Business

14 Nov 2018, 11:50 AM

STA, 13 November 2018 - The EU Court of Justice has ruled in favour of a Slovenian company that filed a complaint against Austria over the system of bonds set down in the country's law on the prevention of payment and social dumping. According to lawyer Rudi Vouk, this is a landmark ruling that will have a positive effect on Slovenian companies doing business in Austria.

Čepelnik, a company based in Prevalje near the Austrian border, challenged the law after its client in Austria paid around EUR 5,000 to authorities in Völkermarkt in the company's place as a deposit for alleged violations instead of paying the company's invoice.

The EU court concluded that the legislation of a member state which allows the recipient of services to suspend payments to the contractor or to pay a security to guarantee the payment of a potential fine in place of the contractor "goes beyond what is necessary for attaining the objectives of protecting workers, combating fraud, in particular social security fraud, and preventing abuse".

The ruling is in line with the opinion of EU Advocate General Nils Wahl, who issued an opinion on the case in May. He said that measures like this system of bonds are in violation of the European directive on services and definitely exceed the scope of what is needed to enable national authorities to enforce national labour legislation.

Rudi Vouk, an Austrian lawyer of Slovenian descent, told the STA that the ruling was significant for Slovenian companies doing business in Austria.

Before the ruling, companies were in constant danger of their clients having to pay bonds for them in the event of the slightest alleged infringement of law. Additionally, potential clients were also aware of the possibility and potentially avoided Slovenian contractors.

"This danger has now been eliminated because the European court concluded that [the system of bonds] is not proportionate with the goals. Austrian legislators will have to annul the relevant provisions," Vouk said.

He added that other provisions, including those about minimum fines for infringements, "which are absurd", remain in place.

They have also been challenged at the EU court and given the latest ruling, there are reasons for optimism that the court would decide in a similar manner, Vouk added.

Čepelnik is one of the 121 Slovenian companies that complained with the European Commission over high fines and enhanced control of foreign companies providing services in Austria.

Other stories on the relationship between Slovenia and Austria can be found here

13 Nov 2018, 12:50 PM

STA, 12 November 2018 - Joško Knez, the director general of the Environment Agency (ARSO), stepped down on Monday, over an internal review of procedures for granting environmental permits for a controversial Ascent Resources gas extraction project in the far north-east of the country.

According to a report by the news portal Siol, Knez has resigned because irregularities were uncovered in the review ordered by the new Environment Minister Jure Leben last month.

Leben ordered the oversight of procedures for extracting gas in the Petišovci area by the UK's Ascent Resources and its Slovenian partner Geoenergo. The latter is owned by energy companies Petrol and Nafta Lendava, which are in majority ownership of the state.

According to a recent report by investment research firm Morningstar, Ascent Resources had received "repeated" private assurances from senior government officials, especially at the Environment Agency, that it would be getting the permit soon.

Apparently the review struck a nerve and the UK-based company launched an offensive against Slovenia, and Leben in particular.

At the end of October, Ascent Resources said it was mulling taking Slovenia to "EU courts" over the delay, while the minister has had to face an onslaught from shareholders and the management of the UK company.

Ascent Resources director and shareholder Colin Hutchinson tweeted that the company "invested EUR 50m in the project to date and will not walk away. The permitting system in the country is in need of urgent reform and foreign investors should be very wary of investing until this happens".

However, the Environment Ministry said today that "today's report corroborates that the minister's suspicions have been warranted", as the principles of independence and autonomy of ARSO were violated in the two procedures.

Moreover, the report says that "persons from abroad apparently do not find unacceptable and contentious putting pressure on Slovenian officials and are willing to repeat them".

The findings of the review will be forwarded to the relevant authorities, including "all the efforts to put pressure on the ministry during the review".

Just today, three non-parliamentary parties and several environmental NGOs urged Foreign Minister Miro Cerar to summon UK Ambassador Sophie Honey over lobbying for the UK company.

The Pirates, Solidarity, and the United Left and Workers' Labour Party (ZL-DSD) alliance, accuse Honey of lobbying and putting pressure on Slovenian authorities to secure the environmental permit for fracking in the Petišovci area.

