Annual Report: Hanfa successfully responds to challenges in 2020, the year marked by COVID-19 and earthquakes

Published: 30. December 2021

The Croatian Financial Services Supervisory Agency (Hanfa) has published its 2020 Annual Report, which contains information on all the measures and activities carried out and an overview of the state of play in each sector it supervises.

2020 was a challenging year. The coronavirus pandemic strongly affected global economic and financial trends. The shutting down of national economies and introduction of social distancing measures led to a significant slowdown in economic activity in all EU Member States, including Croatia.

Being aware of the fact that the impact of the pandemic will not be felt in 2020 only, but that the crisis will have a several-year effect on the economy and entire financial sector, Hanfa, as a responsible and flexible regulator, reacted promptly by imposing measures such as extending reporting deadlines for certain reports, relaxing reporting requirements and directing supervisory activities to off-site examinations, aimed at facilitating the operation and streamlining resources of supervised entities, allowing them to adapt to the emerging situation as well.

“Our focus and actions taken in 2020 were more than ever directed towards ensuring the continuity and stability of operations of our supervised entities in view of the challenges posed by the pandemic and the earthquakes”, said Ante Žigman, President of Hanfa Board, pointing out that financial markets had the fastest and strongest reaction to the escalation of the COVID-19 pandemic. “Our first intervention measure aimed at investor protection was to temporarily suspend trading on the Zagreb Stock Exchange. Along with other economic and monetary policy makers, in the second half of the year we managed to preserve the value of assets of insured persons. Leasing companies were recommended to temporarily stop collecting receivables and to try to reach an agreement with their lessees by approving a moratorium on their obligations or rescheduling their contracts. On the other hand, the companies were temporarily relieved from the obligation to form value adjustments. The devastating earthquakes had a dramatic impact on business operations of insurance companies, and high levels of their capitalisation and liquidity were preserved owing to the introduction of a ban on dividend payment”, said Žigman in his comment on the previous year.

Hanfa’s focus in 2020 was also on increasing the level of financial literacy of Croatian citizens, for the purpose of which it launched a new, educational website entitled “Money for Tomorrow”.

The digital transformation of financial sector operations has been sped up, posing significant technology risks. Due to a need for more efficient money laundering and terrorist financing risk management, Hanfa has established a new organisational unit in charge of those activities. Active participation in the work of domestic and international institutions and associations should also be highlighted.

The creation of a legal framework for sustainable finance is an imperative for sustainable future. The manner in which a company treats climate changes, its employees, clients and suppliers, and its corporate governance culture determine the new goals of the financial services sector, which take more and more account of potential investors.

In 2020, Hanfa recorded positive business results. Pursuant to the Act on Amendments to the Act on the Croatian Financial Services Supervisory Agency, on 9 March 2021, it transferred the surplus income over expenditure, totalling HRK 2.9m, into the state budget of the Republic of Croatia.

The Annual Report is available here.

Hanfa’s activities in 2020