Opinion of the European Central Bank of 25 March 2020 on close cooperation between the European Central Bank and Hrvatska narodna banka (HNB) within the Single Supervisory Mechanism, and on the macroprudential mandate and tools of HNB (CON/2020/10)
Date: 2020-03-25
Institutions: European Central Bank
Subjects: Croatia, EU banking union, banking supervision, central bank, competence of the institution, credit institution, financial stability, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 25 March 2020  

on close cooperation between the European Central Bank and Hrvatska narodna banka (HNB) 

within the Single Supervisory Mechanism, and on the macroprudential mandate and tools of 

HNB 

(CON/2020/10) 

Introduction and legal basis 

On  29  January  2020  the  European  Central  Bank  (ECB)  received  two  requests  from  Hrvatska  narodna 

banka (HNB) for opinions on draft amendments to the Law  on HNB (the ‘draft law on  HNB’) and to the 

Law  on  credit  institutions  (the  ‘draft  law  on  credit  institutions’,  together  with  the  draft  law  on  HNB,  the 
‘draft laws’)1.  

The ECB’s competence to deliver this opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  third  and  sixth  indents  of  Article 2(1)  of  Council  Decision 
98/415/EC2, as the provisions of the draft laws addressed by this opinion3 relate to HNB, rules applicable 

to  financial  institutions  insofar  as  they  materially  influence  the  stability  of  financial  institutions  and 

markets,  and  the  ECB’s  tasks  concerning  the  prudential  supervision  of  credit  institutions  pursuant  to 

Article 127(6) of the Treaty. In accordance with the first sentence of Article 17.5 of the Rules of Procedure 

of the European Central Bank, the Governing Council has adopted this opinion. 

1. 

Purpose of the draft laws 

The  provisions  of  the  draft  laws  with  respect  to  which  this  opinion  is  issued  have  three  main  purposes. 
First,  the  draft  laws  adapt  Croatian  law  to  the  provisions  of  Council  Regulation  (EU)  No  1024/20134, 
Regulation  (EU)  No  468/2014  of  the  European  Central  Bank  (ECB/2014/17)5  and  Regulation  (EU) 

1  

2  

3  

4  

5  

HNB’s  authority  to  consult  the  ECB  is  based  on  Article  39(1)  of  the  Law  on  HNB,  according  to  which  HNB  may 
require  the  Croatian  Government  to  propose  the  enactment  of  laws  concerning  HNB  and  other  matters  to  the 
Croatian Parliament. The Ministry of Finance is the sponsor of the draft laws, which were approved by the Croatian 
Government on 23 January 2020 and were delivered on the same day to the Croatian Parliament for the next steps 
in the legislative process.  

Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

This  opinion  addresses  those  provisions  of  the  draft  laws  that  concern  the  establishment  of  close  cooperation 
between the ECB and HNB within the framework of the Single Supervisory Mechanism, Croatia’s participation in the 
Single  Resolution  Mechanism,  HNB’s  macroprudential  mandate  and  tools,  and  certain  other  provisions  affecting 
credit institutions. The remaining provisions of the draft laws are addressed in a separate opinion. 

Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 

Regulation  (EU)  No  468/2014  of  the  European  Central  Bank  of  16  April  2014  establishing  the  framework  for 
cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent 
authorities  and  with  national  designated  authorities  (SSM  Framework  Regulation)  (ECB/2014/17)  (OJ  L  141, 
14.5.2014, p. 1). 

 
 
 
 
 
                                                 
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No 806/2014  of  the  European  Parliament  and  of  the  Council6  to  provide  for  the  establishment  of  close 

cooperation  between  the  ECB  and  HNB  within  the  framework  of  the  Single  Supervisory  Mechanism 

(SSM)  and  for  Croatia’s  entry  into  the  Single  Resolution  Mechanism  (SRM).  Second,  the  draft  laws 

contain  provisions  concerning  the  macroprudential  mandate  and  tools  of  HNB.  Third,  the  draft  laws 

contain provisions addressing a range of matters affecting credit institutions, including restrictions on the 

remuneration of staff, the outsourcing of business activities and the exchange of information for purposes 

of assessing the creditworthiness of a credit institution’s clients and managing credit risks.  

