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.
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.
STA, 25 February 2019 - Finance Minister Andrej Bertoncelj told European Competition Commissioner Margrethe Vestager in Ljubljana on Monday that Slovenia remained committed to the privatisation of Abanka. The pair also disused a potential lifting of management restrictions for the NLB bank before the state sells another 10%.
After Slovenia recently sold 65% in the country's largest bank, it is also in the process of privatising Abanka, the country's third biggest bank, by July this year as part of commitments made during the 2013 bank system bailout.
While there have been individual political calls in Slovenia for renegotiating the Abanka commitment, including from Economy Minister Zdravko Počivalšek, Bertoncelj told the commissioner the sale is progressing in an independent fashion and according to the timeline.
The minister said Slovenia had not asked for a postponement or cancellation of the sale.
Commenting on the situation, Vestager said Slovenia's commitments needed to be perceived in a comprehensive fashion and by considering the reasons why Slovenian banks had found themselves in trouble.
She acknowledged Abanka had met most of its commitments and was in much better shape, but added that negative experience with state meddling in corporate management had been a key reason for including the bank on the commitments list.
As regards NLB, the majority of which was sold in an IPO last autumn, Bertoncelj said the sale procedure for another 10% minus one share was proceeding in line with plans.
While the timeline envisages a sale by the end of this year, there is speculation that it will occur in mid-2019.
Vestager confirmed that talks were under way about the possibility of lifting all the remaining restrictions in the management of NLB - leasing services, factoring, the closure of branch offices, and above all the sale of NLB Vita, the bank's insurance subsidiary.
Vestager, who praised the NLB sale so far and the clear signal about plans to proceed, expressed satisfaction that Slovenia was proactive in the talks about the restrictions, but she would not comment further.
Bertoncelj already mentioned a few days ago in Brussels the idea of securing the lifting before the full execution of the sale in exchange for the state freezing its voting rights for the unsold 10%. He said the intention was securing the bank's development.
The Finance Ministry said today that it was proposing lifting the restrictions that presented the biggest burden for NLB's operations and were thereby also hurting the new private owners.
Bertoncelj added that the talks were complex and would take a while, meaning it was not possible to say whether the agreement with the Commission or the sale would occur first.
Meanwhile, the pair also discussed the European Commission's past changes and future reevaluation of rules governing state aid.
Bertoncelj said Slovenia supported changes towards a modernised system of state aid, strived for a further simplification of procedures and greater harmonisations with other EU policies, for instance cohesion policy.
While Vestager welcomed Slovenia's support, Bertencelj noted that Slovenia, having a centralised system for state aid, had no major problems in the transition to the new rules that gave more oversight competences to member states.
He pointed out that Slovenia was one of only five member states without any open claims for the return of illegal state aid.
February 12, 2019
Delo reports that European Court of Human Rights (ECHR) is only weeks away from deciding on Slovenia’s suit against Croatia, who according to the plaintiff unlawfully prevented repayment of the loans that Ljubljanska Banka (LB) made to Croatian companies. According to Delo, this will also be the first state-to-state property rights violation case in front of the EHRC, and only the fifth overall, as most cases at the ECHR are lodged by private persons.
In a dispute that began as both countries gained their independence, Slovenia had already been ordered to repay the LB foreign currency saving accounts that went missing following the dissolution of Yugoslavia and the consequent transformation of Ljubljanska banka into Nova ljubljanska banka.
Slovenia, who has been taken to court by Croatian savers and has already settled its €163 million debt according to the court’s decision, is arguing that if the Slovenian state had to repay LB debts to Croatian savers, then the unpaid loans taken by Croatian companies have to be repaid to LB as well.
Slovenia decided to lodge its application at the ECHR after exhausting all legal remedies in Croatia. According to its assessment the Croatian courts, Constitutional Court included, continue to prevent collecting claims from the Croatian companies for Ljubljanska banka, the plaintiff, with politics being one way to achieve this. As an example of the latter Delo cites the example of then finance minister Slavko Linić, who in 2007 prevented the execution of the final decision in favour of LB, claiming that until LB repays its Croatian clients’ saving accounts, there will be no ruling in favour of LB either. LB then took the case to theECHR, which eight years later ruled that it did not have jurisdiction over the matter since LB was a state-owned bank.
In a current lawsuit Croatia disputes ECHR's jurisdiction over the case, arguing that Slovenia filled an application out of dissatisfaction with the rulings of the Croatian courts.
