Bank Supervision
The banking sector is an important part of the national
economy. Banks take deposits, support the payment system and provide the
largest source of funds on the market. Therefore, stable and safe banking are
of crucial importance for the development of a safe and stable economy. The
concept of centralized bank supervision, widely accepted throughout the world,
is also applied in Croatia, where bank supervision is conducted by the Croatian
National Bank.
The Off-Site Supervision Department
The Off-Site Supervision Department is responsible for
supervising banks' operations on the basis of data and reports submitted by
banks to the Croatian National Bank pursuant to a Decision on Supervisory
Reports of Banks, and on the basis of business indicators by banks. On the
basis of prudential analysis of different financial indicators by banks, groups
of peer banks and the banking system as a whole as well as analysis of
different qualitative information, the banks are rated in terms of the level of
risk involved in their business operations in accordance with the adopted
methodology for analysis.
On-Site
Supervision Department
The responsibility for on-site supervision lies with the On-Site Risk Management Supervision Department and the Specialized On-Site Supervision Department. On-site examinations are carried out at the banks' premises and involve examination of their business books and assessment of their technical, professional and organizational resources. Risk management function is gaining in importance in the banking sector. In addition to credit risk, banks are exposed to other risks such as: market risk, liquidity risk, interest rate risk, currency risk and a line of other risks. Their monitoring and supervision, and successful management require advanced specialized knowledge. To this end, the employees of the On-Site Risk Management Supervision Department have received specialized training for the specific risks they monitor.
In addition to credit, interest rate and markets risks, which are traditionally considered typical of the banking business, on-site supervision also covers the so called operational risk which is defined as the "the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events". In terms of its importance, operational risk is right next to credit risk.
The Specialized On-Site Supervision Department, within its assessment of the banks' management of operational risk performs on-site examination of IT systems in banks, internal control systems, compliance with regulations, in particular supervision of the implementation of the measures of monetary and foreign exchange policy and compliance with laws and other regulations, internal procedures and payment system procedures.