Croatia sets shortlist of investors for sale of bank, insurer
ZAGREB Oct 10 (Reuters) - Three foreign investors and a domestic conglomerate have won places in a second round of bidding for stakes in the biggest Croatian insurer and a small state-owned bank, the government said on Thursday.
The government hopes to raise around 2 billion kuna ($355.14 million) from both sales as it struggles to reduce growing public debt and the budget deficit, which is expected to hit 13 billion kuna this year, or about 3.5 percent of output.
It said it had invited Austria's Erste Bank and Hungary's OTP Bank to submit binding bids for a 99.13-percent stake in Hrvatska Postanska Banka (HPB).
HPB is the last major bank in state hands and controls about 4.5 percent of the local market, dominated by units of banks from Italy, Austria, France and Hungary.
The government also said it expected binding bids from Poland's state insurer, PZU, and local tourist and tobacco group Adris to buy around 50 percent of Croatia Osiguranje (CO) which controls some 35 percent of the Croatian insurance market.
"For the sale of HPB, the main criterion is the price. In the case of CO it is different because we are seeking a partner to provide a capital boost and a development plan in a company where we want to keep a controlling stake of just over 25 percent," Prime Minister Zoran Milanovic told a cabinet session.
The government, which owns slightly more than 80 percent of CO, did not give details about a deadline for binding bids.
Erste has made an initial non-binding offer of 130.2 million euros ($176 million) for HPB, while OTP offered a price which may vary between 92 million euros and 118 million euros.
For a stake in CO, Adris offered 234.5 million euros and PZU 192 million euros.
"Our goal is to make CO an insurance leader in the (Balkan) region," Deputy Finance Minister Boris Lalovac told the cabinet.
Croatia, which joined the European Union in July, has seen its economy shrunk more than 10 percent since late 2008, with only one year of flat gross domestic product in that period.
Public debt will soon rise to more than 60 percent of output from a current level of 56 percent, with the general budget gap staying at 3.5 percent of GDP this year before widening to more than 5 percent in 2014, the government has forecast. ($1 = 5.6317 Croatian kunas) ($1 = 0.7398 euros) (Reporting by Igor Ilic; editing by Zoran Radosavljevic and Patrick Lannin)