Ljubljana related

05 Nov 2019, 10:37 AM

STA, 4 November 2019 - The parliamentary inquiry into suspected abuse of office at the bad bank interviewed on Monday the former chairmen of NLB and NKBM, Janko Medja and Aleš Hauc, who said that the banks had no power in determining which assets will and which will not be transferred to the bad bank as part of the 2013 bailout.

First to be interviewed was Medja, who said the bank was only an "object" and could not participate in determining the methodology for appraising assets, nor had it final say about which assets and why would be transferred to the bad bank.

He was faced with the questions from the inquiry chair, Jernej Vrtovec of the opposition New Slovenia (NSi), about the Bank Assets Management Company (BAMC) using "double standards".

Vrtovec noted that the BAMC made different assessments when placing a company or group on the list for transfer of assets, taking the DZS group as an example, as it had been transferred on the bad bank, while KD Group, which is also a financial holding, was not.

Medja, who was the chairman of NLB between the autumn of 2012 and February 2016, which included the state-sponsored bank bailout, said he could not answer the question as he did not remember concrete cases.

Regarding alleged pressures, he said that representatives of certain companies did ask the bank about the transfer, but NLB's answer was always that it stuck to the rules and procedures in line with the law.

According to Medja, the first list of claims to be transferred to BAMC was compiled by NLB, and was sent to an inter-ministerial task force and the Banka Slovenije central bank, with the two coming up with the final list.

Banka Slovenije had data on claims to individual companies from other banks, he said, adding that he could not tell why some claims or assets had not been transferred, as he did not have access to all documents.

According to Medja, the bank did not agree with certain results of asset quality reviews (AQR) regarding for how much claims could be sold. Due to the large quantity of data and relatively short time, he allows for the possibility that not all appraisals were compliant with the international accounting standards, in particular in real estate.

In individual cases, the bank's assessments did not comply with the AQR results, but the eventual estimates on the amount of the required capital were at a similar level, he added.

Medja explained the difference in the initial estimate about how much capital NLB needs and the final calculations with the fact that not the entire portfolio was reviewed in the first estimate.

Surprising things were discovered mainly in investments in foreign countries, he said, adding that NLB services were adopting in 2013 the recommendations of the European Banking Authority (EBA), which were becoming stricter.

Medja stressed on several occasions that when it comes to the bailout measures, NLB was an "object", adding that the bank's management had wanted to get a clearer picture and get a greater role in talks, "but had no chance to discuss it".

The bank could not risk capital inadequacy, and could not get capital on the market, he said, adding that the state-sponsored measures were an "all or nothing" approach, with the bank not being able to pick recapitalisation or transfer or bad claims to the bad bank alone.

"We could only pick recapitalisation as it was envisaged, or capital inadequacy, risking to lose the trust of deposit holders," he concluded.

Also interviewed was Hauc, who managed NKBM from March 2012 to February 2015. He too said that the bank had no say about which assets would be eventually transferred to BAMC, and repeated some of the other explanations offered by Medja.

He said that the the stress tests in 2013 had been "too brutal" and the AQR strongly underestimated the value of insurance of claims. Banka Slovenije was warned about this, but the bank had no influence whatsoever, he added.

Hauc noted that NKBM had wanted that all non-performing assets be transferred to the bad bank, with many of them staying in the bank after the bailout. "There is no logic in carrying out a bailout without transferring everything that is disputable to BAMC."

He also assessed that Banka Slovenije had been rather limited and that the European Commission had the main say, in fact its "lower-ranked officials", who had been sending e-mails about what needed to be done. "The bank had to implement the measures, otherwise it would go bankrupt."

Regarding the estimate of the amount the banks needed in the bailout, Hauc said that no damage had been done. "The state put the money from one pocket to the other. Even if too much money was given, it has not been lost."

He assessed that a majority of bad loans were a consequence of the crisis, and to lesser degree of bad practices. "Companies were borrowing excessively and then stumbled, while banks were not conservative enough in approving loans."

According to him, the US fund Apollo and the EBRD, which acquired NKBM in 2016 for EUR 250 million, got the bank for cheap but are doing a good job. "Apparently a bank had to be sold to show that we are a serious country, not a banana republic," Hauc concluded.

On the other hand, Janez Fabijan of Banka Slovenije said that the banks themselves had sent the lists of companies to the central banks, as he was quizzed about his role in due diligence procedures, transfer of claims to DUTB and other bail-out procedures.

