Hanfa will continue adopting measures and issuing recommendations to support business continuity of the financial services sector and contribute to the stability of the financial system
The outbreak of the COVID-19 pandemic caused by the coronavirus and the declaration of the epidemic in the Republic of Croatia, along with the severe earthquake that struck the City of Zagreb and its surroundings, have not only brought about a sudden and significant change to the daily routine, but also greatly affected the day-to-day functioning of the financial services sector and Croatian economy. Even though the intensity of the consequences of the epidemic for the domestic economy is impossible to be foreseen and estimated at the moment, it is apparent that all the segments of the financial services sector are going to face difficulties and experience pressure on their regular operation for a certain period of time. For this reason, the Croatian Financial Services Supervisory Agency (Hanfa) has adopted measures and given recommendations for the purpose of facilitating and supporting business continuity of the financial services sector, but also protecting the interests and rights of financial services users and public interest and safeguarding the stability of the financial system.
In order to support business continuity of financial services institutions, offer them operational relief in these extraordinary circumstances, but also to ensure and facilitate the functioning of the overall economy and protect the interests of natural and legal persons that use financial services, Hanfa has adopted the following measures:
- Suspension of dividend distribution for insurance undertakings
- Decision relieving issuers listed on the regulated market of the payment of fees for the year 2020 pursuant to the Ordinance on the calculation, level and charging of fees paid to the Croatian Financial Services Supervisory Agency (Official Gazette, No. 2/20)
- Decision determining that it is sufficient for only one management board member of a pension company or investment fund management firm to sign documentation
- Decision on a 30-day extension of deadlines for the submission of reports for members of the Association for Business Activities and Intermediation in Financial Markets at the Croatian Chamber of Economy and for members of the Association of Pension Fund Management Companies and Pension Insurance Companies due to the extraordinary circumstances
- Decision on the postponement of the status change of insurance and/or reinsurance intermediaries due to their failure to meet on-going training requirements following the circumstances caused by the coronavirus outbreak until 30 June 2020, with the application date of 20 March 2020
- In accordance with the Recommendations of the European Insurance and Occupational Pension Authority (EIOPA) issued in order to offer operational relief and support business continuity of insurance and reinsurance undertakings, Hanfa has adjusted its regulatory qualitative and quantitative reporting requirements pursuant to Solvency II, allowing for delays in reporting for one, two, four or eight weeks, depending on the type of report
- Hanfa has allowed a one-month delay in the submission of insurance undertakings’ reports not related to the quantitative and qualitative reporting requirements pursuant to Solvency II, specifying that it will consider a further one-month deadline extension if necessary
- Decision extending the deadline for the submission of statements and relevant documentation relating to financial services users’ complaints from 8 to 15 days, except in cases of complaints related to the consequences of the recent earthquakes in the City of Zagreb and its surroundings
- Within the framework of its supervisory activities, Hanfa will take into account all the circumstances relating to each belated publication of audited issuers’ annual reports for 2019 and quarterly reports for the first and second quarter of 2020. In justified cases, Hanfa will comply with the Public Statement of the European Securities and Markets Authority (ESMA) of 27 March 2020, announcing essentially that supervisory authorities will not take supervisory actions in the case where the publication of issuers’ reports is delayed (this relates to a two-month delay period for audited annual financial reports and a one-month delay period for half-yearly financial reports).
10. Decision on temporary suspension of trading in all financial instruments on the regulated market operated by the Zagreb Stock Exchange on 12 March 2020, in accordance with the legal powers laid down by Article 343(16) of the Capital Market Act for the purpose of protecting investors.
Hanfa will continue to communicate closely with financial institutions and other financial services market participants, monitoring how supervised entities ensure business continuity and protect their employees with their mobility restricted and access to potential users of their services limited, including how and to what extent supervised entities communicate with users of their services and solve any disputes. To this end, Hanfa issues the following recommendations to insurance undertakings, leasing companies and factoring Companies:
- Ensure business continuity with respect to the performance of key functions or operations in the case where employees in charge are prevented from attending or absent
- Monitor and assess solvency, liquidity and costs on an on-going basis
- Reduce and limit costs of non-essential business operations and investments, including the payment of dividends, remunerations and bonuses
- Update the website of the company with information for services users, distributors, and potential services users
- In respect of lessees or business entities that have so far duly settled their obligations and that, based on clearly defined criteria, have been declared unable to further settle their obligations, and whose business has already been or will be affected, leading to their failure to pay three instalments/annuities for three consecutive months starting from April 2020 (leasing company) or to their failure to meet their obligations for more than 90 days (factoring company), leasing and factoring companies may:
- adopt a decision pursuant to which they will not take enforcement actions for the purpose of debt collection until 31 March 2021
- adopt a decision pursuant to which they will not form value adjustment for receivables until 31 March 2021.
In line with ESMA’s Recommendation, Hanfa invited issuers whose securities are admitted to trading on the regulated market of the Zagreb Stock Exchange to disclose any relevant information concerning the impacts of COVID-19 on their fundamentals, prospects or financial situation in accordance with the requirements laid down by the Capital Market Act and Market Abuse Regulation, along with relevant explanations. The issuers acted in accordance with the recommendation.
Hanfa will continue closely monitoring the impact of the coronavirus/COVID-19 pandemic on the stability, regularity and legality of business operations of supervised entities in the financial services market. It will also keep monitoring the implementation of recommendations issued by the competent European supervisory authorities, according to which it will continue adjusting and aligning its regulatory requirements, procedures and actions in a timely manner, with the aim of protecting the public interest and contributing to the stability of the financial system.