Ascent Resources claims it would use hydraulic stimulation and not fracking to extract gas in Petišovci. This was corroborated by Geoenergo, which said that the method used in Slovenia would differ from fracking as used in the US significantly.

The procedure, "cannot and must not be equalised with the hydraulic treatment or fracturing of shale ... There are significant differences between the procedures in Slovenia and those in the US ... that basically stem from the difference in the geological profile of the rock".

But the environmental alliance is unconvinced. "We're witnessing a reality show where multinationals are treating us as natives from the most underdeveloped countries and heaping alternative truths on us in line with the worst case of fake news," environmental activist Gorazd Marinček told the press today.

09 Nov 2018, 19:55 PM

STA, 9 November 2018 - Slovenia's largest bank, NLB, fetched EUR 51.50 per share in the initial public offering, the bottom of the offering price range. The state will initially sell 59.1% of the bank for just below EUR 609m, but taking into account an over-allotment option that stake could increase to 65%.

Based on the pricing, the market capitalisation of NLB will be approximately EUR 1.03bn at the start of trading on the Ljubljana Stock Exchange and the Main Market of the London Stock Exchange on 14 November, a release from the bank and Slovenian Sovereign Holding (SSH) said.

The book value of the share capital at the end of June was EUR 1.51bn and the final offering price represents 68% of the share's book value. The SSH set the IPO offering price at EUR 51.50 and EUR 66 per share. The offering price in the aborted IPO last year was set at EUR 55-71.

The release says that the seller is making an additional 1,18 million NLB shares available pursuant to the over-allotment option which, if exercised in full, would increase the offer size to EUR 669.5m, representing 65% of the share capital on admission.

A stabilisation mechanism, the option is said to have been made available on the demand of large international investors. Stabilisation managers Citigroup and WOOD & Company will retain a portion of the shares to close deals within 30 days from listing in order to stabilise the price.

The shares are to be floated on the Ljubljana and London stock markets on 14 November when the settlement of shares is to take place. Investors have time to pay for their shares by then.

According to the pricing notification issued on NLB's website, the biggest single institutional buyers of shares are US financial fund Brandes Investment Partners (7.6%) and the EBRD (6.3%).

Since information on the buyers of shares in London are not public, detailed data on the dispersed structure of foreign owners will not be available when details are to be presented on 14 November.

Unofficially, the demand considerably outstripped what SSH was willing to accept in a bid to avoid the most predatory investors while forming a buffer if anything was to go wrong.

"We are very proud of having completed the offering of NLB's shares. Today's announcement represents a significant milestone in the privatisation process and in fulfilling our commitments to the European Commission," SSH chairman Lidia Glavina was quoted as saying in the release.

NLB chairman Blaž Brodnjak hailed the pricing as "another important milestone in the process of privatization". "We are looking forward to opportunities and challenges that the listing on the stock exchange will bring to the bank."

The government committed to sell the bank in exchange for the European Commission's approving a EUR 1.56bn state aid for the bank in late 2013.

While the state is to keep a controlling stake of 25% plus one share, it committed to sell at least 50% this year and any outstanding share of up to 75% minus one share by the end of next year.

Until the sale commitment is met in full, the bank will need to implement at least part of compensatory measures, including closing down offices in Slovenia, with 14 slated for closure in early December.

Moreover, since the state sold this year will be less than 75% minus one share, the bank will also have to start procedures to sell NLB Vita, its insurance subsidiary.

In addition, NLB will be able to approve new loans only if receives the minimum yield from equity instruments. NLB cannot do leasing business or make acquisitions either.

The bulk of shares in the IPO was offered to institutional investors. Retail investors were able to subscribe at least 10 shares at EUR 66 apiece. Unofficially they paid in some EUR 30m. The overpaid amount will be returned by 15 November.

The shares were also bought by members of the NLB supervisory and management boards. NLB chairman Blaž Brodnjak acquired 1,136 shares and the head of the supervisory board Primož Karpe 606 shares.

NLB paid out a total of EUR 378.2m in dividends to the state in the past three years. The state aid in 2013 amounted to EUR 1.56bn.

