10% of loans to enterprises is not payable and total loans to private companies are falling from month to month. The crisis that hit the economy and property market hit the banks too, which means that in the case of bankruptcy of a company it is difficult to settle the remaining property.
The banking rule is that the bank finances the business project, not a company, that is her name or property, but the instruments of insurance still play a major role in the overall job. So when it comes to issuing new loans, banks are more cautious than before, especially when it comes to real estate offered as collateral, which eventually results in smaller loans.
In Zagreb bank there are different approaches and the bank has various insurance instruments. There are promissory notes and bills, mortgages on property assets of a company or private persons. Most loans are repaid according to contracted terms, but there is a small proportion of loans in which the inability to charge results in implementing execution or bankruptcy, which must be initiated by other creditors because the bank can not legally run bankrupcy claims if there is a mortgage on the property of the client. Even if someone else starts the bankruptcy, the bank is charged separately from the amount obtained by selling the pledged property. Appraisal of the property is based on location, quality, age and current condition of the property.
The Hypo Alpe-Adria-Bank said that despite all the problems payments are still satisfactory. There are some problems with credit entities and entrepreneurship, where the increased number of requests for reprogramming in long-term commitments led to a postponement of repayment. Termination of loan agreements are not increased, but the bank is trying different interventions to help clients more easily pass through this crisis period.
The Raiffeisen Bank in cases of enforced collection charges out of all available collateral until all possibilities have been exhausted. The amount that the bank fails to charge is written off the business books. The mere payment out of the insurance is led in accordance with the Enforcement Law. At this point the bank has no losses due to reduced market prices of real estate.
Revaluations of market value of real estate are regularly conducted. In the event that the value is to diminish so much that insurance becomes unacceptable in relation to exposure, the bank may require amendment of insurance.
Basically, the Croatian banks for now deal well with an adverse situation that prevails in the economy, but are much more cautious when making decisions about entry into new projects and loans.