ZAGREB, Jan 16 (Hina) - The Croatian National Bank's (HNB) measures aimed at restricting the excessive increase of commercial banks' loans should not result in higher interest rates on loans, leaving sufficient space for banks to
continue with their loan activities, HNB officials said Thursday.
ZAGREB, Jan 16 (Hina) - The Croatian National Bank's (HNB) measures
aimed at restricting the excessive increase of commercial banks'
loans should not result in higher interest rates on loans, leaving
sufficient space for banks to continue with their loan activities,
HNB officials said Thursday. #L#
The undertaken measures were spurred by the fact that an intense
expansion of loans, based on the banks' foreign debts, has
unfavourable effects on the balance of payments and on the growth of
the foreign debt. Continuing such a trend could jeopardise
Croatia's macroeconomic stability, said the officials.
The three measures -- on destimulating bank loans higher than 16
percent annually, on the minimum necessary daily FC claims, and a
lower HNB interest rate for the mandatory kuna reserves -- are only
a clear signal to banks to adjust their loan activities with the
economic and financial situation. If this is seen as insufficient,
HNB will undertake stricter measures, governor Zeljko Rohatinski
told reporters.
At the end of last November, loans to citizens increased by 40.3
percent and loans to companies by 21.4 percent in comparison to the
previous year. In addition, the increase in bank loans is based on
the increase of foreign currency passive balance, not on domestic
deposits. It is therefore, evident that funds for loans were being
obtained through foreign debts.
An annual growth rate of 16 percent for loans is sufficient to
support further economic development, the bank's experts say. The
HNB Council on Wednesday passed measures on destimulating a greater
increase in loans.
The central bank officials do not expect banks to transfer their
higher expenses onto their clients by increasing interest rates on
loans, since competition among banks is already very strong.
Loans to the state are not included in the restrictive measures.
Officials have asserted it is better that the government has debts
at home than abroad, which provides an additional challenge for
banks.
The current good liquidity of banks indicates there should not be
any major problems, officials say.
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