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, 17 June 2019 - The final decision on the privatisation of Abanka, Slovenia's third largest bank, has been deferred to Wednesday after the supervisory board of Slovenian Sovereign Holding (SSH) decided not to convene Monday as planned. Nevertheless, comments by Prime Minister Šarec suggest the bank will be privatised despite initial apprehension.
Karmen Dietner, the chief supervisor of SSH, said the session was postponed so that the supervisory can "thoroughly examine the large amount of material that represents the substantive basis for the decision."
Abanka must be privatised by the end of this month according to commitments Slovenia made in exchange for a state aid clearance it received from the European Commission in 2013.
The procedure went according to plan until Prime Minister Šarec cast doubt on the plan by tweeting on 7 June that SSH should think about its decision given that police investigations into the bailout are ongoing.
But Šarec appeared to backtrack today, telling parliament during questions time that he was not putting any pressure on anyone. "The decision on the sale of Abanka will be adopted by SSH," he said.
The statement appears to settle who will have the final say: after the original tweet, SSH said only the government, representing the state as SSH's sole shareholder, had the power to change the course of the privatisation.
"I believe [SSH supervisors] are capable of taking this decision themselves without making anyone else responsible," Šarec said.
Šarec suggested his original tweet had simply been a comment on new facts revealed at the time - the release of the criminal complaint against the 2013 board of the central bank.
"I'm not pressuring anyone... This is simply a major story and the criminal complaint was a new fact for me," he told MPs.
Commenting on the issue before the postponement decision was made, Infrastructure Minister Alenka Bratušek, who was prime minister at the time of the 2013 bank bailout, said that there were actually no new facts lately which could affect the sale.
"It is irresponsible to change political decisions based on one documentary show," the head of the coalition Alenka Bratušek Party (SAB) said in reference to RTV Slovenija's documentary about the bailout.
The film raised questions about the role of the European Commission in ordering that junior creditors of three banks be wiped out, prompting Šarec to publish the tweet in question.
Bratušek said that the coalition partners had immediately agreed that they would contact the European Commission last September to present the arguments for postponing the sale. This should have been done in September, not a week before the deadline, she added.
"When [SSH] is able to tell what will be the consequences of sale or non-sale, then we will be able to make the right decision. I hope that those who started this non-sale are aware of the possible consequences."
Coalition Pensioners' Party (DeSUS) head Karl Erjavec noted that the party had been against selling banks all the time, but added he did not believe anyone could stop the Abanka sale.
Asked about his potential vote in the government, the foreign minister said he would see what arguments SSH would give for leaving it to the government to decide.
Igor Zorčič, the head of the deputy group of the coalition Modern Centre Party (SMC), said that the "prime minister said he was reserved about this, and we are reserved even more."
"If SSH returns the issue to the government, it will probably need to decide in line with what its representatives have been saying," he added.
Luka Mesec of the opposition Left said that given Šarec's tweet, "we expect from the supervisory board to reject the sale of Abanka or leave it to the government to reject the sale and launch appropriate proceedings before the European Commission".
On the other hand, Jernej Vrtovec of the opposition New Slovenia said that Abanka needed to be sold, "not because of the commitments, but because I believe it would perform better in private ownership".
"I've had enough of these co-financing and recapitalisations of the banking system we had witnessed in the past," he said, adding that the pressure not to sale Abanka now, including from politicians, was inadmissible.
SSH is selling 100% of Abanka, with three binding bids reportedly in the EUR 400-500 million range, about a fifth below book value but, together with recent dividend payments, the proceeds would still be higher than what the state invested in Abanka as part of the bailout.
The SSH supervisors can either complete the sale directly or ask the government as the sole shareholder to have the final say, which is exactly what happened last year, when marker leader NLB was privatised.
STA, 11 June 2019 - Coalition parties are mostly in favour of somehow suspending the privatisation of Abanka, although opinions differ and at least some advocate the position that commitments must be honoured. In any case, it appears that the government will have the final say.
Abanka is supposed to be privatised by the end of the month according to commitments Slovenia made in exchange for EU clearance of state aid. But just weeks before the due date Prime Minister Marjan Šarec cast doubt on the procedure by calling for a re-examination of the commitments.
His party, the Marjan Šarec List (LMŠ), thinks it is necessary to clarify what went on in the run-up to the bailout, a reference to ongoing police investigations of the circumstances of the 2013 bailout.
