STA, 25 May 2020 - The NLB bank will carry on with optimising its business network by closing ten offices across Slovenia on 15 June. The Mislinja municipality in northern Slovenia, one of the places that will experience the closure first-hand, has protested against the step.
The bank has been citing changed clients' habits and the rise of online and mobile banking as reasons for closing physical offices. During the coronavirus epidemic, digital banking services became even more popular.
NLB believes that such habits will have a long-term impact on bank visits, with people being less likely to frequent the actual offices.
The bank has already started notifying the clients as well as local communities of the step, NLB has told the STA, adding that other offices will step in if needed or a team of mobile bankers will conduct home visits.
Moreover, a NLB mobile office will keep paying visits across the country until the end of the year. The bank also highlighted that its ATMs will remain in places where the offices will be shut down.
The Mislinja community is strongly opposing the closure since the NLB office is the only bank office in the municipality. The locals are up in arms, Mislinja Mayor Bojan Borovnik told the STA, pointing out that the elderly required the vicinity of the office in particular.
Borovnik hopes that the bank's decision is not final. He is also looking into the possibility of another bank opening up an office there.
The Mislinja office was temporarily closed during the epidemic. The bank recently notified the municipality of its permanent closure.
The Koroška regional council has addressed a letter to the bank, protesting over the move and urging NLB not only to keep the office open but also to reopen a couple of offices in northern Slovenia.
Meanwhile, today the bank reopened twelve offices across Slovenia in the wake of a major easing of coronavirus restrictions.
STA, 14 May 2020 - NLB generated EUR 18.3 million in net profit at group level in the first quarter, a 68% year-on-year decrease that Slovenia's largest bank said was the result of credit impairments and provisions formed due to the coronavirus epidemic.
Net interest income decreased by 3% to EUR 77.4 million, "mainly due to higher interest expenses resulting from new Tier 2 instruments issued by the bank, which was partly compensated for by increased loan volumes", says NLB's business report published on Thursday.
Net fee and commission income increased 6% to EUR 42.4 million, in particular in the retail segment in banking members on the markets of SE Europe. In the second half of March, net fee and commission income dropped due to the outbreak of Covid-19, especially in card operations, the bank said.
In the first quarter the NLB Group set aside impairments and provisions totalling EUR 28.3 million, which compares to EUR 0.6 million in the same period last year. Additional credit impairments and provisions in the amount of EUR 24.5 million were recognized in the first quarter due to the outbreak of Covid-19.
Gross loans to customers amounted to EUR 8.13 billion, which is 2% more than at the end of last year. Deposits from customers increased moderately, the bank said.
Gross loan to households remained level while gross loans to companies increased by 5% compared to the end of 2019. Lending restrictions introduced by Banka Slovenije in November 2019 and the coronavirus outbreak reduced new loans to households while demand increased for working capital at companies, NLB said.
The bank said it holds a very strong liquidity position, at the group and individual subsidiary bank level. The total capital ratio for the group stood at 18.5%, which "represents a solid basis to cover all regulatory requirements... also in the aggravated circumstances during COVID-19 pandemic".
Credit portfolio quality did not deteriorate, with the share of non-performing loans remaining unchanged at 2.7%. The group "expects credit portfolio quality to worsen in 2020 through a downgrade of some clients, including the increase of non-performing loans as a result of the economic slowdown".
While the supervisory board also got acquainted with the results today, chairman Blaž Brodnjak assessed the crisis could also mean an opportunity.
"On the one hand, us being the largest banking and financial group headquartered in this region - the group which calls this region its home - means that people listen to us. And on the other hand, it might just give us an additional push towards making full use of our potential," said Brodnjak.
STA, 26 February 2020 - The Slovenian NLB bank announced on Wednesday it had signed an agreement with the Serbian government to acquire the 83% state stake in the bank Komercijalna Banka. The deal worth EUR 387 million is pending regulatory approval and is expected to be finalised in the last quarter of the year.
Announcing the deal signed today between the NLB management and the Serbian government, the bank said the conclusion of the transaction was pending approvals from several institutions, including the European Central Bank and the countries' central banks.
According to the NLB, the purchase price for the 83.23% stake in Komercijalna Banka is EUR 387 million, which will be payable in cash on completion.
The Slovenian market leader added that, in accordance with the Serbian bank privatisation regulations, it was not required to launch a mandatory tender offer for the rest of the shares in the Serbian bank.
The purchase price implies a valuation of EUR 465 million for 100% of Komercijalna Banka's ordinary share capital.
It will be subject to a 2% annual interest rate between 1 January 2020 and closing, with NLB benefiting from the bank's earnings during that period.
Subject to approval of the Serbian central bank, the existing shareholders of Komercijalna Banka will receive a dividend equating to 50% of 2019 net profit up to a maximum of EUR 38 million before closing.
