ZAGREB, 30 March (Hina) - The Croatian Government on Thursday set up a five member ministerial group which is to examine recommendations to resolve the problems in the Istarska and Cibalae banks by the next session of the Government.
The Government concluded that the problem of these banks, which last week were assigned temporary trustees, should also be examined by the State Agency for Deposit Insurance and Bank Rehabilitation. The Government believes that attempts should be made to strengthen the status of the Istarska and Cibalae banks while seeking a definite solution to stabilise the banks by finding strategic partners. The Government is to investigate to see what resources it has available to assist in improving the banks' prospects without adding any extra burdens to tax payers. They who contributed to the politicising of the problem of the Istarska bank should be involved in depoliticising it now, Pr
ZAGREB, 30 March (Hina) - The Croatian Government on Thursday set up
a five member ministerial group which is to examine recommendations
to resolve the problems in the Istarska and Cibalae banks by the
next session of the Government.
The Government concluded that the problem of these banks, which
last week were assigned temporary trustees, should also be examined
by the State Agency for Deposit Insurance and Bank Rehabilitation.
The Government believes that attempts should be made to strengthen
the status of the Istarska and Cibalae banks while seeking a
definite solution to stabilise the banks by finding strategic
partners. The Government is to investigate to see what resources it
has available to assist in improving the banks' prospects without
adding any extra burdens to tax payers.
They who contributed to the politicising of the problem of the
Istarska bank should be involved in depoliticising it now, Premier
Ivica Racan concluded the matter.
In an extended debate, ministers expressed their various thoughts
on recommendations to resolve the problems which have emerged in
the two banks particularly regarding a recommendation proposed by
European Integration Minister Ivan Jakovcic.
Jakovcic believes the Finance Ministry's directive of 1992 -
relating to bonds issued in the first phase of the bank's
rehabilitation - be abolished; that the bank be paid 11.4 million
kuna in due bonds for the sale of apartments; to agree to account for
old savings accounts valued at about 70 million German marks and
that shares be transferred to the Croatian Privatisation Fund which
the Istarska bank attained as a collection for debts incurred by the
Uljanik shipyard and in turn that the bank be given "fair
compensation".
Even though the proposal to transform large bonds into market value
seems acceptable, Finance Minister Mato Crkvenac believes that
caution needs to be taken. Cancellation of the 1992 directive would
create numerous problems not only for the Istarska bank but a
further 16 banks and would require huge funds which simply do not
exist. Any partial decision would result in further problems,
Crkvenac said.
"Bankruptcy, certainly not, rehabilitation maybe, sale maybe", was
Minister Cacic's comment which best reflected government members'
thoughts on possible solutions for the Istarska and Cibalae banks.
Bankruptcy is out of the question because in the case of the
Istarska bank alone this would cost the budget some 682 million
kuna. Rehabilitation would probably require 200 million kuna,
Economy Minister Fizulic said.
Several government members opposed the idea of rehabilitation the
bank particularly Deputy Prime Minister Slavko Linic who considers
that the situation is not that alarming. He is opposed to
rehabilitation because this would require confiscating shares held
by shareholders. Linic believes that the Governments' role can only
be in an attempt to infuse additional capital which is vital for
each bank. He said that some Croatian banks had shown interest in
adding fresh capital into these banks but that problems existed
between the interest of the owner and buyer, regarding the price of
the banks.
Fizulic said that Rijecka bank was prepared tomorrow to offer
additional capital to the Istarska bank while Minister Cacic said
that their had been two offers made and that there may even be as
many as three or four offers made.
The ministerial group to examine all the recommendations proposed
will include Deputy Prime Minister Slavko Linic, Finance Minister
Mato Crkvenac, Reconstruction and Construction Minister Radimir
Cacic, Economy Minister Goranko Fizulic and European Integration
Minister Ivan Jakovcic.
A great deal of the discussion was spent on just who was at fault for
the crises in these banks and most indications lay with the
administrative and supervisory boards of the banks.
If the central bank's governor had by some chance been replaced two
months ago, the new governor would be compelled to make the same
decision, First Deputy Prime Minister Goran Granic said in response
to those who thought the blame lay in the central bank.
Fizulic warned of the negative reactions from abroad regarding the
attacks focused on the central bank's governor Marko Skreb, which
could be clearly seen on the Internet where international
institutions questioned Croatia's attitude to its monetary
authorities.
At today's marathon government session the government spent most of
its time criticising itself and individual government members as
well as the problems within the Istarska bank. The Government also
found time to issue a state guarantee to Croatian Railways to be
used for upgrading and obtaining spare parts.
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