He was speaking to the press in Zagreb after meeting with the visiting Slovenian President Borut Pahor. Both called on their respective governments to find a solution to the issue before the Bank for International Settlements in Basel.

"Croatia recognises the memorandum and acts accordingly. Not only does it recognise the memorandum, we are actively working on it," said Josipovic.

"Slovenia expects Croatia to meet its commitments from the memorandum. I'm glad we agreed in principle today that the two governments should find a solution at the bank in Basel as soon as possible," Pahor said at a joint news conference.

The memorandum of understanding on the settlement of the LB issue was signed by PM Zoran Milanovic of Croatia and Janez Jansa of Slovenia on March 11, after which the Slovenian parliament ratified Croatia's European Union accession treaty.

Under the memorandum, Croatia undertook to put on hold all legal proceedings that two of its banks, Zagrebacka and Privredna, had initiated over former LB Croatian clients' transferred foreign currency savings.

Pahor's visit on Thursday and Friday coincided with today's hearing at the Zagreb Municipal Court pertaining to a suit which Privredna Banka Zagreb filed against the now-defunct LB and Nova Ljubljanska Banka over Croatian saving deposits. The hearing was adjourned until the word "stay" in the English-language memorandum is officially translated in order to clear up whether such legal proceedings should be stopped or suspended.

Asked whether Zagreb and Ljubljana interpret the term "the stay of all judicial proceedings" in different ways, Josipovic responded that what was important for the agreement was good will to implement it and not ways of interpretation.

"The key to every agreement is good will, and the parties to this memorandum have good will and the problem will be resolved in the spirit of the agreement," he said.

Pahor said that when it came to the LB issue, great progress had been made at today's meeting, which was also attended by Croatian Foreign Minister Vesna Pusic and her Slovenian counterpart Karl Erjavec, the key negotiators in the process of hammering out the memorandum.

Pahor highlighted the fact that his two-day official visit to the Croatian capital had been the first visit of a Slovenian head of state since 2009 when the two neighbours started dealing with "difficult bilateral problems which remained as ruins from the former common federation".

"Today the results are visible from those efforts and we are now good neighbours," Pahor said.

The two presidents pointed out the joint European future of Slovenia, which is one of the 27 members of the European Union, and Croatia, which is due to join the Union as its 28th member on 1 July.

They underscored the reliance of the two countries on each other, saying that Croatia and Slovenia were the fourth trading partner to each other and that every year 1.5 million Slovenians went on holidays in Croatia and that a great number of Croatians spent their winter holidays in Slovenia.

Josipovic reiterated that Croatia and Slovenia believed that the EU would be complete only after the integration of countries from its southeastern neighbourhood.

The two presidents signed a declaration aimed at deepening cooperation between their nations within the EU and supporting the EU aspirations of Western Balkan countries as well as strengthening their bilateral economic, political and cultural ties.