Next year is gearing up to be an important one for Croatia’s economy after EU finance ministers gave the approval for Croatia’s membership of the eurozone.

With Croatia set to join the eurozone in January 2023, the country’s banks are likely to play a significant role in the transition to the single currency.

The restructuring of indebted retail giant Agrokor shook Croatia earlier in 2017, but central bank governor Boris Vujčić tells Stefanie Linhardt that the country's economy is still on course for growth, though some banks could take a hit on their profit sheets.

Much has been written about Austria's Heta, the ‘bad bank’ which took on the toxic assets of Hypo Alpe Adria. But what of Addiko, which was created from the good parts of its south-eastern European network? Stefanie Linhardt investigates.

In the aftermath of the global financial crisis, populist politicians in central and eastern Europe realised that struggling homeowners could be their new powerbase. Lenders are facing a potential onslaught of unwelcome government intervention in the banking sector, though there could be a silver lining. Stefanie Linhardt reports.

Bulgarian lenders bucked the trend as Tier 1 capital contracted in most of central and eastern Europe, while Czech institutions retained their status as most profitable banks in the region.

Central and eastern European banks in the EU faced a sluggish 2013, but Poland led the region in terms of growth and the Czech Republic in terms of returns. Baltic banks are also starting to rise to the challenge.

EU accession was meant to bolster Croatia’s economic prospects, but it is yet to have a positive effect on the country's flagging economy. Meanwhile, its banks are facing poor asset quality and a difficult operating environment.

Although foreign banks may be reining in finance for their subsidiaries in central and eastern Europe, any transition to local currency bond financing looks likely to be gradual.