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| Knett: long-term bull on Croatia |
In early July, Ibrahim Dedic, the founder of Croatia's Promdei Bank, was shot to death outside his home. Originally from Bosnia, Dedic started his financial career trading foreign exchange on the streets. He then built up Promdei Bank and opened affiliates in Belgrade and Sarajevo. In Zagreb, he managed to acquire capital of Dm100 million ($55 million).
Dedic was notorious for his forceful approach to banking. "He showed very strong behaviour towards his clients," says an analyst. "If they couldn't repay they were kept in the bank for up to two days." Most prominent banks tried to keep their distance from Dedic and his business. On July 22, the Croatian central bank ordered Promdei Bank to appoint a temporary deputy to replace Dedic, after operating difficulties began to emerge and the bank proved incapable of making payments. The police are still investigating Dedic's death.
Promdei is a particularly troubled example of a general banking crisis. Croatia is also confronting a looming recession and has been seriously affected by the war in neighbouring Kosovo. The conflict has resulted in an estimated 30% to 50% reduction in this year's revenues from tourism, an important sector in Croatia, and has further damaged the climate for foreign direct investment.