"We'll see what goes on in the coming days and weeks. But these are things that cannot be resolved fast. The government will have to adopt a position and we have to clarify what had been going on," LMŠ deputy group leader Brane Golubović said on Tuesday.
Similarly, the Social Democrats (SD) think a reconsideration is in order. The government should "decide whether to carry out the sale or not, and whether to negotiate new terms with the Commission at least until court procedures regarding the correctness of the calculation of the bank capital shortfall are ongoing," deputy group chair Matjaž Han said.
The Modern Centre Party (SMC) shares the SD's opinion. "We advocate the position that the government should reconsider and, if necessary, stop the sale," deputy group leader Igor Zorčič said, adding that his party was "against unnecessarily selling state assets".
Only the Pensioners' Party (DeSUS) thinks obligations Slovenia made should be honoured. "The state has made some commitments regarding the bank and will probably have to realise them," the party said, but added that it would still be good if Slovenia had one state-owned bank.
The SAB, led by Alenka Bratušek, prime minister during the bailout, pointed out the coalition agreement said the government would try to convince Brussels it did not have to sell Abanka. But since the Finance Ministry has to its knowledge not yet launched the talks, "this indicates that we will probably sell Abanka".
Given that Slovenia has managed to rescue its banks with its own money and the economy without the intervention of the troika, the right approach could result in the Commission not insisting on the sale, the SAB believes.
The Finance Ministry would not comment on the issue.
The privatisation of Abanka had been considered a foregone conclusion until last Friday when Šarec cast doubt on the plan by saying on Twitter that SSH, which manages equity in companies on behalf of the state, may have to reconsider the move.
The tweet came after the public broadcaster RTV Slovenija aired a documentary about the 2013 bailout a day earlier, raising questions in particular about the role of the European Commission in ordering that junior creditors of three banks be wiped out.
SSH said yesterday it had to stick to the commitment to sell Abanka, which Slovenia made when it received clearance for state aid, but it also said that the government could take a final decision on the bank's sale.
The European Commission has said it expects Slovenia to honour its commitments.
Mladina: Government failing to protect national interest from Hungary
STA, 19 April 2019 – The left-leaning Mladina is critical of Slovenia's reluctance to protect its national interests in a commentary accompanying revelations about connections between the European Commission, the Hungarian government and a bank vying to take over Abanka. The weekly underlines that strong financial institutions are the backbone of a sovereign country.
Editor-in-chief Grega Repovž says that a journalist of Mladina found new connections between the Hungarian government and a Hungarian official at the European Commission who insisted that Slovenia privatise its banks.
The situation is becoming increasingly problematic because the revelations trigger doubts about the actions of those involved in Slovenia, as well as the expertise of the European Commission.
Mladina shows connection between the Hungarian government led by Viktor Orban and István P. Székely, who works for the commission, also highlighting the efforts of Hungarian OTP bank to take over Abanka, which is being privatised.
It wonders why the Hungarian Imre Balogh, who also has links to the Orban government, was appointed the CEO of Slovenian bad bank in 2015 and why Laszlo Urban, a member of Orban's party Fidesz, was appointed a member of the NLB supervisory board in 2016.
"What sort of network has the Hungarian government already woven in Slovenia, apart from the obvious links to the Democrats (SDS) and the media it bought from it?" the weekly wonders, adding that Ambassador Edit Szilágyiné Bátorfi had met privately with Slovenia's central bank governor Boštjan Vasle.
The world is changing and countries are pursuing increasingly selfish interests. "Small countries, above all, need to think very carefully about future relations and how to position themselves today to be safe from turbulence in the future."
But Slovenia does not have many experts capable of thinking so far in advance, Mladina says under the headline Time for the Wise.
Strong banks and financial institutions are the backbone of a country but the incumbent government does not seem to be aware of this.
It has not stopped the privatisation of Abanka although countries are fighting for "the last segment of Slovenia's financial backbone" in plain sight.
Demokracija: Politicians should not speak of media freedom
STA, 18 April 2019 – The right-leaning Demokracija says in its latest commentary that the concern for freedom of the press expressed by ruling politicians in the wake of the alleged pressures on the private broadcaster POP TV should be taken with a grain of salt, adding that journalists should actually be worried about politicians who are doing that.