As a result of the transaction, NLB's market share in Serbia will increase to over 12.1% by total assets, making it the third largest banking group in the country, the Slovenian bank added.
"NLB's operations in Serbia will be by far the largest outside of Slovenia," commented Blaž Brodnjak, the CEO of the bank which already operates the NLB Banka Beograd subsidiary.
The Serbian subsidiary, which has 28 offices and which had total assets of EUR 614 million and posted EUR 4.1 million in net profit last year, posted a 29% growth in net loans to customers in 2019, the biggest in the group.
According to the Serbian media, Komercijalna Banka has EUR 3.5 billion in total assets, and last year posted EUR 74 million in profit. The bank has 2,744 employees and 200 offices in Serbia, Montenegro and Bosnia-Herzegovina.
STA, 13 February 2020 - There was much controversy on Thursday as the parliamentary Commission for the Oversight of Intelligence and Security Services discussed the state prosecution's decision to reject a criminal complaint filed by a parliamentary inquiry over an alleged Iranian money laundering scheme at NLB bank a decade ago.
Addressing reporters after the session, Janez Janša, the leader of the Democrats (SDS), said that the session heard "things that explain much of what is happening" and what was keeping the media busy these days, something that would become very concrete in the future, which he said was "from now on".
After what the commission heard today, Janša said it had become obvious why the "law enforcement authorities that should have investigated the matter found there was nothing wrong (...) People who made possible a criminal act of epic proportions investigate themselves."
Darko Muženič, now director of the National Bureau of Investigation (NBI), served at the Office for Money Laundering Prevention at the time that roughly one billion US dollars was allegedly laundered through NLB bank.
In a bid to "protect the dignity and integrity" of the NBI and Muženič, Police Commissioner Tatjana Bobnar explained today that Muženič at the time served in the department of the Office for Money laundering that was not in charge of the Farrokh case.
Farrokh was the name of the company of Iranian citizen Iraj Farrokhzadeh that the parliamentary inquiry in 2018 found laundered the money on behalf of Iran to skirt international sanctions.
The prosecution's decision of July last year not to prosecute abuse of office suspects in the case was debated by the parliamentary Home Affairs Committee on Wednesday, but the session was suspended because the SDS and the fellow conservative New Slovenia (NSi) wanted to hear from NBI and NLB representatives, who were not present at the session.
NSi deputy Jernej Vrtovec described the findings of investigators which prompted the prosecution not to prosecute as very unusual.
The case was the subject of two parliamentary inquiries, whose extensive reports allege that NLB bankers failed to exercise due oversight and abused their powers at last in the case of some transactions, said Vrtovec.
The police said that that Tuesday's session of the Home Affairs Committee was attended by Police Commissioner Bobnar, who is the NBI director's superior, and director of criminal police Boštjan Lindav.
The police noted that it was the criminal police and not NBI investigators which in 2010 and 2011 handled the case of alleged money laundering at NLB.
Bobnar noted that the police directorate had reviewed police activities in that case 2017 and that the guidelines issued by the then interior minister in connection to that had been fully implemented.
She said that the special department of the specialised prosecution service had rejected a criminal complaint filed against criminal police investigators over the case.
Bobnar also said that the police performed their duties in accordance with the standards of evidence, in compliance with the constitution, penal code and the criminal procedure act and as an independent body whose work in the pre-trial procedure can only be directed by the state prosecutor in charge.
A specialised investigation group formed in 2017 and comprising representatives of the NBI, Office for Money Laundering Prevention and the central bank drew up a plan of work in the Farrokh case to look into suspected criminal offences, including money laundering, terrorism financing and abuse of office.
In the case pertaining to suspected abuse of office, the state prosecutor in charge issued a decision in July 2019 rejecting the criminal complaint by the parliamentary inquiry.
However, Bobnar noted that the specialised investigation group continued work in connection to other suspected criminal offences in the case.
STA, 21 January 2020 - Bank NLB has asked the Constitutional Court to review tighter restrictions on lending imposed by the central bank in November. After filing the request on Tuesday, the bank expressed belief that its request would be a matter of priority for the court because of the "radical effect" the measures had on the quality of Slovenians' lives.
The bank believes that the measures were introduced too hastily and were too radical, and that they have to be abolished. Any anomalies detected in "individual market players" should instead be addressed with targeted and not systemic measures.
NLB says Banka Slovenije imposed the measures virtually overnight and triggered "an excessive drop in volume of loans and accessibility of loans by Slovenians within the strictly regulated and controlled system of commercial and savings banks, whereas there are no restrictions imposed on more expensive and more risky third loan providers".
