On Wednesday, the Croatian National Bank decided to grant to Glumina Banka the remaining amount of the total 200 million kuna bridging loan. This decision was made immediately after Glumina Banka had provided additional collateral for the remaining loan amount, as stipulated by the contract signed before the bridging loan was approved and pursuant to the Decision of the CNB regulating the terms under which bridging loans can be granted to banks which have entered the procedure of assessing the possibility and economic feasibility of their rehabilitation and restructuring. As long as the aforementioned collateral condition was not fulfilled, Glumina Banka was granted only a portion of the loan for which it provided the necessary cover.

As already made public, Glumina Banka opted for voluntary rehabilitation, which was approved by the Council of the Croatian National Bank at its June 23 meeting. Pursuant to regulation, Glumina banka was required to submit to the Croatian National Bank a bank rehabilitation and restructuring program by July 24, 1998. The program was received by the Croatian central bank yesterday.

The duty of the central bank now is to study the submitted program and assess the economic feasibility of the proposed bank rehabilitation. According to regulation, the CNB will assess the feasibility of the proposed bank rehabilitation based on an in-depth evaluation of the submitted rehabilitation program, the bank's balance sheet, risk assets, potential losses and their cover or write-off, as well as the projected bank operation after rehabilitation. If the CNB has a favorable opinion, the final decision on bank rehabilitation will be made by the Government of the Republic of Croatia on the proposal of the Croatian National Bank. The rehabilitation procedure is conducted by the State Agency for Deposit Insurance and Bank Rehabilitation through which savings deposits at all Croatian banks and savings banks are insured. As of July 1998, the deposit insurance covers deposits at Croatian banks and savings banks up to the amount of 100.000 kuna.

Given the ongoing legal procedure, the Croatian National Bank would at this time like to refrain from more detailed public comment on the situation at Glumina Banka and its efforts to find a way out of its difficulties, including negotiations with possible foreign investors. Presently, the Croatian National Bank can only emphasize its standpoint that difficulties encountered by Glumina Banka have to be solved in a way which will contribute to the stability of the Croatian banking system as a whole.