UPDATE 1-Sberbank says no more cash for indebted Agrokor until agreement with Croatia

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MOSCOW, May 26 (Reuters) - Russia’s biggest bank Sberbank will provide no new financing for indebted food and retail company Agrokor until the lender has reached an understanding with the Croatian government, Sberbank’s chief executive said on Friday.

Sberbank is a major creditor to Agrokor, the biggest employer in the Balkans, which is battling to avoid collapse after running up multibillion-dollar debts.

In a move to avert the bankruptcy of country’s largest private company, the Croatian government in April appointed a crisis manager at Agrokor to oversee a debt restructuring, adopting emergency legislation to contain the fallout.

Sberbank CEO German Gref said cooperation with the Croatian government had so far been “not simple”.

“You shouldn’t adopt a law which deprives creditors of their rights post factum,” Gref told reporters in Moscow.

He said Sberbank planned to hold talks with the Croatian government next week.

In response to a question about the possibility of legal proceedings against the Croatian government, Gref said: “I would not like such an inquiry. Lord save us from such a thing. But today we held talks with the main creditors. All of them are baffled.”

Sberbank previously said it was ready to go to court if necessary to recover more than 1 billion euros ($1.12 billion) it had given to Agrokor in loans.

“If they (the Croatian government) took on responsibility for the running of the company, then they should also take on responsibility for its debts. Let them give a sovereign guarantee for those debts,” Gref added.

“If they aren’t ready to do that, then that means they should return to normal market practice.” ($1 = 0.8947 euros) (Reporting by Kira Zavyalova; Writing by Alexander Winning; editing by Susan Thomas)