OECD CAPITAL MARKET SERIES OECD Capital Market Review of Croatia 2021 Capital market reforms for recovery and improved business dynamics in Croatia OECD Capital Market Review of Croatia 2021 Capital market reforms for recovery and improved business dynamics in Croatia Please cite this report as: OECD (2021), OECD Capital Market Review of Croatia: Capital market reforms for recovery and improved business dynamics in Croatia, OECD Capital Market Series. http://www.oecd.org/corporate/OECD-Capital-Market-Review-Croatia.htm This document was produced with the financial assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union. This report is part of the OECD Capital Market Series. More information about the series is available at: www.oecd.org/corporate/capital-markets This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document, as well as any data and any map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. © OECD 2021 O OVOJ REVIZIJI ABOUT THIS REVIEW Nakon razdoblja slabih ekonomskih rezultata uslijed After a period of weak economic performance globalne financijske krize iz 2008 godine, Republika following the 2008 global financial crisis, Croatia has Hrvatska je tijekom zadnjih pet godina imala snažan experienced strong economic growth over the 2015- ekonomski rast. Republika Hrvatska je primila 2019 period. Supported by ambitious reform podršku kroz ambiciozne inicijative za reforme te je initiatives, the country has been able to reduce its uspjela smanjiti zaduženost i poboljšati stanje javnih indebtedness and improve its public finances. financija. Međutim, kao i u drugim državama, dosad However, as in other countries, the unprecedented nezabilježen ekonomski šok uslijed krize economic shock caused by the COVID-19 crisis has prouzročene bolešću COVID-19 narušio je taj disrupted this progress and resulted in a severe napredak i rezultirao ozbiljnom recesijom. Naročito recession. In particular, many otherwise sound se mnoge inače stabilne hrvatske tvrtke suočavaju s Croatian businesses are facing financial challenges financijskim problemima uslijed naglog pada prihoda caused by a sharp decline in revenues and tightened i strožih kreditnih uvjeta. credit conditions. Danas je osobito važno hrvatskom korporativnom Today, it is particularly important to ensure that the sektoru osigurati pristup financiranju putem tržišta Croatian corporate sector has access to capital kapitala u cilju postizanja uspješnog i održivog market financing in order to achieve a successful and oporavka. Dugoročno financiranje putem tržišta sustainable recovery. Long-term market-based kapitala može hrvatskim poduzetnicima pomoći u financing can help Croatian entrepreneurs reduce smanjivanju ovisnosti o kratkoročnom financiranju i their reliance on short-term financing and match usklađivanju dugoročnih ulaganja s dugoročnim long-term investments with long-term patient capital. kapitalom. Razvijenije tržište kapitala također će A more developed capital market will also provide kućanstvima pružiti bolje prilike za ulaganja radi households with better investment opportunities to uspješnijeg upravljanja štednjom i planiranja za manage their savings and plan for retirement. mirovinu. The Croatian Ministry of Finance has submitted a Ministarstvo financija Republike Hrvatske podnijelo request for support to the Directorate-General for je zahtjev za potporu Glavnoj upravi za potporu Structural Reform Support (DG REFORM) of the strukturnim reformama (DG REFORM) Europske European Commission to undertake a komisije u cilju provedbe sveobuhvatne revizije comprehensive review of capital markets in Croatia. tržišta kapitala u Hrvatskoj. OECD je imenovan The OECD was designated as the implementing provedbenim partnerom projekta. Preporuke partner for the project. The policy recommendations navedene u ovom Izvješću imaju za cilj pomoći in this report aim at assisting Croatia in scaling up its Republici Hrvatskoj u produbljenju njezinog tržišta capital markets so that they can play a central role in kapitala kako bi to tržište moglo imati središnju ulogu strengthening the balance sheets of Croatian u jačanju bilanci hrvatskih tvrtki pogođenih krizom companies hit by the COVID-19 crisis. They would bolesti COVID-19. Te preporuke također mogu also help Croatia benefit from the EU Capital pomoći Republici Hrvatskoj da iskoristi prednosti Markets Union agenda, which aimed at deepening agende Unije tržišta kapitala EU-a, usmjerene na and integrating the capital markets of the 27 EU produbljivanje i integriranje tržišta kapitala 27 država Member States. članica EU-a. The Review is part of the OECD Capital Market Ova je revizija dio Serije o tržištima kapitala OECD- Series, which informs policy discussions on how a na kojoj se temelje rasprave o politikama u pogledu capital markets can serve their important role of načina na koji tržišta kapitala mogu djelovati u cilju channelling financial resources from households to ispunjenja svoje važne uloge usmjeravanja productive investments in the real economy. To financijskih resursa iz kućanstava u produktivna prepare the Capital Market Review of Croatia, the ulaganja u realnom gospodarstvu. U cilju izrade OECD Secretariat undertook substantive research, Revizije tržišta kapitala u Republici Hrvatskoj, conducted fact-finding missions to Croatia and held Tajništvo OECD-a provelo je opširno istraživanje i consultations with representatives of relevant organiziralo je misije za utvrđivanje činjenica u business organisations, local authorities and Republici Hrvatskoj te održalo konzultacije s corporate executives. Detailed descriptions of the predstavnicima relevantnih organizacija, lokalnim consultation process, data sources and the tijelima vlasti i izvršnim direktorima korporacija. U methodology for data collection and analysis are dodatku su detaljno opisani proces konzultacija, provided in the Annex. izvori podataka te metodologija prikupljanja i analize podataka. Reviziju je pripremio tim predvođen Matsom The Review was prepared by a team led by Mats Isakssonom, bivšim voditeljem Odjela za Isaksson, former Head of Corporate Governance korporativno upravljanje i korporativne financije and Corporate Finance Division within the OECD Odbora za financijska i poslovna pitanja OECD-a, i Directorate for Financial and Enterprise Affairs and Serdarom Çelikom, vršiteljem dužnosti voditelja Serdar Çelik, Acting Head of the Division, composed Odjela, s članovima tima Adriana De La Cruz, of Adriana De La Cruz, Alejandra Medina, Tugba Alejandra Medina, Tugba Mulazimoglu i Yun Tang. Mulazimoglu and Yun Tang. The report was Izvješće je izrađeno uz financijsku pomoć Europske produced with the financial assistance of the komisije putem Glavne uprave za potporu European Commission via the Directorate-General strukturnim reformama (DG REFORM). for Structural Reform Support (DG REFORM). TABLE OF CONTENTS ABOUT THIS REVIEW ............................................................................................................................3 ACRONYMS AND ABBREVIATIONS .....................................................................................................9 EXECUTIVE SUMMARY ...................................................................................................................... 17 KEY CAPITAL MARKET INDICATORS: CROATIA ............................................................................. 23 PART I .................................................................................................................................................. 27 ASSESSMENT AND RECOMMENDATIONS ...................................................................................... 27 1. Improving conditions for stock market listing ................................................................................ 29 2. Listing of SOEs: Scaling up the market and improving governance ............................................ 39 3. Unleashing the potential of institutional investors in Croatia ........................................................ 44 4. Long-term debt financing through markets ................................................................................... 51 5. Mobilising private capital markets ................................................................................................. 56 6. Strengthening corporate balance sheets and improving the insolvency framework .................... 60 PART II ................................................................................................................................................. 65 CHAPTER I. THE CROATIAN CORPORATE SECTOR ..................................................................... 67 1.1. Overview of the economy .......................................................................................................... 67 1.2. Business demographics ............................................................................................................. 70 1.3. Company categories in Croatia ................................................................................................. 73 1.4. Non-financial company performance and profitability