"I never worked in supervision, but I'm objectively responsible as a member of the Banka Slovenije board of directors," he said, adding that when it came to the bailout, it would be wrong if the central bank had acted differently.

According to him, the transfer of claims to BAMC was transparent, with lists of companies to be transferred being made by the banks, as they were obliged to know their clients.

It was determined with a government decree which claims will be transferred, said Fabijan, who could not tell whether Banka Slovenije made any interventions in the lists. "Perhaps something was changed, but not too many times."

This was done in any case with consent from the banks, and the decree determining the criteria for the transfer of claims gave the banks and BAMC absolute advantage compared to Banka Slovenije, he said.

He added that the central bank had only participated in the process and admitted that he had been visited by a few representatives of companies claims to whom were planned to be transferred to BAMC.

29 Oct 2019, 10:54 AM

STA, 28 October 2019 - The National Council unanimously vetoed the government-sponsored bill designed to provide legal recourse for holders of subordinated bank liabilities wiped out in the 2013 bank bailout, with the interest group proposing the suspensive veto arguing that the bill does not regulate the issue appropriately.

Following the veto from the upper chamber of parliament, the bill, which was passed in a 46:34 vote in the National Assembly last week, will now have to undergo a re-vote and get an absolute majority to be confirmed.

The National Council voted 24 votes for and none against to suspend the implementation of the bill, which aims at providing easier access to recourse for up to 100,000 potential plaintiffs, both shareholders and holders of junior bonds wiped out on instruction of the EU.

But it may take a while before the erased investors are compensated as, in addition to the opposition from the National Council, the central bank had announced a constitutional review.

The veto in the upper chamber had been proposed by the interest group representing employees, which argues that the bill does not provide effective recourse, as councillor Maja Lah reiterated at the session today.

The bill relates to the ruling of the Constitutional Court in 2016, which says that the affected subordinated creditors and shareholders did not have sufficient access to recourse under existing legislation.

Involving up to EUR 963 million, the bill has been a controversial topic.

The proponents of the veto claim the government-sponsored bill falls short of what the Constitutional Court ordered.

When it proposed its own version of the bill in April, the upper chamber said that excessive procedural costs would discourage potential plaintiffs from suing the central bank Banka Slovenije.

The National Council argues that the bill fails to address reservations regarding the exclusive jurisdiction of the Maribor District Court in procedures related to disputes under the bill, as well as the issues related to determining court fees.

It believes the bill also does not address the issues related to the protection of personal information of plaintiffs and the issue of out-of-court settlement with the payment of a lump-sum compensation to the former holders of subordinated bank liabilities.

Lah said that Banka Slovenije as the regulator who had insight into all details of the functioning of the banking system had a professional, personnel and information advantage over a typical small investor.

Such imbalance could significantly affect the realistic chances of plaintiffs to be successful in lawsuits, she said, adding that the group was also critical of the intention to incentivise plaintiffs to group themselves by lowering court fees.

"This results in an unjustified differentiation between 30 or more plaintiffs, who would file a lawsuit together and have a joint representative, and other plaintiffs who would not meet conditions to do so," the veto proposal says.

This could also constitute a violation of the right to free selection of the representative, as plaintiffs who want to reduce their costs for court fees would be forced to agree on a single, joint representative.

Arguing against the veto, Finance Ministry State Secretary Metod Dragonja said that the bill was "protecting the taxpayers and budget", noting that potential damages would have to be paid by Banka Slovenije from its reserves.

Regarding the disclosure of personal information of the former holders of subordinated bank liabilities, he said that the public interests superseded their interest, as the funds for damages would be secured from public sources.

The bill envisages lump-sum compensations of up to EUR 20,000 to uninformed investors. "This is a civilised option of out-of-court settlement for those who waive the right to use further legal remedies," Dragonja added.

National councillor Matjaž Gams meanwhile pointed to the alleged overestimation of the shortage in the state-owned banks, estimated at the time at EUR 1.5 billion.

He wondered who would be held responsible for that given the fact that this resulted in money being taken away from holders of subordinated bank liabilities.

09 Sep 2019, 11:30 AM

STA, 6 September 2019 - Slovenia's largest banking group, NLB saw its half-year-net profit fall by 10% year-on-year to EUR 94.3 million despite higher interest and non-interest income.

Profit before impairments and provisions was up 13% to EUR 116 million, according to the interim report released by the bank on the website of the Ljubljana Stock Exchange.

Total net operating income amounted to EUR 257.4 million, a 6% increase y/y. Net interest income rose by 5% to EUR 159 million, and net non-interest revenue increased by 8% to EUR 98.3 million.

