November 20 (SeeNews) - Covered bonds may stimulate Croatia’s capital market by attracting investors through stable returns, the European Bank for Reconstruction and Development (EBRD) said on Tuesday.
The instrument can provide long-term funding but while other countries in central Europe have seen significant progress in recent years, Croatia does not yet have specific covered bond legislation, the bank’s vice president, Pierre Heilbronn, said, as quoted in a statement by the EBRD.
Covered bonds are an increasingly important instrument to build local capital markets in countries where the EBRD operates, Heilbronn said at a conference jointly organised by the EBRD and the Croatian central bank to discuss the impact of recent changes in the EU covered bond framework on Croatia.
"Once adopted, the proposed EU covered bonds directive will bring about fresh opportunities for the Croatian banking sector’s issuers of covered bonds as well as for investors, which opportunities have not been available in Croatia before. The Croatian National Bank and other Croatian regulators shall to the extent necessary support the implementation of the EU covered bonds framework in Croatia including also by passing secondary level legislation within their respective competences and by actively seeking solutions to any remaining regulatory obstacles or uncertainties regarding the covered bond issuances," central bank governor Boris Vujcic said.
To date, the EBRD has been engaged in supporting the development of covered bond legislation in Poland, Romania and Slovakia, while the work continues in Estonia, Latvia and Lithuania. In Croatia, the EBRD is supporting a technical cooperation project to develop and enhance the domestic covered bonds market in collaboration with the Ministry of Finance, the central bank and the Croatian Financial Services Supervisory Agency (HANFA).