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EU Accession and the Croatian Banking System

The struggling way to the access of Croatia to the EU in the context of banking can be described as the period of severe adjustments in the banking structures considering the ownership of the banks, the spectrum of banking products and services, the capital strength of the banks, concentration indicators and various other changes. After the restructuring of the banking system in the 1990s, banking market has been opened to potential investors and attracted several large banking groups originating mostly from the Austria and Italy. According to the stake in the total assets, today more than 90% of the banking system comprises of the banks owned by foreign capital. The presence of large foreign banking groups for several years has attracted foreign investors in the real economy as well, contributing to further development of Croatian economy. In the banking sector, high percentage of foreign capital has introduced externalities in the domestic market, expressed through the transfer of knowledge and technologies, development of new product and services, strengthening the capital base and many other advantages. Subsequently, Croatian banks became leaders in the region and Croatian banking system is now one of the most developed in comparison to the other regional countries which are on the way to the access to EU. As a consequence of globalization and free movement of capital, banks started to be internationally correlated and dependent to the global capital flows. Answering to the increased level of risk, supervisory bodies implemented unique model of supervising and regulating large banking groups through the function of college of supervisors.

Banking systems, foreign banks, college of supervisors

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