Croatia has committed to aligning its legislation with the legal acquis of the European Union.
Accordingly, it is obliged to align the existing Law on Credit Institutions with the directives and their amendments, as stated by the Croatian National Bank (HNB) in a call for public discussion that will last until January 14.
The main consequence of aligning with Directive 2010/76/EU relates to the introduction of an obligation for credit institutions to adopt a remuneration policy that is consistent with appropriate and effective risk management. The requirements that credit institutions must meet regarding employee remuneration will be defined subsequently by a subordinate act, proportionate to their size, internal organization, and the type, scope, and complexity of their operations.
The primary intention of the aforementioned remuneration policy, as noted by the HNB, is to link employee remuneration with risk-taking and risk management, business strategy, objectives, values, and the long-term interests of the credit institution, thereby preventing remuneration from encouraging risk-taking that exceeds an acceptable level. This intention is implemented by distinguishing fixed remuneration (such as salary) from variable remuneration (such as bonuses), bringing these two types of remuneration into an appropriate relationship, and identifying employees who have a materially significant impact on the risk profile of the credit institution.
For these employees, special rules regarding variable remuneration will apply: a significant portion of variable remuneration must be deferred, and a significant portion must be paid in the form of financial instruments (in other words, management bonuses and those of other key employees will no longer be able to be fully paid out immediately in cash). Additionally, in the event of financial difficulties, variable remuneration will, according to the proposal, have to be reduced.
