Nearly All Older HBOR Loans Reprogrammed

Total Croatia News

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Interest rates range from 2 to 4% and depend on the type of investment and investment area, lower for areas of special state care and islands

Loans to the agricultural sector have always been among the riskiest – so most of the time, since it is a strategic sector of the economy, the state subsidizes interest rates and credit lines are offered through development banks or state agencies, as Večernji List reported on July 4, 2016.

The same goes for Croatia: the greater share of agricultural loans is approved through the Croatian Bank for Restructuring and Development (HBOR) or HAMAG-BICRO together with business banks.

That area, along with the rest of the banking portfolio, is going through a catharsis. Older loans, taken out over ten years ago, are mostly of bad quality, with the situation improving lately.

“Out of 277 approved HBOR loans through operative programmes since 2005, we’ve had 275 reprogrammed, with some reprogrammed two or three times… The projects were written poorly, with unrealistic sale prices, such as milk at six Kuna per litre. The money was spent for all purposes, loans had long grace periods, and when payment started, they often went straight to reprogramming or extending deadlines,” a reliable source told us.

The source also stated that new loans, mostly taken by young people, are based on serious projects and are mostly “healthy” – being paid off regularly.

HBOR in the first five months of 2016 granted 240 million Kuna for agricultural projects, of which 22.8 million is for livestock. Most of the approved credit, 78.8%, was marketed through business banks or leasing companies. From 2011 to 2015 a total of 2.84 billion Kuna was loaned for agriculture, 75% through banks.

Interest rates range from two to four percent and depend on the type of investment and investment area, lower for area of special state care and islands. The repayment periods vary from 12 to 15 years, with two to five year grace periods and 0.8% fee. Insurance instruments are numerous: promissory notes, bonds, pledges or fiduciary transfer of real estate ownership with a real estate insurance policy benefitting HBOR, bank guarantees, HAMAG-BICRO guarantees… If approved through a bank, these depend on the bank’s demands.

Loans can be used to finance practically any need of agriculture entrepreneurs: purchase of construction or agricultural land, regulation of infrastructure and construction of buildings, agricultural production (buildings, long term plantations, base herd, harvest, seasonal work), purchase of equipment and mechanisation, capacity of agricultural processing… with short term loans for agriculturists who are entitled to subsidies, for prefinancing. Loans are approved in Kuna or Euro.


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