2. 

The draft law on HNB  

2.1  The  draft  law  on  HNB  regulates  HNB’s  tasks  within  close  cooperation  with  the  ECB  and 

participation  in  the  SRM  on  matters  including  the  issuance  and  withdrawal  or  revocation  of 

authorisations  and  approvals,  the  adoption  of  other  decisions,  the  exercise  of  supervision  and 

oversight  in  accordance  with  the  laws  governing  the  operation  of  credit  institutions,  and  the 

exercise  of  resolution  powers.  It  is  envisaged  that  HNB  will  also  adopt  subordinate  legislation 

regulating  banking  operations  and  establishing  standards  for  sound  and  safe  operation  of  credit 

institutions.  These  tasks  are  to  be  carried  out  by  HNB  within  close  cooperation  with  the  ECB,  or 
within the SRM, in accordance with EU law7. 

2.2  The draft law on HNB provides that the HNB Council is to issue and revoke authorisations of credit 

institutions, authorisations for performing specific operations, authorisations for acquiring shares of 

credit  institutions,  approve  mergers  by  acquisition,  formation  and  other  changes  in  the  status  of 

credit institutions, approve and revoke the approval of appointments of chairpersons and members 

of credit institutions’ management and supervisory boards, and decide whether a credit institution is 

failing or is likely to fail, within close cooperation established with the ECB and under the conditions 

governed  by  the  Statute  of  the  European  System  of  Central  Banks  and  of  the  European  Central 
Bank or the legal acts of the EU, its institutions and bodies 8. 

2.3  The draft law lays down the competences that HNB’s Governor exercises within the framework of 

close  cooperation  with  the  ECB  and  HNB’s  participation  in  the  SRM,  including  the  regulation  of 

detailed conditions for and methods of exercising supervision,  the  procedure for taking measures 
with respect to credit institutions and the conditions applicable to the resolution planning process9. 

2.4  The  draft  law  makes  provision  for  the  imposition  of  administrative  monetary  sanctions  in 

cooperation with the ECB, and for the cooperation of HNB with the Single Resolution Board (SRB) 
in the procedure of imposing penalties when SRB exercises its powers to impose penalties 10. 

2.5  The  draft  law  provides  that  HNB  is  competent  for  the  definition  and  implementation  of  Croatia’s 

macroprudential policy, for the purposes of contributing to the stability of the financial system as a 

6  

7   
8  
9  
10   

Regulation (EU) No  806/2014 of the European Parliament and  of the Council of 15 July  2014  establishing uniform 
rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of 
a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 
225, 30.7.2014, p. 1). 

See Articles 4 and 24 of the draft law on HNB (amending Article 4 and replacing Article 77 of the Law on HNB). 
See Articles 9 and 28 of the draft law on HNB (amending Article 42(3) and Article 104 of the Law on HNB). 
See Article 10 of the draft law on HNB (amending Article 43 of the Law on HNB). 

See Article 26 of the draft law on HNB (introducing new Articles 87a and 87c of the Law on HNB). 

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whole,  acting  in  accordance  with  relevant  EU  legal  acts.  HNB’s  Governor  is  to  implement 

macroprudential  policy  and  adopt  subordinate  legislation,  recommendations  and  decisions  in  the 
field of macroprudential policy11.  

2.6  The draft law provides that on the date of the introduction of the euro as Croatia’s official currency, 

or  if  after  the  establishment  of  close  cooperation  with  the  ECB  this  cooperation  is  terminated  in 

accordance with Regulation (EU) No 1024/2013, the relevant provisions of the Law on HNB which 
arise out of HNB’s close cooperation with the ECB cease to have effect12. 

2.7  Finally, the draft law provides that HNB will be independent in the performance of its tasks within 

the SRM conferred on it pursuant to Regulation (EU) No 806/2014, without prejudice to the powers 
of  the  Single  Resolution  Board  (SRB)  in  relation  to  HNB13.  It  also  gives  HNB  powers  to  adopt 
implementing acts providing for the application of SRB guidelines, subject to the SRB’s approval14. 

