Ljubljana related

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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11 Jun 2019, 10:56 AM

STA, 10 June 2019 - The shareholders of NLB bank on Monday confirmed the proposal to pay out EUR 142.6 million in dividends at EUR 7.13 per share, and endorsed all new candidates for the supervisory board.

Mark William Lane Richards, Shrenik Dhirajlal Davda and Gregor Rok Kastelic have been appointed new supervisors and Andreas Klingen was reappointed effective on 11 June.

The management has been authorised to buy NLB up to 36,542 own shares on the organised market over the next 36 months to be used in remuneration packages.

It also received a discharge of liabilities despite a counterproposal by a shareholder who also proposed that the shareholders task the management with making provisions for lawsuits brought by wiped-out junior creditors.

The motion was rejected because it is not within the purview of the shareholders to do that.

Chairman Blaž Brodnjak described 2018 as a very special year since the bank was privatised, which will allow it to conduct business free of limitations imposed by the EU due to state aid commitments once the state has reduced its stake to 25% plus one share.

"When another 10% is sold, it will be able to breathe with full lungs and start competing on a level playing field," he said.

As for business prospects, Brodnjak said the trends were good but indicated the bank was remaining vigilant since the region where it operates is very open and hence susceptible to external shocks.

Since last year's initial public offering, NLB's ownership is dispersed among small domestic shareholders and foreign institutional investors.

The state's stake has been reduced to 35%, but it is expected to be reduced further by the end of the year to 25% plus one share.

One benefit of the state no longer exerting majority control is that the board members are no longer subject to pay restrictions imposed on managers of state-owned companies.

Supervisory board president Primož Karpe said the debate about future remuneration packages has been concluded and pay levels will range from EUR 340,000 to EUR 420,000 gross starting with salaries for June.

This is a significant improvement from current levels: the annual report for 2018 shows that CEO Brodnjak got EUR 192,000 last year, while foreign board members got slightly more, up to EUR 210,000.

"We reached a consensus in the end, bearing in mind that we wanted a stable and motivated board," Karpe said about the new remuneration packages.

05 May 2019, 11:10 AM

STA, 3 May 2019 - The French group Societe Generale signed an agreement on Friday with OTP Bank Group on selling SKB Banka and its subsidiaries to the Hungarian financial service provider, which will thus enter the Slovenian market. OTP is also reportedly one of the three most serious bidders for the country's third largest bank Abanka.

 

The purchase price was not revealed in today's press release by Societe Generale, which had taken over SKB in 2001, when it was the third largest Slovenian bank.

According to the agreement, OTP will take over SKB Banka, which is still among the top five largest banks in the country, as well as its subsidiaries SKB Leasing and SKB Leasing Select.

The takeover will be completed pending approvals of both banking regulators, Banka Slovenije and the European Central Bank, as well as competition regulators in the upcoming months.

The French group has already sold a number of banks in SE Europe, striving to improve its solvency ratio and lower the risk exposure level.

On the other hand, OTP Bank Group has strengthened its foothold in Central, Eastern and SE Europe in recent years, mostly through taking over businesses from Societe Generale.

OTP, Hungary's largest commercial bank and one of the largest independent financial service providers in Central and Eastern Europe, already made an attempt to enter the Slovenian market in 2014, when it was one of the bidders for the bank NKBM, according to unofficial reports.

The Hungarian bank has also confirmed its interest for Abanka, with two other companies vying to take over the third largest Slovenian bank, the private equity fund Apollo and Serbian bank AIK Banka.

Besides agreeing on the takeover, Societe Generale and OTP have also come to an agreement on the cooperation in providing various financial services, including investment banking, capital markets, liquidity management, with Slovenia being part of this agreement.

The sale of SKB is coming despite the bank's positive business results in the last year. SKB Banka generated EUR 57.6m in net profit in 2018, a 32.7% increase year-on-year, marking the bank's second-best result since it became part of Societe Generale.

