Despite Agrokor Turmoil, Croatia’s Financial System Is Stable

Total Croatia News

ZAGREB, February 21, 2018 – Finance Minister Zdravko Marić said on Wednesday that Croatia’s financial system was stable and that everyone had the responsibility to keep it so, adding that not only the indebted Agrokor conglomerate, but all the financial market stakeholders, were important in that.

“I think Croatia’s banking and financial system is stable, but we who are involved in it, from regulators to the executive and legislative authorities, certainly have to see to keeping it so,” Marić told reporters ahead of an inner cabinet meeting, asked about the dangers to the financial system if a roll-up loan in Agrokor was activated.

Asked if the state could function financially in a worst-case scenario, Marić said, “That’s one of the topics in the focus of EU leaders and the European monetary union…I think we all have the responsibility to keep the financial system stable.”

Marić noted that he was speaking generally, not in the context of yesterday’s resignation of the emergency administrator in Agrokor, Ante Ramljak. “The topic here is not only Agrokor, but all the financial market stakeholders, and that’s what’s most important to us.”

After reporters noted that the European Commission said in its winter and spring forecasts that Agrokor was the biggest risk to Croatia, he said, “We didn’t mention that in terms of business operations. We didn’t hide anything but presented everything transparently. That’s always a kind of risk. However, we still believe that, based on the current data and indicators, our projections are valid.”

The Commission forecast 2.8% growth for the Croatian economy this year, citing the restructuring of Agrokor as the biggest risk. The government based this year’s budget on a 2.9% GDP growth projection.

Agrokor confirmed today that Ramljak had tendered his irrevocable resignation to PM Andrej Plenković so as not to become a hurdle to the reaching of a settlement with creditors. Under the law on emergency administration in companies of systemic importance for Croatia, the Zagreb Commercial Court can sack an emergency administrator and appoint a new one at any time at the government’s proposal. This court is also the only body competent for supervising an emergency administrator.

Last October, the government dismissed claims that, under a roll-up contract whereby Agrokor was loaned 1.06 billion euro, the emergency administrator virtually could not be sacked. The government said that if it or the Zagreb Commercial Court concluded that the emergency administrator was not doing his job well and professionally, to the benefit of the company and its creditors, he could be dismissed.

The government also said that the roll-up contract clause stating that the government’s dismissal of Ramljak or the restructuring consultants would be considered a breach of obligations, resulting in a claim for damages, was a logical attempt by the creditors to protect themselves from the possible appointment of incompetent persons.


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