3. 

The draft law on credit institutions 

3.1  The  draft  law  on  credit  institutions  empowers  HNB  to  impose  supervisory  measures  that  may  be 

required upon the completion of the comprehensive assessment performed by the ECB pursuant to 

Regulation  (EU)  No  1024/2013.  HNB  is  to  cooperate  with  the  ECB  in  identifying  significant  credit 

institutions in Croatia on the basis of this comprehensive assessment and the requirements set out 
in Regulation (EU) No 468/2014 (ECB/2014/17)15. 

3.2  The draft law seeks to ensure that, whenever the ECB exercises its supervisory powers concerning 

acquisitions  of  qualifying  holdings  in  credit  institutions,  HNB  cooperates  with  the  ECB  in  the 

decision-making procedure in order to ensure that joint procedures carried out with the ECB in the 

course  of  close  cooperation  may  be  applied  mutatis  mutandis  to  supervised  entities  with  a  head 
office in Croatia16. 

3.3  The  draft  law  seeks  to  ensure  cooperation  with  the  ECB  in  the  decision-making  procedure 

concerning the  prior  approval and revocation  of approval for management and  supervisory  board 

members.  A  credit  institution’s  management  board  is  obliged  to  ensure  that  the  credit  institution 

operates,  inter  alia,  in  accordance  with  ECB  regulations  adopted  under  Regulation  (EU) 
No 1024/201317.  These  provisions  are  necessary  as  the  ECB  does  not  have  directly  applicable 
powers over supervised entities and groups in Croatia during the course of close cooperation 18. 

3.4  The  draft  law  seeks  to  facilitate  joint  decision-making  procedures  in  which  HNB  takes  a  decision 

upon  the  instruction  of  the  ECB  on  the  authorisation  of  credit  institutions’  provision  of  banking 

and/or  financial  services,  mergers  by  acquisition  or  formation  of  new  credit  institutions,  the 

11  

12   
13   
14   
15  
16  

17   

18  

See  Articles  4,  10,  25  and  27  of  the  draft  law  on  HNB  (amending  Articles  4,  43  and  89  and  introducing  new 
Article 77a of the Law on HNB). 
See Articles 34 (amending Article 118 of the Law on HNB) and 36 of the draft law on HNB. 

See Article 21 of the draft law on HNB (introducing new Article 71a of the Law on HNB). 
See Article 21 of the draft law on HNB (introducing new Article 71b of the Law on HNB). 

See Articles 5-6 of the draft law on credit institutions (amending Articles 11b-11c of the Law on credit institutions). 
See Articles 7-11 of the draft law on credit institutions (amending Articles 24, 26, 27, 29 and 32 of the Law on credit 
institutions).  
See Articles 13-15 and 17-18 of the draft law on credit institutions (amending Articles 39, 41, 44, 46 and 47 of the 
Law on credit institutions). 

See Explanation accompanying the draft law on credit institutions, Articles 13, 15, 17 and 18, pp. 48-49. 

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granting,  expiry  and  revocation  of  authorisations,  and  the  establishment  of  a  branch  in  another 
participating Member State by a significant credit institution 19. 

3.5  The  draft  law  requires  HNB  to  decide  on  changes  to  credit  institutions’  internal  models,  the 

classification  of  capital  instruments  as  additional  tier  1  or  tier  2  capital  instruments,  and  a  credit 
institution’s  capital  conversion  plan  in  accordance  with  the  ECB’s  instructions20.  The  existing 

limitation of exposures to members of the same group or to a single person or group of connected 

clients,  set  at  25%  of  the  credit  institution’s  eligible  capital,  is  to  remain  in  force  after  the 
establishment  of  close  cooperation21.  As  regards  the  assessment  of  recovery  plans,  HNB  is  to 
decide in line with ECB instructions 22.  

3.6  The  draft  law  envisages  that  credit  institutions  will  continue  to  address  all  their  applications, 

notifications  or  requests  to  HNB.  An  unannounced  inspection  of  a  credit  institution’s  business 

premises may only be performed by order of the High Administrative Court where such an order is 

requested independently by HNB or by the ECB, with HNB submitting such requests on behalf of 
the ECB 23.  

