Ljubljana related

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.

03 Jul 2019, 11:51 AM

STA, 2 July - Speaking to the Slovenian press in Budapest in the wake of a takeover of SKB bank, the CEO of financial services provider OTP Sandor Csanyi announced organic growth on the Slovenian market, with detailed decisions still subject to an ongoing analysis.

Csanyi described the operations of SKB, which has been sold to Hungary's OTP by the French group Societe Generale, as above average.

He said the foray onto the Slovenian market was important for OTP because of its proximity and promise of good results. Csanyi simultaneously sees the Slovenian market as demanding, arguing banks will have to operate more efficiently.

Still, major changes are not planned for now at SKB, which includes staffing. If there are no mergers, mass layoffs do not make sense, he said, while arguing it was of course normal for some posts to be centralised and that the detailed plans still depended on an ongoing analysis.

Csanyi did not wish to reveal how much OTP paid for SKB, the third largest Slovenian bank when it was acquired by Societe Generale in 2001.

He would also not say how much OTP had offered for Abanka, the current Slovenian no. 3 which ended up being sold by the state two weeks ago to the NKBM bank under its new owner, US fund Apollo. He said OTP just offered too little, while he described the sales procedure as entirely transparent.

According to Csanyi, OTP wants to grow in an organic fashion in Slovenia and reach at least a 10% market share.

The company is interested in helping finance the new Koper-Divača rail track, even if Hungary as a country would not participate, while Csanyi would also not mind participating in some other state projects.

Also highlighted was Ljubljana's Emonika, the stalled train and bus passenger terminal project, with Csanyi saying the situation was presently being examined.

20 Jun 2019, 11:28 AM

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.

19 Jun 2019, 14:19 PM

STA, 19 June 2019 - Abanka, Slovenia's third largest bank, said Wednesday it saw its net profit decline 27% in the first quarter of the year to EUR 18.6 million on plunging non-interest revenue and higher net write-downs and provisions.

Net interest revenue increased by 2% year-on-year to EUR 15.1 million, but non-interest revenue plunged over 40% in the same period to EUR 15.4 million.

Abanka says the decline of non-interest revenue is the result of the impact a sale of non-performing loans had on its balance sheet in 2018.

Net write-downs and provisions almost doubled to EUR 5.6 million. Nevertheless, the bank reduced non-performing loans by EUR 12.7 million.

The share of non-performing loans contracted by 0.7 percentage points to 3.7% from the end of last year according to European Banking Authority methodology.

The bank's total assets rose by 2% from the end of 2018, to EUR 3.8 billion, making for a market share measured by total assets of 9.6%, the bank said on Wednesday.

Abanka released the results just hours before Slovenian Sovereign Holding is due to decide on the buyer for the state's 100% stake in the bank.

19 Jun 2019, 11:30 AM

STA, 19 June 2019 - Slovenian Sovereign Holding (SSH) has sold 10% of NLB bank to institutional investors for EUR 109.5 million as it wrapped up the privatisation procedure, leaving the state owning a controlling stake of 25% plus one share.

SSH made the announcement Wednesday after selling shares and global depositary receipts equivalent to almost two million shares at a price of EUR 54.75 per Share and EUR 10.95 per GDR.

The price is well below market price: NLB closed at EUR 58.2 on the Ljubljana Stock Exchange yesterday, while GDRs, which are traded in London, closed at EUR 11.33.

The transaction will be settled on 21 June, which means that the state will also get the dividends incumbent on the shares, for total proceeds from the 10% stake of EUR 123.8 million.

SSH said the buyers were high-quality institutional investors who will be "ensuring [the bank's] competitiveness and its further development in the future".

Igor Kržan, chairman of SSH, said he was satisfied that "one of the largest and the most demanding privatisation process in Slovenia" had been brought to a successful close.

Since restrictions that NLB has had to operate under due to state aid will now no longer apply, it will "again be able to operate in the domestic market and in the markets of the SE Europe with all of its capacities and start to compete with its competitors on more equal footing".

"NLB remains an independent Slovenian financial institution which will continue to support the development of the Slovenian economy and will keep representing an important proportion of the portfolio of state's capital assets managed by SDH," he said.

The banks aid it would now be able to compete at home and abroad on a level playing field. It will be allowed to have a leasing business again, and invest without limitations in digitalisation and the development of new products.

"As of New Year's when the ban on mergers and acquisitions will be lifted as well, NLB, a regional specialist, will be able to more actively seek opportunities to strengthen its position as a systemic player on our markets," chairman Blaž Brodnjak was quoted as saying.

