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.
STA, 12 January 2019 - The global financial crisis, which erupted in 2008 with the collapse of Lehman Brothers, hit Slovenia with a delay, but it exposed huge weaknesses that had built up in the majority state-owned banking system. By 2012 Slovenia was locked out of financial market, and it took until the bank bailout in late 2013 before the sector recovered.
In the run-up to the crisis, credit growth was buoyant, driven by cheap money after interest rates collapsed following the changeover to the euro in 2007.
Loans to the non-banking sector surged by almost two-thirds between 2006 and 2008. Banks financed the expansion mostly by securing financing from foreign banks.
The crisis thoroughly razed the banking landscape.
Banks' total assets peaked at over EUR 50bn in 2010 before reaching a low of just 37bn six years later.
Similarly, lending contracted by more than a third between 2010 and 2016, as banks deleveraged to pay back their foreign loans rather than extend new loans to Slovenian businesses.
On the other hand, deposits remained robust as households responded to the crisis by tightening spending, which deepened the economic crisis but gave banks a lifeline when foreign financing dried up.
The total volume of loans slipped slightly during the crisis as households drew down their savings, going from EUR 23.9 bn in 2010 to EUR 22.4bn in 2013, but the contraction was never as severe as the tightening of lending.
Total assets Loans to non-banking sector
(in EUR m) (in EUR m)
2006 34.1 20.6
2007 42.6 28.5
2008 47.9 33.7
2010 50.8 34.7
2013 40.3 24.3
2014 38.7 21.5
2016 37.1 20.5
2018* 38.3 22.2
* As of 31 October
Source: Slovenian central bank
The credit explosion leading up to the crisis inflated a property bubble, which burst post-2010 as large construction companies that also financed their own projects collapsed one after the other, as did over-leveraged financial holdings.
The share of non-performing loans started to soar, forcing banks to set aside increasing provisions and writing down assets, leading to a negative spiral.
Whereas foreign-owned banks received capital injections from their shareholders, the three biggest banks in the country were all in state ownership, requiring growing amounts of public funds to keep them afloat.
The story came to a head in December 2013, when the treasury spent EUR 3.5bn recapitalising NLB, NKBM and Abanka, wiping out shareholders and junior bondholders in the process. Two smaller banks, Probanka and Factor Banka, were wound down.
At the same time, about four billion euros in non-performing loans were transferred onto the newly-established Bank Assets Management Company (BAMC), which also absorbed the assets of Probanka and Factor Banka.
After the banking system was bailed out banks were flush with cash and largely freed of non-performing loans, but it took several years before lending recovered.
Net profit Net provisions, write-downs
(in EUR m) (in EUR m)
2008 208 -120
2009 162 -279
2010 -99 -811
2013 -3439 -3809
2014 -106 -650
2016 364 -96
2017 443 43
2018* 452 45
* As of 31 October
Source: Slovenian central bank
Echoes of this period continue to reverberate five years later, as lawsuits by subordinated bondholders and shareholders wiped out in the bailout make their way through courts.
These investors have targeted in particular the valuations that determined the size of the bailout, alleging that Slovenia had been the target of speculators and a guinea pig for new EU bank resolution rules.
The commotion over the bailout resulted in criminal investigations at the central bank, the resignation of governor Boštjan Jazbec and, recently, criminal charges against the board of governors serving at the time of the bailout.
The costs of the bailout accounted for a significant chunk of the increase in general government debt during the crisis, which ballooned from 22% of GDP in 2008 to almost 84% of GDP by 2015.
The surging debt was accompanied by growing debt servicing costs, as the precarious state of the economy during the crisis led to higher borrowing costs; for a while, Slovenia was practically locked out of the eurobond market and had to borrow in US dollars.
Public debt did not start to decline until 2016, when the economic recovery was already in full swing. In the past two years the treasury has been busy replacing dollar debt with euro bonds and debt has started to decline at a more rapid pace towards the eurozone ceiling of 60% of GDP.
General government finances
Deficit Debt Debt servicing costs
(% of GDP) (% of GDP) (EUR m)
2008 -1.4 21.8 326.1
2009 -5.8 34.6 326.4
2010 -5.6 38.4 476.7
2011 -6.7 46.6 510.6
2012 -4.0 53.8 632.5
2013 -14.7 70.4 827.0
2014 -5.5 80.4 1082.6
2015 -2.8 82.6 1028.8
2016 -1.9 78.7 1064.0
2017 +0.1 74.1 977.3
Source: Eurostat, Statistics Office, Ministry of Finance
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.
STA, 29 October 2018 - Shares of NLB, Slovenia's largest bank, will be priced at EUR 51.50-66 in the forthcoming initial public offering of up to 75% of the bank minus one share, valuing the entire bank at EUR 1-1.3bn. The pricing, revealed in a prospectus released on Friday, is at the lower end of expectations but reflects the current market situation.
STA, 28 August 2018 - Slovenian banks generated EUR 322.9m in pre-tax profit in the first half of the year, a 26.5% year-on-year increase. Profit after taxes was up 25.3% to EUR 295.7m. The total assets of the banking system rose by more than EUR 0.5bn to EUR 38.5bn, shows Banka Slovenije's report released on Tuesday.
STA, 6 June 2018 - Despite the favourable general economic situation, upbeat forecasts and a revival in lending, the Slovenian banking regulator advised banks on Wednesday to start preparing for a potential new crisis.