The fine concerns a total of 11 violations related to violations of the Prevention of Money Laundering and Terrorist Financing Law.

The Financial Inspectorate of the Republic of Croatia issued a decision by which Zagrebačka banka  (ZABA) is found guilty as the supervision of the Croatian National Bank (HNB) determined that in the period from 1 January 2017 to 8 November 2019 it did not implement all necessary measures, actions and procedures prescribed by the Prevention of Money Laundering and Terrorist Financing Law. Therefore, the bank was sentenced a single fine in the amount of HRK 33m.

The decision of the Financial Inspectorate was made and became final on 30 October 2020. HNB noted that such a fine is the highest misdemeanour ever imposed on a credit institution in Croatia.

HNB has identified a total of 11 violations related to violations of the Prevention of Money Laundering and Terrorist Financing Law, in the following areas:

• Risk assessment of an individual business relationship
• Identifying and tracking suspicious, complex and unusual transactions
• Reporting suspicious transactions to the Anti-Money Laundering Office
• Implementation of measures of enhanced in-depth analysis of the parties
• A system of internal controls to reduce and effectively manage the risk of money laundering and terrorist financing.

ZABA published an announcement on the ZSE stating that the bank accepted the proposal for an agreement with HNB, while the Financial Inspectorate accepted the mentioned agreement of the parties.

The bank adds that the payment within 30 days of the decision of the Financial Inspectorate results in an outflow of HRK 22m, which is already in their 9M results. To read more about the banks 9M 2020 results click here.

Also the full decision can be found here (Croatian only).

For today, we decided to present you with a brief analysis of cash per share of Croatian companies.

In October, Croatian companies published their 9M results, so we decided to revisit (update) our cash per share analysis. The analysis is done in order to see the strength of the balance sheet and how liquid selected Croatian companies are. This figure as the percentage of a company’s share price can give us more insight on the company’s strength on returning the money to shareholders (either through dividends or buybacks), paying down debt etc.

It is important to note that looking at solely cash per share of a company could lead to misleading conclusions if we did not also take into consideration the company’s indebtedness. To see the 9M indebtedness of Croatian companies click here.

Cash per Share of Croatian Blue Chips (HRK)

A high level of cash per share indicates a solid performance of the company, reinsuring the shareholders that the company is operating with “enough room” to cover for any potential difficulties and that the company has adequate capital.

Cash per Share as a Percentage of the Current Share Price

As visible in the graph, of the selected companies, Končar operates with the highest cash per share as a percentage of their current share price of 48.9%, while their cash per share amounts to HRK 286.2. Adris pref. comes next with 42.8%. Two tourist companies – Arena Hospitality Group (38.7%) and Valamar Riviera (28.9%) are following. Note that all of the above-mentioned companies decided not to pay a dividend in 2020, or in other words retained all of their 2019 earnings.

On the flip side, Optima Telekom has the lowest cash per share of HRK 0.12, which translates into 2.6% of its current share price. As a reminder, the company’s cash position has significantly decreased to HRK 8.47m as it has been operating with losses in the recent years. Optima’s share price has also been hit the most of the observed companies this year (-42.1%). As a reminder, Optima observed a sharp decrease in August on the back of the news that HT will start fulfilling its obligation to engage an investment bank for the further sale process or to take actions to prevent possible delays in fulfilling the obligations prescribed by the Croatian Competition Agency decision on the conditionally permitted concentration of HT and Optima.

In the graph below you can see the cash position of selected Croatian companies as of end September. As visible from the graph, 2 Croatian companies breach the billion kuna mark – HT with 3.18bn and Adris with 2.93bn.

Cash Position of Croatian Blue Chips (HRK m)*

*Cash and short-term financial assets (from 9M 2020 reports)

The procedure was concluded without the selection of a buyer, so IPKO shall remain part of the Telekom Slovenije Group.

Telekom Slovenije announced yesterday that it has stopped the sales procedure of its 100% share in the Kosovo-based IPKO Telecommunications. As a reminder, in July of 2019 Telekom Slovenije announced that they have launched the activities to sell their Kosovo subsidiary. However, the company yesterday added that the procedure was concluded without the selection of a buyer, and IPKO Telecommunications shall remain part of the Telekom Slovenije Group.

It is worth adding that in the recent times, IPKO was a burden to the company’s profitability, while as of H1 2020 IPKO observed a 11% decrease in operating revenues to EUR 26.46m. At the same time, IPKO’s EBITDA stood at EUR 13m, representing a decrease of 7%, while the company recorded a net loss of EUR 2.5m.

We note that Telekom Slovenije should publish their 9M report on Thursday (5 Nov), according to their financial calendar.  

Trading statistics for October 2020 show an average daily turnover of EUR 0.93m (+6.8% YoY). Meanwhile, SBI TOP ended the month with a 6.22% decrease.

The Ljubljana Stock Exchange (LJSE) published their trading statistics for October 2020, showing a somewhat lower equity turnover compared to the previous month of EUR 20.51m. This translates into an average daily turnover of EUR 0.93m (+6.8% YoY).

Of the total value traded in the period (excluding block transactions), Krka generated EUR 5.71m (or 29.5%), followed by NLB Group with EUR 3.83m (or 19.8%). Next come Petrol with EUR 2.73m (or 14.1%) and Triglav with EUR 2.2m (or 11.7%). Sava Re follows with EUR 1.99m or (10.3%). These 5 shares generated 85.4% of the turnover recorded by the entire (equity) market.

When observing the total equity market capitalization, it observed a 5.3% MoM decrease (or EUR 335.1m) and currently amounts to EUR 6.02bn.

In October, the Slovenian equity market as represented by SBITOP dropped by as much as 6.22%, which notes the biggest decrease since March (-19.17%). Such a high decrease came on the back of a newly imposed “lockdown“ in Slovenia. To be specific, in order to prevent the spread of the virus, the Slovenian Government has imposed relatively harsh restrictions. Therefore, for the first time since WW2, a restriction on movement at night was introduced, meaning that Slovenian’s are not allowed to leave their homes from 9 pm until 6 am (with some exceptions). As a result of the imposed restrictions, many shops were closed in October, while the operation of hairdressing and beauty salons, wellness centres, swimming pools, cinemas, theatres and gyms is prohibited. In addition, starting late October, passing from one province to another was prohibited (unless given an acceptable reason).

As visible from the graph below, Petrol’s share price leads the losers with a monthly decrease of 10.1%, closing the month at EUR 302 per share. As a reminder, Petrol’s share price has sharpy increased in September on the back of the news on liberalization of retail fuel prices, which you can read about here. Following the news, the share price increased to as much as EUR 337 per share in early October. However, the share price has since than fully reverted. 

Next comes NLB Group with a decrease of 9.8%, closing the month at EUR 34.1 per share and reaching all time low.

Share Price Performance of Slovenian Blue Chips (October 2020)