit institutions and additionally protects depositors. It also provides for the further reform of the banking system in Croatia and the EU, strengthens banks’ capacity to withstand financial shocks, minimises costs borne by taxpayers in case of problems with banks, and establishes a single financial fund which will be filled by credit institutions and not private citizens.
The law also ensures the security of savings deposits and increases the stability of the financial system, making it more resilient to possible financial crises.
Under the new law, DAB will be renamed Croatian Agency for Deposit Insurance.
DAB’s Chief Executive Director Marija Hrebac said that the EU directive on deposit insurance systems requires all member states to establish a deposit insurance fund and raise at least 0.8 percent of the amount of covered deposits into it by 2024.
She recalled that in Croatia such an insurance fund had been established in 1998 and that it now has about 2.5 percent of covered deposits, the fund’s minimum target level defined by law, which is why Croatia has one of the most stable deposit insurance systems in the Union.
“The target level of available funds makes it possible for customers of a failed bank to be disbursed their funds within seven days of the bank’s failure, while the EU directive makes this mandatory as of 2024,” Hrebac said.
This guarantees that citizens can obtain their funds within a very short period of time if their bank fails, and citizens’ trust in the deposit insurance system is a key element of trust in the Croatian banking system, she added.