The impact that the introduction of the euro will have on Croatian HRK
In line with the Law on the Introduction of the Euro as the Official Currency in the Republic of Croatia (hereinafter: the Law) the euro will be introduced as the official currency in Croatia on 1 January 2023.
When talking about converting Croatian kuna into euro, a fixed conversion rate amounts to 7.53450 HRK for 1 EUR. All amounts expressed in Croatian kuna will be converted into euro free of charge using a fixed conversion rate by applying the full numerical amount of the fixed conversion rate and rounding the obtained amount in accordance with the mathematical rules of rounding, whereby the obtained result is rounded to two decimal places, based on the third decimal place.
The introduction of the euro will have an impact on previously contracted services in Croatian kuna. On the day of the introduction of the euro, the amounts in Croatian kuna on clients’ deposit and transaction accounts, payment instruments and in other records will be converted into euro, using a fixed conversion rate, free of charge.
Outstanding payment or settlement orders in Croatian kuna received before the date of introduction of the euro, including standing orders and direct debit orders contracted in Croatian kuna, which should be carried out after the date of introduction of the euro, will be executed in euro from 1 January 2023 in the amount corresponding to the HRK amount specified in the order, using a fixed conversion rate and the rules for conversion and rounding defined by the Law.
Moreover, following the introduction of the euro, it will no longer be possible to submit a payment order for purchase and sale of domestic financial instruments or settlement instructions in Croatian kuna.
Furthermore, if clients have both Croatian kuna and euro accounts opened in the books of Zagrebačka banka on 1 January 2023, Zagrebačka banka will debit the remaining balance on client’s Croatian kuna account, convert the amount into euro and credit the funds to client’s euro account, free of charge. Clients will receive the final SWIFT MT950 Statement of account with zero balance for Croatian kuna account and then it will be automatically closed, free of charge.
Hence, clients are advised that in case they are not planning to close the existing Croatian kuna account in the books of Zagrebačka banka prior to 31 December 2022, they are kindly asked to send, via authenticated SWIFT message, their consent for transferring converted Croatian kuna balance to euro account and closing the Croatian kuna account as described above.
If clients maintain only Croatian kuna account in the books of Zagrebačka banka, on 1 November 2022 Zagrebačka banka plans to open additional euro account to clients, free of charge, to enable the conversion of Croatian kuna funds into euro on 1 January 2023. The euro account would be opened with a new IBAN – which would be promptly communicated to each client – but would remain inactive until the conversion date. All the functionalities of the existing Croatian kuna account would be migrated to the new euro account and Croatian kuna account would automatically be closed free of charge.
Therefore, clients are kindly asked that in case that they are not planning to close the existing Croatian kuna account in the books of Zagrebačka banka prior to 1 November 2022, to send, via authenticated SWIFT message, their consent for opening new euro account with a new IBAN in the books of Zagrebačka banka, to enable the conversion as described above.
In terms of the impact on custodial accounts opened in the books of Zagrebačka banka, with the introduction of the euro the structure of custodial accounts will remain unchanged, and existing assets will be safe-kept in them as before.
Additionally, it is important to focus on the ways and timing of recalculation of the market and nominal value of financial instruments whose value was expressed in Croatian kuna until the date of the introduction of the euro. The market value of shares listed on a regulated market expressed in Croatian kuna on the date of the introduction of the euro as the official currency is recalculated and reported by the Zagreb Stock Exchange, rounded to the nearest cent with the application of a fixed conversion rate and in accordance with the rules for recalculation and rounding from the Law.
The amount of share capital and the nominal value of shares expressed in Croatian kuna is recalculated only by the joint-stock companies, which are obliged to harmonize the amount thus obtained with the requirements and in the manner regulated by the regulation governing the establishment of companies.
All financial obligations based on shares that are due on the date of the introduction of the euro or later and which were denominated in Croatian kuna are settled in euros in accordance with the rules for conversion and rounding from the Law.
The nominal amount of a debt security or money market instrument does not change due to the introduction of the euro, with the exception of dematerialized debt securities issued by the Republic of Croatia and the Ministry of Finance of the Republic of Croatia in Croatian kuna, whose conversion of the nominal amount and quantity is carried out by the Central Depository and Clearing Company Inc. on the date of the introduction of the euro. All other issuers may, within 18 months from the date of the introduction of the euro, make a decision that the nominal amount of the debt security or money market instrument be expressed in euros instead of Croatian kuna in accordance with the rules from the Law.
All due and outstanding financial obligations based on debt securities and money market instruments in Croatian kuna that have not been fulfilled by the date of introduction of the euro shall be fulfilled in euros.
The Bank is a signatory to the Code of Ethics for the introduction of the euro as the official currency in the Republic of Croatia.
