According to an analysis of the Croatian banking industry by Bank Austria Creditanstalt (BA-CA), Croatia’s banking industry is now, four years after the 1999 banking crisis, in good shape. With adequate capital resources, banks are operating profitably as efficiency steadily increases. On the whole, the restructuring and privatization process in the banking sector is complete.
After the fundamental banking crisis in 1998 and 1999, Croatia launched comprehensive reforms in the area of bank privatization and restructuring. In 1999 and 2000, almost all large state-owned banks were privatized and, as a result, over 90 per cent of total assets in the banking industry were in foreign hands at the end of 2002. Today Zagrebacka Banka is the undisputed leader in the Croatian banking market, accounting for about one-quarter of the market as a whole. Privredna Banka Zagreb is in second place, with a market share of 18 per cent. Splitska Banka, a subsidiary of Bank Austria Creditanstalt, ranks third with a market share of 9.1 per cent, making Bank Austria Creditanstalt the largest Austrian bank in Croatia.
Nevertheless, economists at BA-CA feel there is a need for further consolidation. “Cross-ownership structures and the large number of small banks with a regional business focus suggest that another wave of mergers will take place in the near future,” says Marianne Kager, Chief Economist of Bank Austria Creditanstalt. Further efforts will also be required for adjusting Croatian banking law to EU standards. “As Croatia intends to join the European Union, there is keen interest in implementing reforms,” Marianne Kager adds.