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First EBRD long-term mortgage financing for Croatia
To encourage wider home ownership and to support the private sector in Croatia, the European Bank for Reconstruction and Development (EBRD) is extending a 12-year DM 100 million (ECU 56.8 million) mortgage financing facility to the largest Croatian bank, Zagrebacka Banka (ZB). The facility will give private individuals the opportunity to purchase or renovate their own residences in Croatia through long-term financing.
"Home ownership is one of the hallmarks of a market-oriented economy and the EBRD loan will contribute to extending this opportunity to an increasing number of Croatians", said David Hexter, Deputy Vice President at the EBRD. "The project will also continue to support private sector banks, providing them with the capacity to offer a full range of banking services and long-term funding. This is particularly important in small countries such as Croatia, where the financial sector has a pivotal role in providing finance for the development of all sectors of the economy."
The loan will enable ZB to expand its mortgage finance operations by providing a sound long-term funding base.
The housing market in Croatia is still at a relatively early stage but is steadily expanding. The introduction of the new Law on Property at the end of 1996 helped boost its development together with the growth of residential construction and ancillary services, such as estate agents.
Zagrebacka Banka was established in 1977 following the merger of the City Savings Bank for Zagreb with the Zagreb main branch of Jugobanka. By the end of 1989, ZB was transformed into a joint-stock company, and its first shareholders were Croatian corporations. As of 30 November 1997, ZB had 3,973 individual and 988 corporate shareholders. Private shareholders own 83.8 per cent of the bank's shares. With 4,300 employees, ZB provides a full range of wholesale, investment and retail banking services and started its mortgage finance operation in late 1993.
This will be the third EBRD facility extended to ZB, following loans of DM 50 million and DM 6 million in April 1995, which were the Bank's first private sector transactions in Croatia. The Bank's total commitment for housing finance including a previous facility in Estonia, stands at DM 139 million (ECU 78.9 million).
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