Net interest income rose in all banks of the group as a result of loan volume growth and lower interest expenses. Subsidiary banks in SE Europe continued to perform well, contributing 38.4% to the group's profit before tax.

Net loans to customers rose by 3% year-on-year to EUR 7.28 billion, while deposits went up by 7% to EUR 10.75 billion. The growth was mainly due to retail deposits.

This year saw a gradual increase in new consumer and housing loans. The share of consumer loans in all gross loans rose from 26% in the first half of 2018 to 28% in the first half of 2019.

The group's total assets rose by 5% to EUR 13.16 billion. This is attributed mainly to the continuous inflow of retail deposits.

NLB also reports having continued with the trend of improved credit portfolio quality. The proportion of non-performing loans dropped to 6%, 2.3 percentage points down compared to a year ago.

The internationally comparable non-performing exposure ratio dropped by 1.7 percentage points to 4.1% in line with the European Banking Authority guidelines, which is very close to the mid-term target of 4%.

Total capital ratio for the NLB group at the end of June reached 16.5%.

"NLB Group is on a good path toward meeting its mid-term financial targets despite the increasingly challenging economic environment of low interest rates," the bank commented on the results.

The parent bank generated EUR 122.6 million in profit, which compares to EUR 103.3 million in the first half of last year.

The macroeconomic outlook suggests the countries where the group is present are likely to post growth rates of between 3% and 4%, if supported by loose monetary conditions, fiscal easing and solid domestic demand.

"Considering these circumstances and presented risk factors, in 2019 the Group aims to achieve a single
digit % increase of revenue and pre-provision profit with continued loan growth (in line with GDP
dynamics) and stable net interest margin," reads the release.

The results were reviewed by the bank's supervisory board today.

The board also gave a green light to establishing a new leasing company, as restrictions on leasing activities ceased to apply following the bank's completed privatisation earlier this year.

04 Sep 2019, 14:52 PM

STA, 4 September 2019 - Abanka Group generated EUR 26.3 million in net profit in the first six months of the year, according to unaudited report, which is 32.3% less than in the same period last year. Net interest revenue was down by 0.5% and net non-interest income by 19.5%, Abanka said on Wednesday.

Net interest reached EUR 29.8 million and net non-interest income stood at EUR 27.3 million, according to a report published on the web site of the Ljubljana Stock Exchange.

The bank's supervisory board got acquainted with the results on Tuesday.

The total assets of the group, which includes the Abanka bank and real estate company Anepremičnine, amounted to EUR 3.76 billion at the end of June, after standing at EUR 3.73 billion at the end of December.

Anepremičnine contributed EUR 17.4 million or 0.5% to the group's consolidated total assets.

Abanka posted a net profit of EUR 26.2 million in the January-June period, down 35.2% from the same period last year. Its market share reached 9.4% at the end of June.

Net interest was up by around 1% to EUR 29.8 million, while net non-interest income dropped by a quarter to EUR 26.2 million.

The bank said the rise in net interest was due to higher interest income from loans to non-banking clients.

Abanka's cancelled provisions and impairments reached EUR 5.5 million net after topping EUR 13.4 million in the same period last year.

Loans to the non-banking sector reached EUR 2.05 billion at the end of June, which is up EUR 86 million compared to the end of 2018. Loans to legal entities and sole traders increased by EUR 61.9 million and loans to individuals by EUR 24.1 million.

The biggest share of loans, 45.5%, were to individuals, followed by big companies (25.2%) and small and medium sized companies (17.1%).

The state has been Abanka's sole owner since a massive bank bailout at the end of 2013 which also saw the state salvaging NLB, NKBM and Banka Celje. The latter was merged with Abanka in 2014.

In June, a contract was signed on the sale of Abanka, Slovenia's third largest bank, to NKBM bank. The transaction is to be completed by the end of the year.

All our stories on banks in Slovenia are here

04 Sep 2019, 09:24 AM

STA, 1 September 2019 - Slovenia's national system for instant peer-to-peer money transfers will be up and running by the end of 2019 or early 2020. Most of the banks have developed a special mobile app for the purpose.

The system, called Flik, is being developed by Slovenian banks in cooperation with the national payment processor Bankart, based on its exiting Bips IP infrastructure.

Transfers will be processed within seconds round the clock and every day of the week, unlike now when transactions are settled every two hours, and even than only until 4:30pm and only on weekdays.

