As Novac writes, throughout 2020, the Croatian Bank for Reconstruction and Development held Croatian companies up with an enormous amount of money, around 8 billion kuna, which is 13 percent more than was needed back in pre-pandemic 2019, as was announced in the audited annual financial report issued by HBOR for last year.
In total, HBOR supported more than 1,800 projects of Croatian enterprises back in 2020, and last year, HBOR approved 43 percent of the total amount of loans granted by banks in Croatia to business entities under the COVID-19 measures. In order to mitigate the consequences of the ongoing pandemic, HBOR put almost half of its total gross loan portfolio in a moratorium that companies could access and use for a period of up to 16 months, the Croatian Bank for Reconstruction and Development announced.
HBOR’s operations during 2020 were marked by activities related to mitigating the negative consequences of the COVID-19 pandemic on the operations of Croatian businesses, and back at the end of March 2020, the very first COVID-19 measures for preserving the liquidity of such companies and jobs were adopted.
”2020 was exceptionally challenging for us, both because of the pandemic and because of the earthquake that severely damaged our headquarters. In such a year and in such changed working conditions, HBOR approved as much as 43 percent of all COVID loans across Croatia. This share is especially pronounced if we take into account the fact that HBOR has only 2 percent of the employees and 6 percent ofthe assets in the whole banking system,” said the President of the Management Board of HBOR, Tamara Perko on the occasion of the publication of their annual report.
Under the COVID-19 measures, Croatian business owners were given the opportunity to use the aforementioned moratorium for up to 16 months and to reschedule their existing obligations. During the approved moratorium, HBOR didn’t charge their clients regular interest rates or fees, and clients were allowed to use the moratorium despite the fact that HBOR was still obliged to regularly settle its obligations to creditors without the possibility of using the moratorium itself.
The offered possibility of using the moratorium was accepted by clients for more than 1,600 approved loans.
Within the general scope of the COVID-19 measures, HBOR, both directly and in cooperation with commercial banks, provided loans to domestic business owners at an interest rate of as little as 0 percent without the usual fees. By the end of 2020, under lending programmes under those same COVID-19 measures, HBOR approved almost 1.3 billion kuna in loans, which is 43 percent of the total amount of loans granted to Croatian businesses under the COVID-19 measures during 2020.
In order to encourage commercial banks to grant new liquidity loans to companies, HBOR introduced new ways of securing loans as part of the COVID-19 measures and issuing guarantees that assume up to 90 percent of the risk of loan repayment. In addition to HBOR’s insurance, banks granted 1.24 billion kuna in liquidity loans to companies back in 2020.
The largest users were small and medium-sized enterprises, and exporters were supported by 4.7 billion kuna
In addition to approvals issued under the COVID-19 measures, HBOR continued to implement all its existing lending programmes for investments and working capital and financial instruments, export credit insurance programmes and encouraging the development of the venture capital market, as well as other similar activities.
Due to the circumstances caused by the coronavirus pandemic, 2020 was marked by the use of moratoriums and loans to maintain corporate liquidity. However, even in these conditions, more than 50 percent of HBOR’s approvals were intended for investments. The share of approved loans for investments is important because they represent investments that are focused on the development of one particular area, increasing the competitiveness of businesses, investments in new technologies and production, and new employment.
The most numerous beneficiaries of HBOR’s loans in 2020 were small and medium-sized Croatian enterprises, to which 1,168 loans were approved, ie 88 percent of the total number of approved loans during 2020. Last year, HBOR supported Croatian exporters in more than 800 projects with a total amount of almost 4.7 billion kuna.
Capital investment market development
A series of analyses indicate that, due to the poorly developed risk and equity capital market, Croatian micro, small, medium and medium capitalised companies face the challenge of finding appropriate sources of financing. For this reason, HBOR has recently launched a number of initiatives to develop this market in order to provide adequate resources to help the growth of entrepreneurial activities.
During 2020, two new venture capital funds started operating within the CROGIP programme and preconditions were created for the start of the third, and through the VC fund Fil Rouge Capital (FRC2), which was established back in 2019 with HBOR’s support. Due to the consequences of the ongoing pandemic, the need for funds for investment in risk or quasi-risk capital is expected to increase further, and HBOR’s activities will continue in the same sense in the future.
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