GOVT DENIES "NACIONAL" ARTICLE ABOUT RIJECKA BANKA

ZAGREB, April 2 (Hina) - The Croatian government on Tuesday denied allegations in an article released in the "Nacional" weekly, claiming that Rijecka Banka will have to pay EUR100 million to Germany's Bayerische Landesbank (BLB). The government said in a statement that the article was based on "misunderstanding, untruths and ignorance". #L# The statement notes that the article in "Nacional" is an attempt to arouse panic and cause damage to Rijecka Banka. The statement further says that the situation in the bank has been stabilised and that the bank is liquid and conducting regular daily business with its depositors and clients. The statement adds that the bank's management board has informed the government that BLB does not intend to withdraw loans approved to their bank. Even if this were to occur, Rijecka Banka is capable of repaying those loans on its own and the government is not a guarantor nor is it obliged to repay those loans, the statement says. The government reminds that Wednesday is the deadline for offers to buy Rijecka Banka and that potential buyers are expected to express their interest by submitting bids. The "Nacional" article, headlined - "Instead of EUR1, the Government To Pay the Germans EUR100 Million", notes that BLB returned its entire portfolio in Rijecka Banka to the Croatian government and immediately activated its "cross default" regulation by which Rijecka Banka has to immediately return EUR100 million to BLB if its share in the bank falls beneath 51 per cent. According to the article, when BLB purchased Rijecka Banka in July 2001, it gave the bank a loan of EUR85 million and deferred the repayment of a DM25 million loan. When BLB recently returned its entire ownership portfolio in Rijecka Banka to the government, it simultaneously activated the "cross default" and is now demanding the return of about EUR100 million or a government guarantee, claims the weekly. (hina) sb sp