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Russians May Take Over Croatia’s Agrokor

Location of Croatia. Source: CIA World Factbook.Location of Croatia. Source: CIA World Factbook.

By Sven Milekic

A partial takeover by Russian state banks of the biggest private company in Croatia would have momentous consequences but ‘cannot be ruled out’, an economist has suggested.

A Croatian economic analyst told BIRN that Russia’s state-owned bank Sberbank and VTB Bank may take over partial ownership and management of troubled Agrokor, the biggest private company in Croatia.

It “can’t be ruled out”, economic analyst Guste Santini told BIRN.

Agrokor, which is facing a financial crisis due to large debts and lowered credit ratings, owes 1.3 billion euros to Russian banks.

Media reports on Friday said that Sberbank had approved another 300 million euros in loans to Agrokor, to help the company pay its employees and suppliers.

The Croatian newspaper Novi list reported on Friday that Russian creditors, along with others creditors, may change the ownership and the management of the company, now in the hands of the Croatian owner and founder, Ivica Todoric.

“In a situation like this, it [a partial takeover] can’t be ruled out. It wouldn’t be an extraordinary example in the world or in Croatia for that matter,” Santini told BIRN.

“We can expect certain political consequences if such an important company partially comes into the hands of Russian state-owned banks,” he added.

Santini said Agrokor was too important a company for Croatia, the region – and for its creditors – to be allowed to go bankrupt.

“Sberbank is in direct communication with Agrokor, however, we cannot comment in detail on the relationships with our clients,” Sberbank told BIRN on Friday, when asked to comment on reports of the 300-million-euros loan to Agrokor.

On Tuesday, N1 media outlet reported that Croatian government officials secretly met Todoric in the government building on March 5. Under pressure from the media, the government admitted holding meetings with the troubled company.

N1 also reported that government officials met representatives of Sberbank – a meeting that neither the government nor the bank has confirmed.

The company’s role in the economy of Croatia is massive, with revenues of 6.5 billion euros in 2015 – almost 16 per cent of Croatia’s total GDP – and around 40,000 employees.

Agrokor employs another 20,000 people in neighbouring Bosnia and Serbia while it is believed that suppliers and companies for the Slovenian retailer Mercator – which it bought in 2014 – employ around 70,000 people in Slovenia as well.

The company’s main problem is its accumulated debts. Borrowings at the end of 2016 stood at 3.4 billion euros while its total debt was estimated at some 6 billion euros, almost six or even seven times higher than its estimated total capital, which is put at slightly over 1 billion euros.


About the Author

Balkan Insight
Balkan Insight
The Balkan Insight (fornerkt the Balkin Investigative Reporting Network, BIRN) is a close group of editors and trainers that enables journalists in the region to produce in-depth analytical and investigative journalism on complex political, economic and social themes. BIRN emerged from the Balkan programme of the Institute for War & Peace Reporting, IWPR, in 2005. The original IWPR Balkans team was mandated to localise that programme and make it sustainable, in light of changing realities in the region and the maturity of the IWPR intervention. Since then, its work in publishing, media training and public debate activities has become synonymous with quality, reliability and impartiality. A fully-independent and local network, it is now developing as an efficient and self-sustainable regional institution to enhance the capacity for journalism that pushes for public debate on European-oriented political and economic reform.

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