US Fund Apollo Buys Abanka

By , 20 Jun 2019, 11:28 AM Business
US Fund Apollo Buys Abanka abanka.si

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STA, 19 June 2019 - Abanka, Slovenia's third largest bank, will be sold to NKBM bank, owned by US fund Apollo, with the value of the deal to be disclosed on Thursday as the sales agreement is to be signed.

The decision was announced by Slovenian Sovereign Holding (SSH) after the supervisory board endorsed the management board's proposal on Wednesday to sell Abanka to NKBM as the best bidder.

SSH will provide more information about the sales procedure, including the value of the transaction, after the contract is signed. The signing is scheduled for tomorrow.

A merger between Abanka and NKBM would create a bank with combined total assets of EUR 8.71 billion or a 22.5% market share. Slovenia's largest bank, NLB, has total assets of EUR 8.81 billion.

Speaking to reporters, SSH chief supervisor Karmen Dietner said that the selected bidder had not been given any guarantees for potential negative consequences of lawsuits pertaining to the 2013 bailout.

SSH management board chairman Igor Kržan said that the sales process was rather long, but also transparent and competitive. "These are two key factors, if we want a successful sales procedure."

Asked whether the proceeds from the sale would make up for the state's capital injection in the bank, at EUR 781 million, Dietner said: "If we add to the purchase money all the debts that are being sold by the Bank Assets Management Company, I hope we'll reach or exceed the state aid."

Unofficial information available to the STA indicates that NKBM as well as the Hungarian bank OTP offered between EUR 450 million and 500 million for the bank in the final stage of bidding.

The newspaper Finance cited unofficial information suggesting the purchase money was just below 90% of the share's book value or just over EUR 500 million. The purchase money includes the takeover premium.

Neither NKBM nor OTP bank would comment on SHH's decision as yet, with the NKBM management saying it would "wait for the seller's written confirmation".

Dietner would not comment on Prime Minister Marjan Šarec's tweet on 7 June that SSH should "seriously reconsider continuing the sale of Abanka. In particular to questionable funds."

However, she said: "We have thought over the decision thoroughly, we have taken a little bit of extra time, having deferred the session from Monday. The decision is well grounded."

Responding to SSH's decision today, Šarec's office issued a statement saying that with the sale of Abanka and conclusion of NLB's privatisation certain commitments to the European Commission would cease.

"This means the lifting of major restrictions on operations of the two banks, which is vital for their competitiveness and further development," the PM's office said.

Slovenia pledged to fully privatise Abanka by the end of June 2019, and to sell 75% minus one share in NLB bank by the end of 2019 in exchange for the European Commission clearing state aid to both banks in 2013.

SSH today sold the remaining 10% of NLB shares to institutional investors for EUR 109.5 million after a 65% state stake in the bank was sold for EUR 669.5m in an initial public offering last year.

Šarec's office underscored that SSH had taken the decisions on the two banks independently in accordance with its powers and based on the strategy of state asset management, passed by parliament in 2015.

A similar reaction came from the Finance Ministry, which said that 10% of the purchase money for Abanka would be earmarked for the demographic reserve fund and 90% to reduce government debt.

Abanka is the last major bank still in state ownership after NKBM was sold to Apollo (80%) and the EBRD (20%) in 2015, and following the partial privatisation of NLB last year.

To finalise the acquisition of Abanka, NKBM will need to get clearance from the competition watchdog and the European Central Bank, which needs between four and five months on average to issue its decision.

Since NKBM is owned by Apollo, which acquired the Maribor-based bank in a privatisation required as a condition for the approval of state aid to the bank, regulatory approval procedures are not expected to take long.

NKBM and Abanka have 2,300 employees and around 100 branches between them, plus 330 NKBM counters at post offices around the country.

Abanka saw its net profit decline by 27% in the first quarter of the year to EUR 18.6 million. Total assets increased by just over 2% to EUR 3.8 billion at the end of March.

NKBM posted a group net profit of EUR 72.5 million for 2018. Its total assets as of the end of 2018 amounted to close to EUR 5 billion.

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