The transaction completes a long privatisation process which started in earnest in 2018 after years of fits and starts.

Slovenia nationalised the bank after spending EUR 1.55 billion bailing it out at the end of 2015. Since then the state has earned roughly EUR 1.2 billion in dividends and proceeds from the sale of the bank's equity.

12 Jun 2019, 15:03 PM

STA, 12 June 2019 - The Grand Chamber of the European Court of Human Rights (ECHR) held an oral hearing on Wednesday in Slovenia's case against Croatia over Croatian companies' debt to the defunct Ljubljanska Banka (LB). Slovenia presented the lawsuit as substantiated and admissible.

The government said after the hearing that this had been "the first opportunity for Slovenia to present its arguments and evidence concerning violations committed to the detriment of LB in 48 proceedings before Croatian courts".

Slovenia argues that Croatian judicial and executive authorities have been systematically preventing LB, the biggest bank in the former Yugoslavia, from recovering debts incurred by Croatian companies in the 1990s.

This is even though Slovenia as the bank's owner has had to settle the bank's debt to the retail clients who held their savings deposits with the bank.

Slovenia's claim to just satisfaction amounts to EUR 429.5 million, a figure calculated on the basis of an appraisal of LB's assets conducted by an auditing firm.

Ana Polak Petrič, Slovenia's high representative for succession, pointed out before the ECHR Grand Chamber that the European Convention on Human Rights "guarantees rights to all natural and legal persons".

"The rejection of Slovenia's application by the Court would imply that state-owned legal entities do not enjoy such rights and that the Court is unable to guarantee the protection of their rights," she said.

Slovenia's arguments were presented before the court by Ben Juratowitch, head of the Slovenian legal counsel, who said "Slovenia's application is substantiated and admissible and Slovenia has the right to refer Croatia's breaches to the court in an inter-state application".

Polak Petrič told the press after the hearing that she hoped the key Slovenian arguments had been presented successfully, a key argument being Article 33 of the European Convention on Human Rights "which gives Slovenia the right to file an inter-state application if it finds another Council of Europe member violated the rights stemming from this convention".

Polak Petrič said that these rights apply to all natural and legal persons, including state-owned and that Slovenia met all the admissibility criteria.

Slovenia therefore argues that Croatia's objection regarding the admissibility of the application is unfounded. Any other interpretation by the court would result in a precedent with far-reaching effects, also paving the way for arbitrary and unequal treatment of state-owned companies operating in foreign countries, the press release says.

It adds that in the interest of the international community, outstanding disputes should be resolved as soon as possible and in a peaceful manner, which is of particular importance for the region that is dealing with many unresolved issues.

"Based on the principle of the rule of law and the trust in international justice, Slovenia has brought this outstanding issue before the ECHR" - Slovenia brought the application in 2016.

A video recording of the hearing released by the court shows that today's debate focused mainly on the question of LB's role in relation to the state.

Croatian lawyer Jeremy McBride argued that LB was an entity operating in the interests of the state and was in fact a governmental organisation which he said was not entitled to bring applications before the court.

Polak Petrič and Juratowich countered the claim in detail, emphasizing that the main point was that through their arbitrary conduct the Croatian government and judiciary authorities sought to protect Croatian companies from their debt to the bank being enforced.

They noted that former Croatian Finance Minister and Deputy Prime Minister Slavko Linić boasted in 2015 that as minister he banned any payments being made to LB.

ECHR judges inquired mostly about LB's status and how it is associated with the state. Juratowich underscored that LB was not a government body and was not part of the state apparatus.

Even though state-owned, it is not a state entity nor does it have special powers and has never performed public functions, Juratowich argued.

He also noted that the bank was not state-owned when it issued loans to Croatian companies. The Croatian central bank revoked in 1991 LB's right to operate in Croatian territory, so the Slovenian lawyer said it was ironic of Croatia to claim that the bank was no longer operational.

Slovenia took ownership of LB through a 1994 constitutional law, but still the supervisory board which includes state representatives cannot affect the management's decisions, Juratowich explained.

Given the usual practice in inter-state applications, Slovenia expects the court's decision on the admissibility of its application by the end of 2019 or in the first half of 2020.

The Strasbourg court had already decided on LB claims against Croatian companies in June 2015, but ruled the case, brought by the defunct bank, inadmissible because the bank was state-owned.

Governmental bodies or public companies under the strict control of a state are not entitled to bring an individual application before the ECHR. The court did not deliberate on the case substantively.

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