08 Nov 2018, 11:50 AM

STA, 7 November 2018 - Employers were quick to condemn the planned overhaul of the minimum wage law, especially the way it is to be pushed through parliament. The Employers' Association stressed that any changes to minimum wage should be harmonised with social partners at the country's main industrial relations forum, the Economic and Social Council.

The Left presented on Wednesday a proposal to overhaul the way minimum wage is determined. The opposition party that acts as a partner to the minority government proposes raising the minimum wage to EUR 667 next year and to EUR 700 in 2020, before a new formula to calculate the wage is introduced in 2021.

Related: Proposal to raise Slovenia’s minimum wage from €638.42 net to €700 by 2020

The Employers' Association is unhappy with the way the bill was presented, "bypassing any dialogue with social partners". According to a press release, employers have experience with this practice, which has had serious consequences for companies.

Determining the minimum wage must be a matter of discussions and harmonisations among social partners, but the new bill has not even been presented to the Economic and Social Council, the association said.

Even stronger reaction came from the Chamber of Commerce and Industry (GZS), the country's biggest trade association, which called the proposal dangerous and expressed "shock" that the coalition should have backed it.

"It's trampling international agreements on social dialogue, something that government officials committed to at the first session of the Economic and Social Council over a week ago."

The GZS noted that only over a week ago it had "received a clear assurance from the prime minister that any change to the minimum wage would be agreed with the social partners".

slovenia's minimum wage.png

The figures in the chart show the gross minimum wage. Data: Eurostat

The Left's leader Luka Mesec said today that the party had agreed with Prime Minister Marjan Šarec for the bill to be discussed at the Economic and Social Council.

Nevertheless, employers are unhappy: "It is the middle of November, and companies and employers still do not know what kind of arrangement awaits them next year," the Employers' Association said.

The GZS said that most large companies would not feel the planned rise in the minimum wage, but that the increase would hurt companies where value added per employee was below EUR 20,000 and which employed 70,000 people.

The chamber argued that politics was interfering with the minimum wage all the time even though the share of those receiving it had been falling steadily and that even though the minimum wage in Slovenia was one of the highest in the EU.

"Each rise in the minimum wage generates more employees who earn minimum wage because it includes all those who had been in higher bracket until then," GZS said.

According to its data, average gross pay in the country has increased by 11% since 2010, while the minimum wage has risen by 41%.

The Chamber of Trade Crafts and Small Business (OZS) meanwhile said that it strives not only for raising the minimum wage but also for workers to have decent wages.

However, the state should cut labour costs to enable the workers to get higher net wages. "The difference between the gross and the net pay is too big. The state will get the most from raising wages," OZS head Branko Meh was quoted in a press release.

07 Nov 2018, 19:00 PM

STA, 7 November 2018 - The Slovenian competition watchdog has pinpointed several potential issues with the proposed takeover of Slovenia's biggest commercial broadcaster by cable operator United Group as it issued a statement of objections on Wednesday as part of its regulatory review of the takeover.

The takeover of Pro Plus, which operates several commercial TV channels, could lead to horizontal concentration on the TV advertising market, the market for TV sports rights, and the wholesale of children's TV programmes, the Competition Protection Agency (AVK) said.

It also raises the prospect of permanent concerted action with other operators on the market and the possibility of licenses for the distribution of Pro Plus channels increasing. Competitive programmes in the bundles of United Group's Slovenian cable operator Telemach could be sidelined as well.

Finally, the acquisition could have other effects since "the combined company would acquire sensitive business information about their competitors, would give it a significant competitive edge," the document reads.

These preliminary findings do not prejudge the agency's final decision and United Group has 45 days to submit remarks in its favour.

As the agency points out, it may also propose "corrective measures eliminating serious suspicion about the conformity of the concentration with competition rules."

United Group said today that it was already drawing up its remarks. "We do however expect that the final decision will be in conformity with EU competition law."

Former AVK director Andrej Krašek commented on the statement for the STA, saying that such statements were usually issued when the watchdog intended to reject a takeover.