The ruling politicians were quick to swear on democracy and presented themselves as defenders of media independence from politics and capital, but this care of politicians for freedom of the press should raise concern among journalists.
Friday's editorial headlined Riders of Freedom notes that, for instance, MEP Tanja Fajon of the coalition Social Democrats (SD) said on Twitter that "if there is no democracy, there could be no media freedom".
Fajon's idea that democracy ensures freedom of the press is wrong. It is the opposite: freedom of the press, individuals, expression and economy can ensure democracy, which manifests itself in various forms, the editor-in-chief of the right-leaning weekly, Jože Biščak, argues.
Slovenia has around 20,000 laws and by-laws and also has media legislation. "What is regulated by law cannot be free. The media are therefore not free, they are regulated. And the government will make media legislation only stricter."
Some have gone as far as proposing licences for journalists, which would be a very totalitarian thing, as an "expert committee" appointed by politicians would determine who is journalist and who is not.
They say this is a method to fight bad journalism, protect the public from fake media and fake journalists, and improve media professionalism. But this has no basis in reality, as despite the increasing regulation, there are a lot more media outlets today, and they are much more accessible to an average citizen.
"It is not up to the state or politicians to recognise the legitimacy of the media, it is up to every individual to choose freely what sources and media they will believe. This is how it goes in free societies."
Biščak concludes by saying that those who think that the majority of Slovenian citizens are not capable of differentiating between disinformation and information and that politics could "help" them in that, are inclined to dictatorship.
All our posts in this series can be found here
STA, 24 November 2018 - The state budget generated almost one billion euro in revenue from the privatisation of state assets in the last six years, with the recent sale of a 65% stake in the NLB bank actually representing the bulk of it. Among the most profitable years were also 2014 and 2016, when the state sold some major investments.
With the share of the country's largest bank sold at EUR 51.50 at the recent IPO, the state received the proceeds amounting to EUR 609m.
"The proceeds from the sale of the capital investment in NLB have been transferred to the budget and used for repayment of debt in accordance with the public finance act," the Finance Ministry has told the STA.
More than EUR 540m or 90% of the proceeds have been earmarked for debt repayment, and the remaining 10% have been transferred onto a special account of the ministry.
The money will be reserved for the planned independent demographic fund, which is a response to the demographic changes and which looks to ensure long-term stability of the pension system.
The special account for the demographic fund has been holding ten percent of the proceeds from all privatisation deals since April 2014, when the law on Slovenian Sovereign Holding (SSH), the custodian of state assets, entered into force.
A total of EUR 97m has been collected on the account so far.
Since 2013, when the National Assembly confirmed a list of 15 companies for privatisation, the national budget has received a total of EUR 983.7m in proceeds.
Before the SSH law entered into force, all proceeds were spent for repayment of debt, which stood at EUR 31.8bn at the end of last year.
Due to the economic growth Slovenia has been recording in the recent years, its share in the country's GDP has been decreasing, standing at 74.1% at the end of last year.
The first companies to be privatised were coatings maker Helios in October 2013 and medical laser maker Fotona in January 2014, followed by car electronics maker Letrika and Ljubljana airport operator Aerodrom Ljubljana.
Proceeds from the privatisations completed in 2014 amounted to EUR 119m.
In mid-2015, the state-owned owners of sports equipment maker Elan sold the company for a symbolic sum, with the new owners, Bank of America Merrill Lynch and Wiltan Enterprises, securing EUR 12m as a return of state aid received in 2008.
Aircraft maintenance company Adria Airways Tehnika was also sold in 2015 to the Polish Linetech Holding for around EUR 1m.
In the same year, the US investment fund Apollo and the European Bank for Reconstruction and Development bought NKBM, the second-largest bank in the country, for EUR 250m, while bread and pasta maker Žito was acquired by Croatia's Podravka.
The privatised companies from the list also include car parts maker Cimos, tissue maker Paloma, and airline Adria Airways.
All our stories on privatisation in Slovenia are here
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.
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.
STA, 17 August 2018 - Lynda Blanchard, the nominee for the new US Ambassador to Slovenia, described Slovenia in a hearing before the Senate Foreign Relations Committee in Washington on Friday as "a reliable partner of the US" and a "regional leader in implementing democratic reforms" in the Balkan region. She pledged to encourage the continuation of privatisation.