3.7  Whenever  the  ECB  exercises  and  performs  its  supervisory  powers  and  tasks,  HNB  as  the 

consolidating  supervisor  must  cooperate  with  the  ECB  in  the  decision-making  procedure  for  the 

approval of a financial support agreement for a group of credit institutions in Croatia and decide in 
accordance  with the ECB’s instructions 24. Provision is  made for cooperation and  decision-making 

according  to  the  ECB’s  instructions  in  relation  to  supervisory  measures  in  the  early  intervention 
phase25. Where  the  ECB  or  a  supervisory  authority  from  a  non-participating  Member  State  is  the 

consolidating  supervisor,  HNB  may  participate  in  the  college  of  supervisors  as  an  observer,  and 
must act in accordance with the ECB’s instructions 26. 

3.8  Under the draft law the provisions of the law governing the general administrative procedure apply 

to administrative procedures carried out by HNB. The draft law on credit institutions establishes the 

legal  framework  for  the  exercise  of  the  right  to  be  heard  and  to  access files.  In  particular,  before 

adopting a decision that could adversely affect the legal rights of a party, HNB must notify the party 

of all facts, circumstances and legal issues relevant to the adoption of the decision and invite the 

party to provide its comments in writing. Where HNB deems it appropriate, it may provide the party 

with the opportunity of commenting in an oral hearing. In addition, a party subject to a supervisory 

19  

20  

21  

22  
23  
24  
25  
26  

See Articles 19-23, 24 and 26-27 of the draft law on credit institutions (amending Articles 60, 63, 65, 67-69, 73 and 
75 of the Law on credit institutions). 
See  Articles  34  and  38  of  the  draft  law  on  credit  institutions  (amending  Articles  114  and  143  of  the  Law  on  credit 
institutions). 
See Article 40 of the draft law  on credit institutions (introducing new Article 145a of the Law  on credit institutions). 
See  also  Article  493(3)(c)  of  Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of 
26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) 
No 648/2012 (OJ L 176, 27.6.2013, p. 1). 
See Article 41 of the draft law on credit institutions (introducing new Article 154a of the Law on credit institutions). 

See Article 44 of the draft law on credit institutions (amending Article 175 of the Law on credit institutions). 
See Article 49 of the draft law on credit institutions (amending Article 216b of the Law on credit institutions). 
See Article 53 of the draft law on credit institutions (amending Article 235a of the Law on credit institutions). 

See Article 56 of the draft law on credit institutions (amending Article 277 of the Law on credit institutions). 

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procedure and a party against whom a procedure for imposing administrative sanctions has been 
initiated have a right to access the file 27.  

3.9  Under the draft law HNB is competent for establishing breaches and carrying out the procedure for 

imposing  administrative  sanctions  and  imposing  administrative  sanctions  on  legal  persons  and 
responsible  persons  for  particular  breaches  of  credit  institutions28.  As  noted  in  the  explanatory 

memorandum  accompanying  the  draft  law,  in  accordance  with  Article  7  of  Regulation  (EU) 

No 1024/2013, the ECB may give instructions that the HNB is obliged to comply with. In exercising 

its powers under Article 18 in conjunction with Article 7 of Regulation (EU) No 1024/2013, the ECB 

may  instruct  HNB  to  impose  administrative  sanctions.  To  enable  HNB  to  comply  with  such 

instructions, HNB is given the power to impose administrative sanctions. The procedure by which 

HNB imposes administrative sanctions aims to fulfil the requirements under close cooperation with 

the ECB. This includes the types of administrative sanctions that HNB may impose at the request 
of the ECB29. The draft law  introduces administrative disputes and judicial protection as the legal 

remedy  against  a  decision  on  administrative  sanctions.  An  appeal  against  a  decision  of  HNB  on 

administrative  sanctions  may  be  made  before  the  Administrative  Court  in  Zagreb,  with  such  an 
appeal  regarded  as  urgent30.  The  limitation  period  for  imposing  administrative  sanctions  and 
executing  fines  is  five  years31,  in  line  with  Articles  130  and  131  of  Regulation  (EU)  No 468/2014 
(ECB/2014/17)32. Whenever  the  ECB  exercises  its  powers,  HNB  is  to  cooperate  with  the  ECB  in 
the  administrative  sanctions  procedure  and  comply  with  the  ECB’s  instructions33.  In  this  respect, 

HNB  must  follow  the  same  procedural  requirements  as  apply  when  it  imposes  administrative 
sanctions of its own accord34. 

