UPDATE 1-Croatia to shortlist candidates for sale of bank, insurer
(Adds government confirmation)
ZAGREB Oct 9 (Reuters) - The Croatian finance ministry has drawn up a shortlist of trade buyers in the privatisation of the country's biggest insurer and the last local bank in state hands.
Croatia, struggling to contain a growing budget shortfall and public debt, has invited investors to express interest in acquiring its 99.13 percent stake of Hrvatska Postanska Banka (HPB) and about 50 percent of insurer Croatia Osiguranje (CO).
The finance ministry will propose to the cabinet shortlisting Austria's Erste Bank and Hungary's OTP Bank for the sale of HPB, according to a document posted on the government's website on Wednesday.
For the CO stake, it will propose shortlisting Poland's state insurer PZU and local tobacco and tourist group Adris, which has said it wants to expand into the insurance sector.
The cabinet will decide on Thursday whether to approve the shortlist.
The government has said it hopes to earn around 2 billion kuna ($355.97 million) from the sales.
CO is the biggest local insurer with a market share of around 35 percent. The government owns about 80 percent of the company.
HPB controls around 4.5 percent of the local banking market, which is dominated by units of banks from Italy, Austria, France and Hungary.
The finance ministry said it rejected a non-binding offer for CO from Slovenia's Zavarovalnica Triglav, citing its lack of sufficient capital.
Croatia, which joined the European Union in July, is struggling with a fifth straight year without economic growth.
The government is under pressure to cut the high public debt, which is likely to surpass 60 percent of gross domestic product (GDP) soon, and the general budget gap which is forecast to be 3.5 percent of GDP this year.
($1 = 5.6184 Croatian kunas) (Reporting by Igor Ilic; Editing by Pravin Char)
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