The Croatian government said on Thursday, Dec 12 , it is rejecting the sole binding bid placed by Erste Bank for lender Hrvatska Postanska Banka (HPB) as the offered price was low. The government said after its regular cabinet meeting there were also risks the price would drop further due to the conditions set in the bid by Erste. It gave no details on the offered price for the 99.13% state-owned stake. However, finance minister Slavko Linic told a news conference after the cabinet meeting that Erste Bank has offered HRK 790mn ( EUR 103.4mn ) for the HPB stake, or HRK 905.71 per share, which is by HRK 232.29 less than what it offered in the first round of the tender, daily Poslovni Dnevnik reported. The proposed price is only 54% of the bank's total capital, Linic said, adding this is too low for a lender which managed to recover from the 2010 and 2011 loss. HNB's net profit rose 2.2% y/y to HRK 73.8mn in the first nine months of 2013. Moreover, Linic said, according to the bidder HPB's reserves for 2014 will not be sufficient and it needs considerably more funds for potential court litigations - therefore it insisted on receiving state guarantees, which would lead to an additional reducing of the sales price. In August 2013 , Croatia's finance ministry invited investors to express their interest in HPB, and Erste and Hungary's OTP Bank placed non-binding bids in the first stage of the tender with OTP's bid ranging from EUR 92.2mn euro to EUR 118mn , while Erste offered EUR 130.2mn . OTP, however, did not participate in the second stage. HPB's assets amounted to HRK 18bn ( EUR 2.4bn ) at the end of September. It was the seventh largest bank among 31 lenders operating in the Adriatic country. There is only one more state-owned bank - Croatia Banka.
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