19 Apr 2019, 16:20 PM

STA, 17 April 2019 - Slovenians prefer to save in bank deposits, however mutual funds have seen an increase in assets and savers. At the end of 2018 Slovenian households had 1.7 billion euros invested in mutual funds, said Karmen Rejc, director of the Slovenian Investment Fund Association.

The average European invests 10% or 5,800 euros of their assets in mutual funds, whereas in Slovenia that figure is lower, namely 6% or 900 euros, Rejc said at a news conference leading up to Friday's World Mutual Fund Day.

Matjaž Lorenčič, president of the Slovenian Investment Fund Association and Infond Investment Funds chairman, said that out of the over 20 billion euros in last year's bank deposits, between 250 and 300 million euros were lost due to inflation.

Slovenian asset managers manage approximately 2.7 billion euros in 100 mutual funds. Adding the assets in alternative funds and those managed based on contracts for the sound management of operational risk, this figure amounts to approximately 3.7 billion euros. The number of investors in mutual funds is approximately 450,000.

Slovenian mutual funds are managed by six companies. Last year they recorded an inflow of approximately 540 million euros, an outflow of 550 million euros. This year, cash flow is positive, according to Lorenčič.

There are 96 foreign mutual funds operating in Slovenia. These manage 211 million euros in assets.

17 Apr 2019, 14:25 PM

STA, 17 April 2019 - Abanka, the country's third largest bank, posted EUR 66.7m in net profit last year, up 56.6% over 2017, according to the audited annual report released on Wednesday.

The report says that the optimisation of operations of Abanka continued in 2018, reflecting in a reduction of operating costs, which were down by 2.4% or EUR 1.8m compared to the year before.

Net interest revenue amounted to EUR 60.6m, down from EUR 71.9m in 2017, while net non-interest revenue was up to EUR 64.4m from EUR 46.8m. Impairments and provisions amounted to EUR 22m, up from EUR 8.2m in 2017.

Abanka's total assets amounted to EUR 3.73bn at the end of last year, up from EUR 3.66bn at the end of 2017.

The Abanka group's net profit was up by 57% to EUR 65.6m, while net interest revenue was down by almost 17% to EUR 61.1m.

The bank continued to lower the share of non-performing loans, which dropped by 5.6 percentage points at the group level to 4.6% through the sale of non-performing claims.

Abanka noted that the operating results, the sound capital position, a high level of liquidity and a significant reduction in non-performing loans also resulted in an improved credit rating by Moody's to investment grade in 2018.

The bank has been in 100% state ownership since it was bailed out with taxpayer money in 2013. The government must privatise Abanka to meet the commitments it made in exchange for the EU clearance of the state aid.

According to unofficial reports, three binding bids for the bank were submitted in the second half of March.

The media have mentioned the US private equity fund Apollo, Hungarian bank OTP, Serbia's AIK Banka, Austrian Erste Group, as well as US private equity funds Blackstone and Advent International as potential buyers.

While the pricing of the offers remains a secret, analysts estimated late last year the bank was worth EUR 340-460m based on the book value.

25 Mar 2019, 11:44 AM

STA, 22 March 2017 – NKBM (Nova Kreditna Banka Maribor), Slovenia's second largest bank, posted a group net profit of EUR 72.5m for 2018, a year-on-year increase of 50%, shows the audited annual report released on Friday.

 

The bank recorded a substantial increase in net interest revenue, which was up 32% to EUR 109.6m, whereas non-interest revenue declined marginally to EUR 59.3m.

NKBM also booked substantial revenue, EUR 16.5m, from the cancellation of write-downs and provisions, an indication of an improving credit portfolio.

The share of non-performing loans declined by over four percentage points at group level, the bank said in a press release.

The bank remains well capitalised, with the common equity tier 1 capital ratio, a key benchmark of capital adequacy, remaining roughly level at 20.13%.

Total assets rose marginally to just under EUR 5bn.