Krašek believes that, considering the facts presented to far, the AVK will reject the takeover, and it could be convinced to do the opposite only by large structural measures.

"The agency has examined the actual state and collected evidence, and the procedure is nearing its end. The acquirer has 45 days to state new facts to prove that the concentration is in live with the law."

But Krašek believes that, as the procedure has started a year and a half, United Group probably does not have much new evidence.

The biggest media takeover in Slovenian history is being closely watched.

Domestic media players and media experts have expressed fears that it may lead to excessive concentration of power in the hands of a single, US-owned media group.

United Group, meanwhile, has been berating the regulator for the long duration of the procedure.

Pro Plus not only owns two of the most popular TV channels, POP TV and Kanal A, it also operates several cable-only channels, a pay-per-view service, and 24ur.com, one of the top news portals in the country.

United Group acquired the media portfolio of the Central European Media Enterprises (CME) in Slovenia and Croatia, which includes Slovenia's Pro Plus, last July. The entire deal has been estimated at EUR 230m.

United Group is owned by the Kohlberg Kravis Roberts (KKR) investment fund and the European Bank for Reconstruction and Development (EBRD), but an agreement was reached last month to sell a majority stake to the international investment firm BC Partners.

07 Nov 2018, 11:50 AM

STA, 6 November - Slovenia's major strategic asset in relation to China is its geo-strategic position or access to a 500-million European marker, Zdravko Počivalšek, the minister of economic development and technology, said during a visit to China, where he is presenting Slovenia's business and investment environment.

"Slovenia lies at the heart of Europe, which gives us access to a 500-million market," Počivalšek said as he visited the Slovenian Consulate in Shanghai Tuesday.

Pointing to a well-developed infrastructure, Počivalšek was quoted by his ministry as saying that to unlock the potential presented by the geo-strategic location, some improvements would be needed.

The minister, who is China for the China International Import Expo fair, praised the good political relations between Slovenia and China, the country's biggest trade partner outside Europe.

He stressed that as part of the 16+1 initiative, which brings together Central and East European countries plus China, the two countries had managed to boost economic cooperation to top 1.2 billion euro.

See all our stories about Slovenia and China here

"Over the past few years, we've managed to attract a number of well-known investors to Slovenia, which proves we have a truly encouraging business environment.

"I believe investing in Slovenia can also be an important opportunity for Chinese companies, particularly in infrastructure and tourism, which I've presented to my Chinese counterparts," said Počivalšek, who met several ministers in charge of the economy, including Chinese Commerce Minister Zhong Shan and his deputy Fu Ziying.

Počivalšek also met on Sunday his counterpart from the United Arab Emirates, Sultan bin Saeed Al Mansoori, to discuss Slovenia's participation in Expo 2020 in Dubai, and Austrian Minister for Digital and Economic Affairs Margarete Schramböck.

Meanwhile, State Secretary Aleš Cantarutti attended Monday's promotion of Chinese-owned Slovenian home appliances maker Gorenje's premium products in Beijing. The ministry believes this proves that Slovenian companies have a major impact in China.

The aim of the Slovenian delegation visiting China during the fair, which features 3,000 companies from 130 countries, is to strengthen economic relations with China, including in tourism, and intensify Slovenia's role within the Silk Road initiative.

Learn more about the Silk Road, Slovenia and China here

06 Nov 2018, 11:50 AM

STA, 5 November 2018 - The central bank has recommended that retail banks impose stricter conditions on consumer loans, arguing that at the current pace of lending consumers could face problems paying back their loans if the economy turns sour.

In a macroprudential recommendation issued on Monday, Banka Slovenije said risks remained moderate and manageable, but consumer loans had been growing at a brisk pace for an extended period of time.

The pace of lending has been driven by factors including low interest rates, high bank capitalisation, low household debt and high employment.

While these trends are expected to continue driving high demand, loan maturity has been extending, often beyond the useful life of consumer goods that households are purchasing.

Banks in Slovenia told to reduce loan-to-value ratios

"Long maturity means that these loans will remain on bank balance sheets when the economic cycle turns, which, if macroeconomic risks materialise, may quickly lead to problems in the payment of these loans," the central bank warns.