The Grand Chamber of the ECHR will first decide on the admissibility of the Slovenian suit, only then will the content assessment follow.
STA, 14 November 2018 - NLB shares were listed on the Ljubljana and London stock exchanges on Wednesday, bringing the sale of 65% of Slovenia's leading bank via an initial public offering (IPO) to an end. By selling NLB, Slovenia has partly met its commitment to the European Commission to sell 75% minus one share in exchange for a bailout in late 2013.
As the state has retained a controlling 35% stake, US financial fund Brandes Investment Partners (7.6%) and the EBRD (6.3%) have emerged as the two largest private owners.
The state has sold almost 12 million shares or 59.1% of all shares of NLB at €51.50 per share to get almost €609m, but taking into account an over-allotment option the stake could increase to 65% (€669.5m).
The seller is making an additional 1.18 million NLB shares available pursuant to the over-allotment option. The shares will be kept on a separate fiduciary account and be made available 30 days after the listing to make deals to stabilise the price.
"We remain a Slovenian banking group," NLB chairman Blaž Brodnjak said at today's listing on the Ljubljana Stock Exchange (LJSE), which was accompanied by symbolic bell-ringing when trading opened in Ljubljana at 9:15 AM.
The bank's shares have also been listed in the form of financial instruments known as GDR on the London Stock Exchange. NLB has become the first Slovenian joint-stock company to be listed in London.
"The head and heart of NLB remain in Ljubljana," said Brodnjak, adding that a new era was beginning for the bank, as "we have been very limited in our operations for five years", referring to the restrictive measures set down by the Commission.
Under the commitment to the EU, Slovenia has to sell another 10% of NLB by the end of 2019. Until then, the bank will be subject to a set of measures the Commission has imposed to make sure NLB is not in a more favourable market position than its competitors.
Once all limitations are lifted, it will be a "great privilege and great responsibility" for the bank, Brodnjak assessed, labelling today's listing as "the most important day in the bank's history".
Until the end of 2019, the bank is banned from making acquisitions, having aggressive advertising campaigns and performing leasing services.
Moreover, since the stake 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.
Brodnjak however hopes that it will be possible to negotiate with the European Commission the elimination of the remaining limitations and requirements. He noted that European Commissioner for Competition Margrethe Vestager will pay a visit to Ljubljana soon.
He believes that under a majority private ownership, the bank will develop in the sense of corporate management and freedom of operation. The bank is in a very good shape and is a systemically important institution in another five countries.
The group is also present in Serbia, Montenegro, Bosnia-Herzegovina, Kosovo and Macedonia, and the bank will now be vying for the "title of a regional champion", for which it has potential as it is familiar with the history and culture of the region.
Finance Ministry State Secretary Metod Dragonja said that with the transaction, Slovenia had met the first, most important commitment to the European Commission.
"Slovenia has clearly shown that it respects the commitments given. The credibility that the state has gained by doing so will make a positive impact on the state's and bank's credit ratings," he added.
Lidija Glavina, the chairwoman of Slovenian Sovereign Holding (SSH), said that SSH would continue with the sale of the remaining shares by the end of 2019.
"Despite the very demanding situation on financial markets, internationally renowned financial investors have decided to buy," she said, adding that NLB nevertheless remained "an independent Slovenian financial institution".
SSH will be able to sell the remaining stake after a six-month moratorium. There will be no price range and procedures will be simplified. "We will be waiting to get the maximum out of it," Glavina announced.
LJSE chairman Aleš Ipavec added that it was "an important day for the Slovenian capital market", while he did not wish to comment on the price of the share.
"Some are not satisfied as it is allegedly too low. But the market will show soon how much the share is really worth," he added.
The listing ceremony was also attended by representatives of regulators, the financial sector and some companies, mostly those traded in the prime market.
Slightly more than €500,000 in turnover with the NLB shares has been generated so far, with the price standing around €55, which is €4.50 above the price fetched with the IPO.
NLB closed the day’s trading at €56.65, 5.15 above the IPO price.
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.
A short Deutsche Welle documentary from 2012 looking at the growing problems Slovenia’s economy faced at the time, which led to the collapse and nationalization of NLB bank, now about to be privatized, followed by a report from 2013 on the corruption scandals that hit the country.
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, 23 October 2018 - The supervisory board of Slovenian Sovereign Holding (SSH) endorsed on Tuesday all documents required for the initial public offering of NLB bank, allowing privatisation of Slovenia's largest bank to proceed. The price range will be revealed by the end of the week, presumably on Friday, when the prospectus is published.