Keep up with all the business news in Slovenia here

13 Mar 2019, 06:25 AM

STA, 12 March 2019 - The Specialised State Prosecution, which deals with the most complex forms of crime, has told the STA that investigations continue into a number of cases of banking crime. Some tangible success has already been achieved, with two bankers, both former executives at Factor Banka, sent to prison so far.

The specialised service, which was launched in its current form in 2012, said it presently had 22 cases in the investigation. These involve 127 individuals and legal entities, 82 of which are practising or former bankers. The total damage in the cases is estimated at EUR 221.67m.

There are moreover 15 cases where a criminal charging document has already been filed. 48 individuals face charges, 29 of whom were working in the banking sector at the time of the alleged crime. The total damage estimated for these cases is EUR 92.19m.

While there are several more open cases in the pre-trial phase, the beginning of 2018 saw the first final guilty verdict for bankers in Slovenia.

It involved Dušan Valenčič and Boris Pesjak, the former executives of Factor Banka, the small bank that was liquidated in early 2016. Found guilty of abuse of office, both are serving prison sentences of 15 months.

Another Factor Banka executive, Mojca Lampret Križaj, pleaded guilty to abuse of office in 2017 and received a suspended sentence of three years.

Meanwhile, a trial has been underway at the Ljubljana District Court since 2015 against four former managers of the Slovenian branch of Hypo Alpe Adria - Andrej Potočnik, Andrej Oblak, Anton Romih and Božidar Špan - who stand accused of defrauding the bank of millions of euro.

A fifth defendant in the case, the former boss of bankrupt builder Vegrad, Hilda Tovšak, pleaded guilty in return for a suspended sentence of a year and a half.

Also still open is the case against former board members of the recently privatised NLB - Draško Veselinovič, Miran Vičič and Matej Narat.

The trio have been accused of acting with criminal intent in approving in 2009 a generous loan to Simona Dimic, an aide to Borut Pahor, the head of state, when he served as prime minister. They were found innocent in 2016, but the Higher Court ordered a retrial.

Another NLB executive, Dušan Šuštar, was found guilty of approving two loans worth EUR 2.75m in 2008 although knowing they would not be returned. He got four years in prison, but the verdict is not final yet. Several more lower profile cases of guilty verdicts related to NLB were listed by the prosecution.

The latest senior bakers to be found guilty of fraud committed at the height of the economic and financial crisis were Romana Pajenk and Milana Lah, who served as CEO and board member, respectively, at Probanka, a similar case to Factor Banka.

The pair received in January this year suspended sentences of 23 months with four-year probation for defrauding two businessmen of EUR 1.5m. The prosecution had sought four years in prison and has announced an appeal.

08 Mar 2019, 14:30 PM

STA, 7 March 2019 - Slovenian banks recorded a cumulative net profit of just over EUR 496m in 2018, the highest since the pre-crisis year 2007 and an increase of almost 17% over the year before on the back of robust growth of non-interest revenue.

Whereas net interest revenue rose by just 3% to EUR 672m due to persistently low interest rates, non-interest revenue surged by over 14% to EUR 482m, shows a central bank report released on Thursday.

The figure confirms earlier findings that banks have been increasing service fees to offset low interest rates.

The sector also profited from the cancellation of provisions for non-performing loans, though that contributed only EUR 48m to the bottom line, a tenth more than in the year before.

Operating costs increased only marginally, by 0.6% to EUR 700m.

Total assets increased by 2.2% to EUR 38.78bn, in what is the second consecutive annual increase.

Non-banking deposits were up 5.3% to almost EUR 30bn, mostly due to a EUR 1.2bn increase in household deposits.

Loans to the non-banking sector grew at a rate of 3.3% on the back of robust lending to households, which now account for a quarter of total outstanding loans.

Asset quality improved last year as banks reduced exposure to non-performing loans to 4% from 6% measured by the broad definition of the European Banking Authority.

Despite the rapid improvement, the share of non-performing loans to the corporate sector remains high, at 8.4%. This is however a 4.5-point improvement on the year before.

All our stories about Slovenia and banks can be found here

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