Monitoring Competition in Croatia’s Banking Sector
As soon as Tanja Ruzic assumed the role of Lead Regulator for Market Competition at the Croatian National Bank (CNB), she turned to USAID for assistance. Up until 2003, market competition in Croatia’s financial sector was loosely regulated by the Agency for Market Competition Protection. However, the huge influx of foreign investment in the banking market (which has acquired nearly 90% of banking assets), and increasing foreign interest in insurance and capital markets, caused competition to heat up and market regulators to become more sophisticated.
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Thomas Nydegger, a FSVC voluteer, presentation for the staff of the Market Competition Unit of the CNB and Agency for Competition
Photo Credit: Financial Services Volunteer Corps |
In response to Ruzic’s request, USAID, through its partner, the Financial Services Volunteer Corps (FSVC), brought in experts from the Swiss Competition Authority, the Bank of Italy, and the U.S. Department of Justice. They trained and provided technical assistance to newly-hired lawyers and economists, using techniques employed in more developed markets to identify and resolve suspected abuse of dominant market share and restrictive agreements that limit free competition.
As a result, Ruzic’s team is able to make better structured legal decisions and use sound economic analysis to render decisions on complex cases. Her unit was able to resolve 35 out of the 47 reported cases of suspected abuse in just over two years. In some cases, the CNB determined that no abuse occurred. In other cases, it is more complex, and the CNB has to determine corrective measures that will allow the market to innovate without distorting competition. The key is to make sure that consumers have a choice and are paying a fair price.
Thanks to USAID support, the unit has an increased level of sophistication and its young staff have already established a positive reputation in the Croatian financial sector. Further, working with experts from other market regulators has created lasting institutional linkages.
“Volunteers from reputable institutions helped develop our institutional knowledge and helped place the unit on the map of internationally recognized regulators in the area of market competition” says Ms. Ruzic.
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