The system involves all 15 Slovenian commercial banks and savings banks, which own it, Paul-Alexandre Raveleau from SKB bank and Tatjana Bole Pirc from DBS bank, have told the STA.

The pair, who head the inter-bank board for Flik, say that the rules and procedures have been established and that the central-bank Banka Slovenije will act as a major catalyst.

They say the banks decided to develop the system in order to provide a simple channel for fast and safe instant money transfers.

Currently, various technical solutions are being tested with the plan that 13 out of the 15 banks launch the Flik system at the end of 2019 or right at the beginning of 2020.

By mid-2020, another bank will make the service available, while another of the participating banks is yet to announce the launch date.

Eleven of the 15 banks have decided to develop a special app, while the remaining banks will include the new feature in their existing mobile bank or digital wallet solutions.

Further on, the banks will be able to opt for various solutions together, depending on the response and desire of the customers, Raveleau and Bole Pirc say.

The app will be accessed by the PIN code or fingerprint or some other biometric code allowed by smart phones, with transactions conducted using contacts in the phone, that is without time-consuming typing of payer and recipient account numbers and other data required on payment orders.

Raveleau and Bole Pirc say that the system is fully compliant with the EU's general data protection regulation, because it has been developed in cooperation with Slovenia's information commissioner.

The system will initially allow transfers of up to EUR 15,000 between the accounts of physical persons, but the banks would like to expand the system to in-store payments as early as next year.

This will require upgrading the existing POS terminals (there are between 35,000 and 40,000 of those in Slovenia at the moment) and educating cashiers. The timeline will thus also depend on retailers.

The customer experience will be similar to using contactless payment cards. For the smaller shops, bars or restaurants that do not use POS terminals special mobile apps are being tested QR code scan payments.

At later stages, the banks would like to expand instant transfers to online shopping, transactions between businesses and between customers and businesses and some transactions with the state.

Ideally, the users should get the chance to make instant transfers for the whole range of various payment transactions. The ambition is that Flik becomes a national payment standard.

The amount of transfer, now capped at EUR 15,000, may be raised or lowered in the future, depending on the users' response.

Raveleau and Bole Pirc say that this is a mayor investment for Slovenian banks, but they would not specify as each bank invests in development of its own technical solutions, based on common rules.

So are the fees for the customers up to the bank's business policies, while Raveleau and Bole Pirc expect transfers between physical persons and in-store payments to remain free for physical persons.

Bips is intended for domestic money transfers, while later instant cross-border transfers will be made possible based on the Target Instant Payment Settlement (TIPS), which became operational in late 2018.

Slovenian banks will join TIPS on their own or via Bankart gradually, and so they enter the Sepa Instant Payments system.

For cross-border transfers to become as simple as those in Slovenia and some other countries that have introduced national instant payment systems, a common EU solution will be needed or at least integration of the national systems.

23 Aug 2019, 12:34 PM

STA, 23 August 2019 - A higher court has upheld a ruling under which Abanka has to fully refund two clients whose subordinated debt was wiped out as part of the December 2013 national bank bailout, interest included.

The Celje District Court's ruling from June 2018 has thus become final, so it must be implemented even if Abanka appeals at the Supreme Court, several media outlets reported on Friday.

The clients who took Slovenia's No. 3 bank to court in 2017 are two well-known lawyers from Celje. In 2007, Igor and Marija Karlovšek bought junior securities to the tune of EUR 1.1 million, the Siol news portal reported.

The spouses claimed in the suit that Banka Celje, which merged with Abanka in 2015, had failed to properly inform them about the risks involved.

The courts argued Banka Celje should have told them they could lose the money even if the bank does not go bankrupt.

Ever since 2001, the option of erasing subordinated bondholders if the central bank orders measures to reorganise the bank has been part of Slovenian legislation, Siol said, citing the latest ruling.

The portal also quoted the ruling in saying that when buying the subordinated debt, the plaintiffs "justifiably assumed they had bought ordinary, not subordinated bonds".

Siol reported that the Karlovšeks, who declined to comment on the ruling for the portal, had already received the money back, unofficially around EUR 2 million.

Abanka was ordered to pay them the principal plus interest, yet not since the day of the erasure, but since the day of the purchase.

The Karlovšeks were one of the the biggest individual owners of erased subordinated debt and are among the eight plaintiffs who have turned to the European Court of Human Rights for justice, according to Siol.

Abanka declined to comment on the latest ruling for the newspaper Delo. But the Higher Court confirmed a proposal for review had been filed in the case, with a decision still pending.

