The Croatian government has pressured the insurer Allianz and threatened it with regulatory measures after the local pension fund it controls withdrew from an agreement involving a payment of 500 million euros to Sberbank, which is under Kremlin control, reports the Financial Times.
The Russian bank is trying to find a buyer for its 42.5 percent stake in Fortenova, a retail chain and food producer that is the largest employer in Croatia with 45,000 employees and 5.2 billion euros in sales, as well as a key food supplier throughout the region.
Last autumn, the government advocated for the option that Sberbank sell its 42.5 percent stake in Fortenova to a group of Croatian pension funds, the largest of which is AZ, a fund in which Allianz holds 51 percent of the shares, while the minority shareholder is the Italian UniCredit.
The transaction, in which the value of Sberbank’s stake was estimated at 500 million euros, collapsed when AZ withdrew last October after Allianz decided to back out of the agreement due to concerns that it could violate European Union sanctions, individuals familiar with the details told the Financial Times.
Allianz stated to the Financial Times that the supervisory board of AZ made an “independent decision not to invest in Fortenova because the risk and return profile was completely inappropriate for retirees and because its financial structure posed potential compliance risks that it deemed unacceptable.”
Sources say that Croatian Foreign Minister Gordan Grlić Radman, as well as the Croatian ambassador to Germany Gordan Bakota, lobbied various executives at Allianz. Grlić Radman urged Allianz board member Klaus Peter Röhler to reject that decision, arguing that Fortenova is crucial for the broader Croatian economy.
The Croatian Ministry of Foreign Affairs did not respond to inquiries from the Financial Times for comment, and the embassy in Berlin declined to comment on the case.
When Allianz refused to reconsider, the Croatian regulator Hanfa announced in November what some called “open threats” against the local operations of the German company. Hanfa stated at the time that the local management would be dismissed, and the fund would be forced to pay a penalty if it was concluded that there were issues in governance and risk management, sources said.
A few weeks later, Hanfa launched an inspection at AZ, stating that it was a regular audit of decision-making processes, controls, and cyber risk management, sources said.
When asked about these events, Hanfa declined to comment in detail, telling the Financial Times that its “investigation of the AZ pension fund is still ongoing” and adding that it would “inform the public of all verification results once it is completed.”
Sberbank is the largest shareholder of Fortenova, but the consequences of sanctions caused by last year’s Russian invasion of Ukraine have complicated the structure, and refinancing the group’s billion in debt has become complicated and expensive.
The German government has been informed about the pressures from the Croatian government and Hanfa on Allianz, sources said. A spokesperson for the German government told the FT that the government “will not comment on internal business decisions or the content of confidential discussions with representatives of other countries.”
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Allianz stated that it would not comment on “communication with government bodies,” but added that it had “made decisions based on their value in accordance with the values and duties that the company has towards its clients.”
Fabris Peruško declined to comment on the actions of the Croatian government but said: “The situation we are in today is a consequence of the agreement that did not happen in October. Had it occurred, we would be refinanced today and focused solely on business.”
A major concern for Allianz, those familiar with the company’s perspective say, was the following: Although the transaction was designed to comply with European sanctions, it would violate them in spirit as it involved a payment to a company under Kremlin control.
Allianz also rejected Fortenova’s financial history, they said. The company was restructured between 2017 and 2019 after its predecessor, Agrokor, accumulated losses and failed to meet obligations worth over a billion euros. Fortenova has since become a profitable company again, and its revenues are stable.
Sberbank was a major creditor of Agrokor and became the largest shareholder of Fortenova in exchange for debt for equity, which was part of the Agrokor restructuring process.