3.10  Where certain provisions of the Law on credit institutions are breached, a misdemeanour may be 

committed,  the  establishment  and  sanctioning  of  which  falls  within  the  competence  of  county 

courts.  The  draft  law  provides,  in  contrast,  that  HNB,  and  not  the  county  courts,  is  to  have  the 
power to impose administrative sanctions in relation to certain breaches 35. 

3.11  The draft law contains further provisions regulating HNB’s macroprudential mandate and tools. In 

particular,  where  necessary  to  safeguard  the  stability  of  the  financial  system  as  a  whole,  to 

strengthen the resilience of the financial system and to prevent  and mitigate systemic risks,  HNB 

as  a  designated  authority  must  adopt  subordinate  legislation  to  set  appropriate  measures  and 

instruments  that  may  include:  (1)  the  highest  permitted  ratio  of  the  approved  loan  amount  to 

collateral  value;  (2)  the  highest  permitted  ratio  of  the  loan  amount  to  the  income  of  the  loan 

27  

28  

29  
30  
31   

32  
33   
34  
35  

See Articles 62-63 of the draft law on credit institutions (introducing new Articles 322a, 323a and 323b of the Law on 
credit institutions). 
See  Article  65  of  the  draft  law  on  credit  institutions  (introducing  new  Articles  359a  to  359s  of  the  Law  on  credit 
institutions). 
See Explanation accompanying the draft law on credit institutions, Article 65, pp. 56-58. 

See Article 65 of the draft law on credit institutions (introducing new Article 359k of the Law on credit institutions). 
See  Article  65  of  the  draft  law  on  credit  institutions  (introducing  new  Articles  359m  and  359n  of  the  Law  on  credit 
institutions). 
See Explanation accompanying the draft law on credit institutions, Article 65, p. 58. 

See Article 65 of the draft law on credit institutions (introducing new Article 359s of the Law on credit institutions). 
See Explanation accompanying the draft law on credit institutions, Article 65, p. 56. 
See  Article  66  of  the  draft  law  on  credit  institutions  (amending  Article  360  of  the  Law  on  credit  institutions); 
Explanation accompanying the draft law on credit institutions, Article 66, p. 59. 

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beneficiary; (3) the highest permitted ratio of the amount of loan instalment repayment or annuity to 

the  income  of  the  loan  beneficiary;  (4)  the  maximum  duration  of  the  loan  agreement;  (5)  the 

requirements  related  to  the  loan  repayment  calculation  method;  or  (6)  other  measures  and 

requirements aimed at safeguarding the stability of the financial system as a whole and preventing 
and mitigating systemic risks36. Further, HNB is the designated authority responsible for setting the 

countercyclical  and  systemic  risk  buffer  rates  for  Croatia  for  the  purposes  of  Articles  133(2)  and 
136(1)  of  Directive  2013/36/EU  of  the  European  Parliament  and  the  Council37  and  must  also  set 

other systemically important institutions (O-SII) buffer rate. In these cases, HNB carries out these 
macroprudential tasks together with the ECB, and follows the ECB’s instructions38. 

3.12  The draft law contains provisions prescribing the ratio between the fixed and variable components 

of the total remuneration of a staff member of a credit institution and restricting the type and design 
of instruments in which variable remuneration may be awarded39. 

3.13  The  draft  law  amends  existing  provisions  concerning  credit  institutions’  outsourcing  of  business 

activities, prescribing in more detail the content of subordinate legislation that HNB may adopt on 
outsourcing40. 

