The privatisation of Croat lender Hrvatska Postanska Banka (HPB) could end unsuccessfully as allegedly the sole binding bid filed by Erste Bank offers too low price, news service Novosti reported, quoting unofficial sources.

Furthermore, the government said on its website that one of the topic to be discussed at its Dec 12 cabinet meeting will be the proposal to turn down the offer submitted by Erste for HPB. It gave no details.

This is the second stage of the completion for the purchase of the state's 99.13% stake in HPB. According to local media, only Erste submitted a binding bid, while the other potential bidder - Hungary's OTP Bank, withdrew from the sales process. In the first stage of the tender, OTP Bank's bid for HPB ranged from EUR 92.2mn euro to EUR 118mn, or from EUR 105.84 to EUR 135.46 per share.

Erste, on the other hand, had previously offered EUR 130.2mn but now allegedly reduced the price to EUR 103mn - and therefore the government might decide it is too low.

In August, Croatia's finance ministry invited investors to express their interest in HPB, and last week the government extended the deadline for placing binding bids for the lender to December 9 from December 2.

HPB was seventh largest bank in terms of assets, which amounted to HRK 18bn (EUR 2.4bn) at the end of September, preliminary unaudited data from central bank showed. Out of the 31 banks operating in the Adriatic country, two are state-owned - HPB and Croatia Banka.