Delo speculated the proposal may well have come from Abanka, which said it would protect its interests and which had appealed against the first-instance court ruling.

Last year, Delo reported the ruling handed down by the Celje District Court was the first in cases brought against Slovenian banks after the junior debt erasure.

In 2013 and 2014, Slovenia bailed out its major banks with billions of euro in taxpayer money, but also with a bail-in involving subordinated debt of private investors.

Following years of efforts by the erased holders of subordinated debt, the government drafted a bill designed to provide them with legal recourse after it was ordered to do so by the Constitutional Court.

After almost 80 amendments were filed to improve it, the bill got stuck at second reading in parliament last June.

07 Aug 2019, 13:00 PM

STA, 7 August 2019 - The Slovenian subsidiary of the Italian banking group Unicredit posted EUR 16 million in consolidated profit in the first half of the year, a marginal increase of 0.3% on the same period a year ago, shows the annual report released by the parent bank.

Unicredit Banka Slovenija and Unicredit Leasing saw their operating profit increase by almost 6% to EUR 19 million in the same period. Operating revenue rose by 7.2% to EUR 42 million and net interest revenue was up 1.3% to EUR 23 million.

The bank formed EUR 5 million in net write-downs on loans, a decline of 7.4% compared with the first half of 2018.

Unicredit Group reported a net profit of EUR 2.16 billion for the first half of the year, up 1% year-on-year.

All out stories on banking in Slovenia can be found here

02 Aug 2019, 13:03 PM

STA, 2 August 2019 - Macro stress tests conducted by the Slovenian central bank have shown that the country's banking system is stable. "In the baseline as well as stress scenario, the Slovenian banking system has been shown to have appropriate capital adequacy," Banka Slovenije said on Friday.

"Slovenian banks are relatively well capitalised and have improved the quality of their credit portfolios, which is the consequence of successful reduction of non-performing exposure in recent years," the central bank said.

The stress tests were conducted using two macroeconomic scenarios designed to check the resilience of banks to shocks.

The baseline scenario considered the most likely macroeconomic trends through 2021 based on the bank's own forecasts, with the stress scenario assuming a downturn - a contraction of the economy by a cumulative 2.3% over three years.

Macro stress tests are top-down exercises for the entire banking system and are seen as complimentary to supervisory stress tests, which are bottom-up exercises focused on each individual bank.

08 Jul 2019, 09:32 AM

STA, 5 July 2019 - Biser Bidco, the sole owner of Slovenia's second largest bank NKBM, decided on Friday to pay out EUR 5 million in dividends, leaving EUR 126,66 million in profit undistributed.

The EUR 5 million payout is significantly lower than the year before, when Bidco Biser decided to pay out EUR 45.8 million in dividends. The AGM also granted a discharge of liability to the bank's management and supervisory boards.

The Luxembourg-based company is owned by US fund Apollo, which holds 80% of the company, and the European Bank for Reconstruction and Development (EBRD).

The two companies signed a contract to buy the Maribor-based state-owned bank for EUR 250m in mid-2015, meeting all the requirements in April 2016.

The AGM comes only a few weeks after NKBM was selected as the best bidder in the privatisation of Abanka. A EUR 444 million sales contract has already been signed, with the transaction pending regulatory approval.

The sale is expected to go through by the end of the year. The NKBM-Abanka merger, which is expected to be wrapped up in the first quarter of 2020, will create the second largest bank group in Slovenia.

04 Jul 2019, 09:18 AM

STA, 3 July 2019 - The Serbian AIK Banka, a new sole owner of Gorenjska Banka since April, decided at Wednesday's annual general meeting that EUR 12 million, or almost two-thirds of last year's distributable profit of Gorenjska Banka of EUR 18.9 million, will be earmarked for dividends at EUR 33.75 per share.

 

The rest - EUR 6.9 million - will remain unallocated, with EUR 4.3 million being at the bank's disposal for unlimited and immediate use to cover risks or losses the moment they occur.

The assembly granted discharge of liability to the management and supervisory boards for last year as well as passed a number of amendments of the company's articles of association today.

The supervisory board, currently including six members, is as of now required to have a minimum of three members and a maximum of seven, while the management board, currently featuring two members, is required to have at least two members and at most five.

Gorenjska Banka generated EUR 20.68 million in profit before taxes last year, thus doubling the 2017 gross profit. The net profit in 2018 was EUR 17.1 million. The bank's total assets amounted to EUR 1.83 billion at the end of the last year.

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