Banks are therefore advised to keep loan-to-value ratios (loan payments relative to the client's annual income) to below 50% for persons with monthly income of up to EUR 1,700 and below 67% for those making more than that.

The central bank also recommends that new consumer loans should have maturities below 120 months.

The decision was reached "to prevent a loosening of lending standards and improving banks' resilience."

Formally, the new macroprudential recommendation is an expansion of the measure from late-2016, when the central bank advised banks to start reigning in mortgages. That recommendation remains in place.

06 Nov 2018, 10:20 AM

STA, 5 November 2018 - Minister of Economic Development and Technology Zdravko Počivalšek is leading a Slovenian delegation to the China International Import Expo (CIIE) fair in Shanghai, which features 3,000 companies from 130 countries.

The ministry said the visit was designed to boost trade ties with China, enhance Slovenia's role in the Belt and Road Initiative (BRI), present measures to potential investors and boost cooperation in tourism.

The biggest BRI event this year, CIIE provides the platform to showcase a broad range of goods, services and industries. It is expected to attract more than 150,000 Chinese customers.

The fair is aimed at supporting liberalisation and globalisation of international trade and at opening up the Chinese market.

Sports also an important link between Slovenia and China

The participating Slovenian companies and institutions will showcase the country's potential as an innovative high-tech partner for winter sports.

The Slovenian delegation was invited to the fair by the Chinese Ministry of Trade after China recognised Slovenia as a potential partner in the runup to the 2022 Winter Olympic Games in Beijing.

The Nordic Centre in Slovenia's Planica has been selected as the European training camp of the Chinese men's ski jumping team.

In August this year, the Ljubljana Faculty of Sport and Beijing Sport University signed a memorandum on academic and scientific cooperation in winter sports.

In the first joint activity spurred by the memorandum, a bilateral forum on development of winter sports will be held in Beijing on 7 November.

The forum is based on a 2016 agreement on cooperation in sports signed by the respective ministries.

While in China, Počivalšek is due to hold bilateral meetings with Chinese government officials, to brief them on the state of Slovenia's economy and discuss bilateral cooperation in trade and investment.

The focus will be on cooperation in the Belt and Road Initiative and ways to boost trade, also through new forms of cooperation. The minister will also present the investment environment in Slovenia.

Related: Koper joins China’s One Belt One Road initiative

02 Nov 2018, 11:50 AM

STA, 28 October 2018 - Winemakers in Slovenia are happy with this year's harvest, which according to official statistics is on course to be the best in Slovenia's history. A total of 128,347 tonnes of grape was picked or 8.2 tonnes a hectare, which is 45% more than last year and up 30% from the ten-year average.

The harvest of red grapes was slightly richer, with 8.6 tonnes picked per hectare until 5 September or 41,295 tonnes in total. Winemakers meanwhile picked 8 tonnes of white grapes per hectare for a total of 87,052 tonnes.

The harvest of late fruit varieties is also expected to be record high this year. The quantity of apples from intensive orchards is expected to be six times higher than last year's (81,193 tonnes) and 43% higher than the ten-year average.

In extensive orchards seven times more apples were produced than last year or 47,586 tonnes.

Pears also grew well, with 4,911 tonnes picked in intensive orchards, which is four times as much as in 2017. The harvest in extensive orchards is expected to be record breaking at 11,000 tonnes or 45.5 kilos per tree, which is 75% above the ten-year average.

The harvest of plums, blueberries and raspberries was similarly rich, exceeding last year's quantities several times.

30 Oct 2018, 14:30 PM

The crypto world may have cooled down from the dizzy heights of December 2017, but Slovenia is still making news on the scene, if not for the various developments at BTC City, then for Monday’s announced sale of Bitstamp, the biggest Slovene success in the field to date. 

29 Oct 2018, 16:00 PM

Bitstamp has been purchased by NXMH, a Belgium-based investment company that is the European subsidiary of South Korea-based NXC, which invests in digital technologies. NXC also owns South Korean cryptocurrency exchange Korbit, and Nexon, a South Korean gaming company. 

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