Linić: Due to banking risks, we want to strengthen other financial instruments

The government today submitted a proposal for a leasing law to the parliamentary procedure, aiming to enable the expansion and development of leasing companies’ activities and strengthen oversight of their operations.

Finance Minister Slavko Linić states that the government assesses that the risks of banking operations will continue to increase, and the exposure of banks to the economy will be limited, thus it is necessary to strengthen other financial instruments, such as leasing.

According to the data presented, there are currently 25 leasing companies operating in Croatia, which account for 16 percent of the financial sector, with total assets exceeding 22.5 billion kuna.

Currently, only commercial companies can engage in leasing, and the government now proposes that individuals or private persons can also engage in this activity.

According to the government’s proposal, foreign leasing companies could also operate in Croatia, and the rules of operation for leasing companies registered in Croatia would be equalized with those registered in other EU member states. Both domestic and foreign companies will need approval from the regulatory agency – the Croatian Financial Services Supervisory Agency (Hanfa).

The government also proposes that upon the expiration of the lease and the return of assets to leasing companies, the possibility of concluding a new lease agreement for used assets should be opened.

The government wants to impose requirements on leasing companies regarding the establishment of a risk management system, so they will need to have a strategy, policy, and measures for risk management, and they will also need to establish internal audits and internal controls.

In addition, the rules for the supervision of leasing companies conducted by Hanfa are aligned with the rules for other financial market entities. Supervision is divided into direct and indirect, and the measures that Hanfa can impose range from issuing warnings to revoking operating licenses.