3.14  The draft law removes legal impediments to the exchange of confidential information necessary for 

a  credit  institution  to  assess  a  client's  creditworthiness  and  manage  credit  risk,  ensuring  the 

compliance  of  such  information  exchanges  with  banking  secrecy,  data  protection  and  other  legal 

requirements.  These  changes  are  proposed  following  the  discontinuation  of  the  exchange  of 

information  on  the  credit  obligations  of  citizens  by  the  Croatian  Registry  of  Credit  Obligations  in 
2018 41. 

4. 

Observations regarding close cooperation between HNB and the ECB within the SSM 

4.1  The ECB welcomes the draft laws as an important step in the process leading to the establishment 

of  close  cooperation  between  the  ECB  and  HNB  pursuant  to  Article  7  of  Regulation  (EU) 

No 1024/2013.  

4.2  The  ECB  notes  that  it  has  already  been  consulted,  and  issued  an  opinion,  on  a  first  piece  of 

Croatian legislation adopted for the purpose of establishing close cooperation 42. 

4.3  This opinion is without prejudice to the overall assessment of the request filed on 27 May 2019 by 

the Republic of Croatia to establish close cooperation between the ECB and HNB, which is taking 

36  

37  

38  

39  

40  

41  

42  

See  Article  39  of  the  draft  law  on  credit  institutions  (introducing  new  Title  VIIa  -  Macroprudential  measures  and 
Article 144a of the Law on credit institutions).  

Directive  2013/36/EU  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  access  to  the  activity  of 
credit  institutions  and  the  prudential  supervision  of  credit  institutions  and  investment  firms,  amending  Directive 
2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).  
See  Articles  35-37  of  the  draft  law  on  credit  institutions  (amending  Articles  119,  129  and  137  of  the  Law  on  credit 
institutions). 
See  Article  30  of  the  draft  law  on  credit  institutions  (introducing  new  Articles  100a  and  100b  of  the  Law  on  credit 
institutions); Explanation accompanying the draft law on credit institutions, Article 30, pp. 50-51. 
See Articles 31-33 of the draft law on credit institutions (amending Articles 109-111 of the Law on credit institutions); 
Explanation accompanying the draft law on credit institutions, Articles 31-33, p. 51. 
See  Articles  42  and  61  of  the  draft  law  on  credit  institutions  (amending  Articles  157  and  321  of  the  Law  on  credit 
institutions); Explanation accompanying the draft law on credit institutions, Articles 42 and 61, pp. 52 and 55. 

See Opinion CON/2019/25. All ECB Opinions are published on the ECB’s website at www.ecb.europa.eu. 

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place  in  line  with  the  existing  procedures  established  under  Article  7  of  Regulation  (EU) 
No 1024/2013 and under Decision ECB/2014/5 of the European Central Bank 43. In particular, this 

opinion remains  without prejudice to the assessment being conducted by the ECB in accordance 

with  Article  4  of  Decision  ECB/2014/5,  which  includes  a  broader  assessment  of  the  relevant 
national legislation, also taking into account its practical implementation44. 

4.4  The ECB welcomes the comprehensive approach taken in the draft laws to the establishment and 

operation  of  close  cooperation  with  the  ECB.  As  previously  noted,  the  ECB  understands  that  the 

new provisions will be read in accordance with the other provisions of the Law on HNB and the Law 

on  credit  institutions,  so  that  the  exercise  of  prudential  supervision  over  credit  institutions 

established  in  Croatia  will  take  place  under  the  framework  provided  for  in  Regulation  (EU) 
No 1024/201345. 

4.5  The  ECB  welcomes  the  establishment  of  a  legal  framework  providing  HNB  with  all  necessary 

powers  to  comply  with  all  the  instructions  which  the  ECB  may  adopt  under  Regulation  (EU) 

No 1024/2013. 

4.6  The ECB welcomes the provisions enabling the ECB to carry out the tasks in the areas referred to 

in  Article  4(1)  and  (2)  and  Article  5  of  Regulation  (EU)  No  1024/2013  once  close  cooperation 

between the ECB and HNB is established. 

