Money from privatization will end up only in the state treasury

Money from the sale of 99 percent of Hrvatska poštanska banka will very likely end up only in the budget, despite individual ownership stakes of Hrvatska pošta, the Fund for Croatian Veterans, Croatia Airlines, and other institutions.

Namely, the Government has already informed the Veterans Fund to say goodbye to the money from the sale of shares and that it would rather pay each veteran around two hundred kuna. The head of Hrvatska pošta, Alen Premužak, who has a 27 percent ownership stake in HPB, is also counting on the money from the sale. In an interview with Lider, Premužak stated that he would use the money from the sale to service debts, but insiders say that the money will still go to the budget.

– It is logical and expected that after the sale of shares, owners receive a share according to their registrations with the Central Clearing Depository. However, the sale of HPB is a specific case, and I believe that Hrvatska pošta will not receive money from the sale of that bank, but that it will go through internal flows of public money to where it is most needed – to the budget. It is hard to say how this will play out, but I believe that all the money will go to the Government because it decided to sell HPB under the pressure of the budget deficit – explains economist Damir Novotny.

As for the privatization model in this case, Novotny says that a privatization could have been made according to the model of selling part of the shares and recapitalization. Namely, whoever buys HPB (the potential buyer most often mentioned is Erste Bank) will have to carry out a recapitalization because the bank’s assets need to be covered with fresh money to meet the capital adequacy criteria.

In the remaining announced privatizations, there is no dispute about where the money will go. Namely, the Government is only selling its stake in Croatia osiguranje, for Petrokemija a strategic partner is being sought, while the Government retains its 25 percent stake, and a similar scenario is repeated in the case of Croatia Airlines, where the Government is only selling its own stake.
Finance Minister Slavko Linić has already explained several times that there is no need to retain the state stake in HPB, and the chief economist of Splitska banka, Zdeslav Šantić, points out that in the context of retaining state stakes in some companies, a realistic list of strategically important companies should first be made.

– The worst option would be for the state to retain ownership, while there is no need for the state to manage the company. Considering the long-standing experiences of the state managing companies, we can say that privatization, besides financial, would also result in other benefits. First of all, an increase in efficiency, increased investment, strengthening of market mechanisms, and a reduction of monopolies, as well as a likely reduction in corruption can be expected – concluded Šantić.