CROATIAN NATIONAL BANK REJECTS FINANCIAL REHAB OF GLUMINA BANK

( Editorial: --> 1468 ) ZAGREB, Sept 18 (Hina) - The Croatian National Bank's (HNB) advisory board on Friday rejected to propose to the Croatian government the financial rehabilitation of the Glumina Bank. At today's session the advisory board assessed that, in line with the Law on Financial Rehabilitation and Restructuring of Banks, there was no economic justification for the Government to decide to financially rehabilitate the bank. The advisory board also issued a recommendation to all relevant state institutions to the effect that, regardless of further developments in the fate of Glumina Bank, the strictest care should be given to protect citizens' savings in Glumina Bank. Glumina Bank has existed since February 1994, and the size of its active business transactions made it the sixth largest bank in Croatia. Based on its founding capital it was the eighth in size and the largest private bank in Croatia, said a statement released by the HNB. Today's conclusions ended a process which began on June 23, when on Glumina Bank's request, the HNB began evaluating the possibilities of and economic justification for the bank's financial rehabilitation. in July Glumina Bank submitted to the HNB its own proposal for financial rehabilitation and restructuring. A detailed analysis of the recoverable activities of the bank, which was conducted by employees of HNB's section for control and supervision of banks, showed that the problems faced by Glumina bank were not only in the field of liquidity, but that the bank was deeply insolvent as well. Namely, its guarantee capital amounted to US$64.6 million at the end of June this year, while it potential losses amounted to US$173 million. It was also found that there were cases of additional capitalisation of the bank via loans for the purchase of its own shares, as well as bad management and irregular procedures. In the meantime, the HNB conducted meetings with representatives of allegedly strategic foreign investors in Glumina Bank, with whose support the bank announced the stabilisation of its financial position and further business. No capitalisation of Glumina Bank occurred by the deadline set for the decision on the justification of financial rehabilitation. Not one local bank has shown interest to take over the Glumina Bank either. (Hina) sp jn/ha 182235 MET sep 98