About Bank liquidation

The procedure of bank liquidation of credit institutions is prescribed by the Law on Bank Liquidation (OG 146/20). Pursuant to the Law, the Croatian Deposit Insurance Agency exercises the powers of a supervisory liquidation body which supervises liquidators and assists them in conducting business, monitors the course of bank liquidation proceedings and settling creditors, reviews book transactions and business documentation.

Within its scope, the Agency in particular: adopts the initial balance sheet of the credit institution and approves the Bank Liquidation Plan proposed by the liquidator, considers the liquidator's reports on the liquidation proceedings and the implementation of the bank liquidation plan, approves the liquidation proceedings credit institutions in liquidation, and gives consent to the liquidators for legal actions that are of special importance for the bank liquidation procedure.

The Agency proposes to the court the liquidator from the list of liquidators which it determines, but also its dismissal in accordance with the Law.

Furthermore, the Agency may finance legal actions for the purpose of sale or transfer of assets, rights and obligations of a credit institution in bank liquidation proceedings, in whole or in part, approved in the bank liquidation plan, provided that the cost of such legal actions is less than the losses deposits suffered in the process of bank liquidation without taking the above legal action.

Objectives of Bank Liquidation

The goal is the controlled exit of a credit institution from the market while reducing the risk and spillover of the negative effects of the credit institution's failure on the rest of the financial market and preserving financial stability in the Republic of Croatia. Also, the goal is to preserve the value of the financial assets of a failed credit institution, increase the level of settlement of creditors of that credit institution and shorten the duration of the bankruptcy or liquidation procedure of the credit institution.

 

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