The bank argues that the measures have already produced a radical effect with virtually total stop in growth in loan volume. What is more, the number of loans given out in the recent months has dropped dramatically.
The restrictions were introduced to protect the taxpayer, says the bank, adding, however, that Slovenian population is already among the least indebted in relevant global comparisons, while banks are highly liquid, which means that they are capable of absorbing any potential major shocks.
Moreover, Slovenia has the fresh experience of an extremely tough crisis, but in the 2009-2015 period there was no excessive increase in default among the population, the bank said.
Saying the measures were introduced overnight, the bank says the "legal unpredictability" makes it extremely hard to make business plans and evaluate companies.
The move by NLB comes a day after the Bank Association released data showing that the number of consumer loans had dropped by 60% compared to October and housing loans by 40%.
STA, 15 January 2020 - NLB Skladi, the asset managing arm of Slovenia's largest banking group, NLB, attained a market share in excess of 34% in 2019, the largest among all Slovenian mutual funds, managing more than a billion euro in mutual funds.
Slovenian mutual fund managers saw assets under their watch rise by more than 20% last year to EUR 3.01 billion. The bulk of the growth was generated through an increase in the value of investment, with net payments into the funds amounting to EUR 83.6 million, NLB Skladi said on Wednesday.
Foreign providers managed EUR 221 million in assets as of the end of October, paying out EUR 1.7 million net. Receipts to the European Undertakings for the Collective Investment in Transferable Securities by the end of October totalled EUR 284 billion.
"It wasn't a record year but it was a very good year in Europe nonetheless," Kruno Abramovič, the CEO of NLB Skladi, told reporters in Ljubljana.
After a fall in 2018, NLB Skladi did not record an increase in payments until June or July 2019. "It took six months for investors to stop being jittery," said Abramovič, adding that a similar trend was observed in Europe, although it took only about three months there.
Board member Blaž Bračič said that NLB Skladi's market share in gross payments into mutual funds was 47.1%, and the market share in gross receipts 104.8%. "The rivals had outflows and we had inflows," he said.
Marko Bombač, chief analyst with NLB Skladi, noted that at the end of 2018, the manager had projected a 11% return on global shares for 2019, which was considered an upbeat projection. In fact global stock markets posted a growth of almost 30%, while euro corporate bonds posted a 6.3% growth.
"The obvious question after such a growth is whether time has come for profit-taking and a bit more conservative structure of investments in the portfolio," Bombač said, adding that NLB Skladi believed there was still plenty of room for growth in 2020.
Projections for bond investments this year are low, which tips the scales in favour of investment in stocks. "We expect a solid stock year, a bit under average," said Bombač. The mid scenario is for a growth of 7% for advanced and emerging markets, 9% for Western Balkan markets and 10% for Slovenia.
NLB Skladi favours Europe over the US, its projections for the US being on a par with those for developing markets, where countries are lagging with reforms. Key to the profitability of US shares will be the profitability of technological shares.
The manager is optimistic about European banking shares, has raised weightings of cyclic sectors such as raw materials and manufacturing and car industry, and has kept slightly above-average exposure to the software and services sectors.
A major topic of the year will be the US presidential elections with NLB Skladi projecting a narrow victory for Donald Trump, but also the possibility of a new US-China escalation. A global recession is not expected to hit until 2022, but it is expected to be deeper as it would be in 2021.
STA, 27 December 2019 - Bank NLB and Belgian KBC, NLB's former owner, have sold their life insurance company NLB Vita to the country's second biggest insurer Sava Re. The sale means that NLB has met the last of several conditions upon which the European Commission approved the 2013 bailout.
The cost of the deal, signed on Friday, has not been disclosed, but the business paper Finance recently reported that NLB and KBC expected to get between EUR 20 million and EUR 30 million.
Established by NLB and KBC in 2002, NLB Vita is the largest life insurance company in Slovenia, holding 14.8% of the market.
The sale is to be completed by the end of the first half of 2020, pending regulatory approval and suspensive conditions, said a press release issued by NLB and Sava Re.
"This will be the final step on our way to meeting all of the obligations imposed by the European Commission and a vital milestone, because we will be able to do business and show our full competitive potential," NLB chairman Blaž Brodnjak was cited as saying in the press release.
"We believe we have found the right strategic partner for NLB Vita, one to continue its story of success," Brodnjak said.
Sava Insurance Group chairman Marko Jazbec believes that the combination of knowledge and experience from KBC and NLB in NLB Vita provide a solid foundation for future development of a strong partnership with Sava in banking insurance.
He sees the acquisition as a key step for Sava to solidify its position in the life insurance market in Slovenia. "The share of life insurance premiums in terms of GDP is lower in Slovenia than in other, more developed European markets, therefore we see potential for development and organic growth for the future."
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.
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.
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.