Pensions funds have invested a lot in Agrokor, which does not seem like a good idea now.
Croatian pension funds have invested substantial amounts in shares and bonds of Agrokor and its companies. Investments in the group owned by Ivica Todorić were considered to be a safe investment, but then the value of the businesses sank almost overnight, reports 24sata.hr on October 18, 2017.
The Croatian Financial Services Supervisory Agency (HANFA) was not keeping watch, while HAGENA (an agency that was supposed to oversee pension fund investments) was incorporated into HANFA several years ago, so pension funds have been investing for years in what they want, says a pension system expert. “It is not just a problem with Agrokor. The issue is that pension funds invest our money wherever they want, including in risky companies. One example is a recent investment in a private tourism company without risk assessment, without any serious analysis. Pensions funds are already losing money due to Agrokor.”
Even at the beginning of Agrokor's crisis – in May – some future pensioners were shocked when they read their pension account statements. “When I received my AZ pension fund report, the total amount was 2,000 kunas lower than the previous month. They explained that this was due to Agrokor and the stock market situation. Thank you, the prime minister, for saying that you have everything under control and that you will take care of us who do not have privileged parliamentary pensions.”
One citizen received a report saying that his account with the PBZ Croatia Osiguranje fund lost about 1,500 kunas between early February and late April. Pension funds invested mostly in shares of Agrokor’s ice-cream company Ledo, which were worth approximately 4,000 kunas in 2013, but could become worthless in the case of bankruptcy. By the number of shares owned, the largest loser with Ledo is the AZ Pension Fund, followed by Raiffeisen, and PBZ Croatia Osiguranje. The fourth fund, Erste, sold its shares of Ledo in time.
“If the pension funds were to collapse, that would be a financial tsunami for one and a half million people,” says the expert. “They are losing everywhere, not just on Ledo, but on all of Todorić's business deals in the region, and the fall of Agrokor is bringing down the Crobex stock exchange index and the entire market. Still, if this were just about Todorić, they could survive. For example, AZ has less than one percent of the portfolio in his companies. They can survive this loss, but the problem is that pension funds invest in risky businesses, without necessary diligence and supervision. People should know that their pensions are in danger if the system is not changed. There is a danger of a collapse of the pension system. The funds should not invest in risky securities; they have to invest conservatively and be supervised. This is the final moment to do something.”
Croatian pension funds have lost millions due to Agrokor's crisis since the beginning of the year. Still, this loss may be just temporary, since it could be reversed if and when shares start rising again. Everyone agrees that Jamnica, Ledo, Belje and many other companies from Agrokor could survive and are ready to face their market competition. But, it is also possible the entire company will be bankrupt. In his blog, Todorić argues that the businesses would lose money as individual companies because they could not count on synergies. But, the only synergy visible now is in the creation of financial damages.
Translated from 24sata.hr.