4.7  The  ECB  welcomes  the  provisions  ensuring  that  the  common  procedures  laid  down  in  Part  V  of 

Regulation  (EU)  No  468/2014  (ECB/2014/17)  can  be  applied  in  respect  of  supervised  credit 

institutions during close cooperation. Consistent with Regulation (EU) No 468/2014 (ECB/2014/17), 

the  draft  laws  provide  for  the  right  of  a  party  to  be  heard  before  a  decision  that  could  adversely 
affect its rights  is adopted46. However, the draft  laws do not contain provisions on HNB’s  powers 

and  procedure  in  case  of  the  adoption  of  an  urgent  decision  necessary  to  prevent  significant 

damage to the financial system. The Croatian authorities are encouraged to align the draft laws in 

this respect with Article 31 of Regulation (EU) No 468/2014 (ECB/2014/17) and provide HNB with 

all necessary powers to comply with all the instructions which the ECB may adopt under Regulation 

(EU) No 1024/2013 in cases of urgency.  

4.8  The ECB welcomes the fact that the draft law on credit institutions introduces and specifies HNB’s 

sanctioning  powers  in  order  to  align  Croatian  law  with  the  scope  of  the  ECB’s  sanctioning  power 

under  Article  18  of  Regulation  (EU)  No  1024/2013.  In  particular,  the  ECB  welcomes  the  express 

requirement  for  HNB  to  open  proceedings  for  the  imposition  of  administrative  penalties  when  so 

requested  by  the  ECB  on  the  basis  of  Article  18(5)  of  Regulation  (EU)  No 1024/2013.  The 

procedure  by  which  HNB  imposes  administrative  sanctions  is  harmonised  with  the  procedure  by 

which  the  ECB  imposes  administrative  penalties  under  Part  X  of  Regulation  (EU)  No  468/2014 

(ECB/2014/17). However, a provision should be  added empowering HNB to  impose sanctions on 

holding  companies  in  the  event  that  they  breach  decisions  adopted  by  HNB  pursuant  to  ECB 

43  

44  
45  
46  

Decision ECB/2014/5 of the European Central Bank of 31 January 2014 on the close cooperation with the national 
competent authorities of participating Member States whose currency is not the euro (OJ L 198, 5.7.2014, p. 7). 
See paragraph 2.3 of Opinion CON/2019/25.  
See paragraph 3.1.1 of Opinion CON/2019/25.  

See Article 63 of the draft law on credit institutions (introducing Article 323a of the Law on credit institutions). 

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ECB-PUBLIC 

instructions  or  act  contrary  to  legal  acts  adopted  by  the  ECB  which  are  directly  applicable  in 

Croatia. Further on, the definition of total income for the imposition of administrative sanctions on 

entities  belonging  to  groups  should,  in  line  with  Article  128  of  Regulation  (EU)  No  468/2014 

(ECB/2014/17),  take  into  account  the  consolidated  annual  financial  accounts  of  the  group 

irrespective  of  the  place  of  establishment  of  the  parent  undertaking.  Also,  the  provisions  on  the 

publication of decisions on administrative sanctions by HNB on its website should be amended to 

include all sanctions imposed on all subjects sanctioned by HNB upon the ECB’s request. Further 

on, the exceptional ground provided for in the new Article 215(9)(4) of the Law on credit institutions 

allowing  for  publication  on  an  anonymous  basis  should  not  be  applicable  to  HNB  decisions 

imposing  administrative  sanctions  upon  the  ECB’s  request,  as  it  departs  from  the  publication 

regime provided for in Article 132 of Regulation (EU) No 468/2014 (ECB/2014/17).  

5. 

Observations regarding HNB’s macroprudential mandate and tools 

5.1  The ECB understands that the part of the draft laws which relates to the macroprudential mandate 

and  tools  of  HNB  is  to  be  adopted  in  line  with  the  commitments made  by  Croatia  in  policy  areas 

which  are  of  high  relevance  for  a  smooth  transition  to,  and  participation  in,  the  exchange  rate 
mechanism (ERM II) 47. 

