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Sep 12, 2007 17:39 EEST
(adds quotes) </p>ZAGREB
September 12 (SeeNews) - The Croatian central bank said on Wednesday it gave its nod to Germany's Bayerische Landesbank (Bayern LB) to buy the two Croatian units of Austria's Hypo Bank and re-enter the market of the EU aspiring country.
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"The request has been granted, taking into account that Bayern LB, in its new request submitted to the Croatian National Bank on August 28, had accepted all the conditions, which the Croatian National Bank had set after the rejection of the first request in July," the central bank said in a statement.
The Munich-based bank has sought the consent of the Croatian central bank to directly acquire a stake larger than 50% in Hypo Alpe-Adria-Bank and Slavonska Banka. The Bavarian bank first placed a request in July to acquire the two banks after it bought 50% plus one share in their owner, Hypo Alpe-Adria-Bank International, in May. Croatia's central bank, however, rejected the July bid, asking Bayern LB to improve its offer, apologise to Croatian savers and promise to raise the capital of the two Croatian units of Hypo bank.
Bayern LB officially apolgised to Croatian savers at the end of August for abandoning the troubled commercial bank Rijecka Banka in 2002. Bayern LB was majority owner of Rijecka Banka which almost went bankrupt in 2002 due to accrued losses on the foreign exchange markets. Later the same year, Bayern LB sold the bank to the government and in 2003 Rijecka Banka merged with the Croatian unit of Austria's Erste Bank.
The central bank said that following the approval, this year the capital of Hypo Alpe-Adria-Bank will be increased by 250 million euro (of which a capital hike of 150 million euro has already been carried out) and Slavonska Banka’s capital will be raised by 100 million kuna (of which a 30 million kuna increase has already been made).
"Bearing in mind the moves that Bayern LB has made in recent years in its operations and risk management, and being aware of the fact that the bank works in accordance with the national regulations, which are completely in line with the requirements of the European Union, it can be expected that this will contribute to the improvement of the status and the stability of the future operations of the two domestic banks," the statement said.
Taking all this into consideration, the central bank has decided, despite the unacceptable behaviour during the crisis in Rijecka banka in the beginning of 2002, to accept Bayern LB’s new request and allow the German bank to re-enter the Croatian market, it added.
Hypo Alpe-Adria-Bank was the sixth largest by assets among the 33 banks operating in Croatia at the end of March. Slavonska Banka ranked ninth. The Croatian arm of Hypo is among its most profitable divisions.
Some European Union politicians have put pressure on Croatia to allow the German bank to re-enter its market. The Adriatic country started accession talks with the European Union in October 2005 and hopes to join it in 2009.
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