DEPOSITORS SHOW INCREASING CONFIDENCE IN CROATIAN BANKS

ZAGREB, Oct 15 (Hina) - A steady rise in foreign exchange savings, and, to a certain extent, lower rise in the domestic currency savings, registered in Croatian commercial banks recently, reflects in some way the fact that domestic banks are regaining the confidence of clients. In the end of August deposit accounts in foreign currencies totalled 43.4 billion kuna (over 11.2 billion German marks) at those banks. Deposit accounts in kuna rose to 6.6 billion kuna. As regards the structure of depositors, civilian population prevailed, and thus citizens had some 11.2 billion kuna at deposit accounts and 26.8 billion kuna put in tied deposits. This together totals 38 billion kuna (or almost DM 10 billion), according to data published by the Croatian National Bank (HNB). A climb in foreign currency savings was registered in summer months. According to the central bank, June and July saw a rise by 1.7 billion kuna, and August 1.3 billion. Preliminary data show that the steady rise continued in September. The HNB assesses that there was no longer hesitation which depositors showed last year. At the beginning of 2000, foreign currency accounts opened with commercial banks totalled less than 37 billion kuna, and deposits in kuna were some 5.3 billion. In view of the aforementioned figures and increase in savings as well as in view of banks' high liquidity, it seems paradoxical that there is stagnation in commercial banks' activities in granting loans, particularly in giving loans to businesses. The stagnation in the credit volume has been present for several years. Loans granted to the private sector in the end of August came to 57.4 billion kuna, in comparison to 57.9 billion kuna in August 1999. Learning lessons from the past (particularly having in mind how some banks went bankrupt) commercial banks became much more cautious in activities about granting loans to companies. In addition, there are no many good projects offered to banks for crediting. Croatian big companies (such as 'Agrokor' being given a syndicated loan via the European Bank for Reconstruction and Development) which have good business results, can receive credits from abroad. There are no longer firms whose credit rating used to be based on state guarantees and collateral. On the other hand, many banks still have no elaborated procedure for crediting small and medium- sized businesses. The crediting of citizens is on the rise. This is mainly about short-term credits at the basis of the so-called allowed overdraft, from which banks profit well as an average interest rate is about 20.7 percent. However, interest rates have considerably been cut for other kinds of loans. (hina) ms