5.2  HNB  is  competent  in  the  area  of  macroprudential  policy  for  its  contribution  to  the  stability  of  the 
financial system as a whole48. Based on this competence HNB has already adopted a number of 
macroprudential  measures49.  HNB  is  also  the  designated  national  authority  for  the  purposes  of 

identifying macroprudential or systemic risks under Article 458(1) of Regulation (EU) No 575/2013 
of the European Parliament and of the Council50. The draft law does not therefore confer genuinely 

new tasks on HNB, but rather specifies a more broadly formulated macroprudential mandate and 

certain  new  macroprudential  tools  that  HNB  may  use  when  discharging  its  macroprudential 

responsibilities. Consequently, it is not necessary to assess whether the conferral of new tasks on 

a national central bank complies with the prohibition of monetary financing. 

5.3  The ECB welcomes the clarification of the details of HNB’s macroprudential toolkit. The objectives 

of the draft law are also in line with the principles set out in the Recommendation of the European 
Systemic  Risk  Board  on  intermediate  objectives  and  instruments  of  macroprudential  policy51,  in 

particular  with  regard  to  the  objective  to  mitigate  and  prevent  excessive  credit  growth  and 
leverage52. 

47  

48  
49  

50  

51  

52  

See  press  release,  ‘Statement  on  Croatia’s  path  towards  ERM  II  participation’,  8  July  2019,  available  at 
www.consilium.europa.eu.  
See Article 4 of the Law on HNB. 

See  HNB  Recommendation  for  mitigating  interest  rate  and  interest  rate  credit  risk  in  long-term  consumer  lending 
(26 September 2017) and HNB Recommendation on the procedure for granting non-residential loans to consumers 
(28 February 2019), available on HNB’s website at https://www.hnb.hr. 
See Article 11(2) of the Law on credit institutions; Regulation (EU) No 575/2013 of the European Parliament and of 
the  Council  of  26  June  2013  on  prudential  requirements  for  credit  institutions  and  investment  firms  and  amending 
Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).  

Recommendation ESRB/2013/1 of the European Systemic Risk Board of 4 April 2013 on intermediate objectives and 
instruments of macroprudential policy (OJ C 170, 15.6.2013, p. 1). 
See  paragraph  2.2  of  Opinion  CON/2017/11,  paragraph  2.3  of  Opinion  CON/2017/21,  paragraph  3.1  of  Opinion 
CON/2018/9 and paragraph 3.1 of Opinion CON/2018/52. 

8 

 
                                                 
ECB-PUBLIC 

5.4  From  a  financial  stability  perspective,  the  ECB  welcomes  the  implementation  of  a  legislative 

framework for  borrower-based  measures.  The  ECB  takes  positive  note  of  the  fact  that  HNB  may 

activate some or all of the abovementioned tools, as well as any other measures and requirements 

aimed at safeguarding the stability of the financial system as a whole and preventing and mitigating 

systemic risks, thereby responding in a flexible and proportionate way to potential risks to financial 

stability.  A  thorough  quantitative  impact  assessment  will  be  important  to  verify  the  effect  and 
appropriateness of the new tools when they are activated53.  

5.5  The  ECB  expects  HNB  to  consult  the  ECB  in  accordance  with  Article  127(4)  of  the  Treaty  on 

subordinate legislation that HNB adopts under the draft law on credit institutions 54.  

6. 

Observations regarding Croatia’s participation in the SRM 

6.1  The  ECB  welcomes  the  provisions  of  the  draft  laws  which  allow  for  the  implementation  of 

Regulation (EU) No 806/2014 in relation to the SRM. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 25 March 2020. 

[signed] 

The President of the ECB 

Christine LAGARDE 

53  

See  paragraph  2.3  of  Opinion  CON/2017/11,  paragraph  2.4  of  Opinion  CON/2017/21,  paragraph  3.2  of  Opinion 
CON/2018/9,  paragraph  3.2  of  Opinion  CON/2018/52  and  the  Governing  Council’s  statement  on  macroprudential 
policies of 15 December 2016, available on the ECB’s website at www.ecb.europa.eu. 

54     See paragraph 2.4 of Opinion CON/2017/11. 

9