It is independent of the Government in its operation, coordinates its work with the Government to the extent that this is necessary, and it is directly responsible to the Parliament.
In Croatia, banks form by far the biggest part of the banking and finance sector. In October 1994, there were 50 commercial banks included on the list of authorized banks. 40 banks among them were authorized for the international banking operations.
The financial system of Croatia is generally characterized by the dominance of the banking institutions while capital markets are much less developed. Another factor is that banks have a universal structure and for the time being are permitted to engage in the full range of capital market operations. The merchant/investment banks as such do not exist as separate legal persons. A bank is not permitted to start insurance deals, production and trade in goods, future deals with commodities, with the exception of deals with gold, other precious metals and coins.
According to the new Banking Law, a bank may be established by a natural person or a legal entity and only as a joint stock or a limited liability company.
A foreign natural person or legal entity may establish a bank on the basis of the principle of reciprocity, i.e. provided that the legal provisions of a foreign country, which a natural person or a legal entity is coming from, provide a legal possibility for a Croatian entity to start a bank in the same foreign country.
The following basic conditions must be met when establishing a new bank: the bank must have the approval of the National Bank of Croatia and a minimum share capital the counter value of approximately 5 million DEM. A bank which intends to engage in all international banking transaction is required to have a share capital the counter value of at least 15 million DEM.
Savings banks are primarily limited to following transactions; deposit transactions with households, extending credit to households and small businesses, and lending surplus funds to other banks
