Bank Resolution in Croatia: Inflection Points, Institutional Resettling, and Governance Perspectives

Abstract

The establishment of the second pillar of the Banking Union (BU) unquestionably confirmed the social and economic significance of appropriate bank resolution and crisis management regimes as one of the core components of prudential frameworks. In this regard, the Croatian experience offers an intriguing case study in terms of institutional arrangements, regulatory approaches, and policy decisions that construct an appropriate resolution and crisis management regime in the context of a post-transition economy. Therefore, this paper examines bank resolution in Croatia from an evolutionary standpoint, focusing on economic complexities and institutional entrepreneurship as the primary drivers of the convergence of a crisis-forged system into a larger resolution and stabilisation framework represented by the BU’s Single Resolution Mechanism. Despite episodes of exceptional market disruptions, the paper identifies ‘success factors’ in banking sector restructuring, macroeconomic stabilisation, and institutional empowerment in Croatia through a qualitative, documentary analysis of a variety of primary and secondary sources. Furthermore, based on an analysis of actions taken in the resolution of ‘Sberbank’, the paper sheds light on recent issues in bank resolution governance within the broader BU framework.

Keywords

• bank crisis
• prudential regulation
• bank resolution
• single resolution mechanism
• croatian national bank