CNB will closely monitor health and economic trends and will reassess the existence of reasons for this decision by 30 September 2021 at the latest and may revoke the decision accordingly before its expiry.

Croatian National Bank (CNB) has published on Friday a Decision on temporary restriction of dividend payments, share buybacks (repurchase of own share), allocation of variable receipts and other forms of distribution. The temporary restriction is put in place until 31 December 2021.

CNB notes that the restriction was put in place in order to increase the resilience of credit institutions and maintain the stability of the financial system during the COVID-19 pandemic.

The COVID-19 pandemic has had significant negative consequences on the  economic activity in Croatia, which were mitigated by a number of support measures for credit institutions and their clients, such as monetary policy measures to maintain favorable financing conditions, an adapted approach to supervision and a simplified regulatory framework for credit institutions and public measures to support the operations of the affected sectors.

Nevertheless, CNB adds that uncertainties regarding the impact of the current extraordinary health and economic circumstances on the operations of credit institutions in Croatia remain high. In such circumstances, the temporary distribution restriction strengthens the resilience of credit institutions to possible losses associated with the materialization of credit risk in the balance sheets of credit institutions.

The Croatian National Bank will closely monitor health and economic trends and will reassess the existence of reasons for this decision by 30 September 2021 at the latest, and may revoke the decision accordingly before its expiry.

As a reminder, ECB has recently lifted the dividend ban on banks with a cap on dividend and buybacks remaining below 15% of cumulated 2019-2020 profit. To read more about it click here.