Encouraging housing savings needs to be reformed and directed towards the middle class

The housing savings system in Croatia is currently neglected, despite the significant potential for addressing housing issues that has been proven in Austria and Germany over the last hundred years. However, its advantages could once again come to the forefront following the recent decision by the Croatian National Bank (HNB) requiring banks to demand a one-third contribution from clients seeking housing loans. This was announced during a press conference where Slatinska banka officially announced the completion of its acquisition of Wüstenrot housing savings bank. As emphasized by Andrej Kopilaš, the CEO of the bank, this is the first acquisition in the domestic banking market in eight years, since the former Splitska banka came under the wing of Hungary’s OTP bank.

Synergistic effects

As Kopilaš recalled, the process began in the summer of 2022 when it was announced that the then Austrian owner was withdrawing from foreign markets, including Croatia, to focus on the domestic market. The first attempt was unsuccessful, but Slatinska banka subsequently initiated a thorough review of Wüstenrot a year later. In May of last year, a takeover agreement was signed, which included two conditions. The first was the recapitalization of Slatinska banka with four million euros, marking the first time that the bank raised additional capital. The second condition was obtaining approval from the European Central Bank, which was granted after Christmas.

Kopilaš points out that this acquisition will provide the bank with the opportunity to grow in a consolidated manner, to be more resilient to potential market turbulence, and to achieve synergistic effects, especially since housing lending to citizens occupies a smaller part of Slatinska banka’s business. The synergistic effects will not be insignificant. With this acquisition, Slatinska banka will have 100,000 clients, 50 million euros in capital, a loan portfolio worth 430 million euros, and 530 million euros in deposits. This will position Slatinska banka among the leaders in the ‘small’ bank segment. When asked whether they will stop at this acquisition or plan further consolidation, Kopilaš stated that they will not rush after the acquisition of Wüstenrot, but will engage if opportunities arise.

Zdravko Anđel, the current and, as Andrej Kopilaš states, future CEO of Wüstenrot housing savings bank, emphasized that there were several interested buyers, but that they concluded that Slatinska banka was the only real choice that guarantees their survival. This is particularly important in the current circumstances of difficulties with affordable housing, which is why the operations of the housing savings bank have a broader social function, according to Anđel. In his opinion, the housing savings system in Croatia is currently neglected, while the situation in the real estate market is polarized.

Buying for housing, not investment

On one side are cash buyers who purchase real estate for investment, while on the other side are middle-class citizens who want to resolve their housing issues but have increasingly limited options. – HNB’s measures will complicate this even further as they will make it more difficult for this segment to access apartments – believes Anđel. He pointed to the experiences of Austria, where the state encourages financing the purchase of apartments for living rather than for investment. – The state needs to encourage people to save; this is the only healthy way to finance the purchase of an apartment – believes Anđel.

This incentive should not be like before when one received 1,250 kuna annually on saved five thousand kuna. After such a model of incentives was abolished, a calculation model was introduced based on the average interest rates on time deposits of citizens, with a corrective factor representing the necessary adjustment for longer maturities. For savings collected this year, the state incentive amounts to three percent, with the maximum amount of incentive that a housing saver can achieve for savings of 663.61 euros being 19.91 euros.

Zdravko Anđel believes that the new incentive policy needs to find the right measure and that incentives should be focused on specific categories of citizens.