Setback for NLB IPO as Ljubljana refuses to address concerns over lawsuit

Setback for NLB IPO as Ljubljana refuses to address concerns over lawsuit
By bne IntelliNews May 30, 2017

The Slovenian government cannot provide additional measures requested by Slovenian Sovereign Holding (SSH) related to a lawsuit over Yugoslavian era deposits, which are seen as a potential risk in the sale of the country’s largest lender Nova Ljubljanska Banka (NLB), the Slovenian ministry of finance said, on May 29. 

Ljubljana is preparing to hold an IPO of NLB, in which the state plans to sell at least 50% of the bank by the end of this year, to be followed by the sale of a further 25% in 2018. It is not clear to what extent the failure to take the measures requested by SDH will affect the IPO process. 

Croatia’s Privredna Banka Zagreb (PBZ) has sued the now defunct Ljubljanska banka (LB) and its legal successor NLB over savings deposits from the Yugoslavian era, and the case is still being considered in Zagreb. 

Slovenia’s LB was shut down in 1991 when both Croatia and Slovenia separated from Yugoslavia yet the bank did not compensate its Croatian depositors, who later filed law suits against NLB. Deposits were returned to Croatian savers by the Croatian state, which then authorised Croatian commercial banks to recover them in court. The potential liabilities are estimated at around €400mn.

The ministry said on May 29 that the government took note of information from SSH that the risk arising from issues relating to foreign currency deposits of LB savers proved to be an obstacle to the successful completion of the further procedures for the sale of NLB.

“The government examined potential measures to reduce the risks involved in the sale of NLB. It found that it can not provide the measures expected by SDH,” reads the ministry’s May 29 statement.

One proposal from SSH was that Slovenia guarantee potential liabilities stemming from these lawsuits through the Succession Fund which was set up to deal with succession issues, unofficial information obtained by STA indicated. 

Finance Minister Mateja Vranicar Erman reportedly advocated this option, and even offered her resignation when the proposal was not accepted, but Prime Minister Miro Cerar did not accept it. Neither the finance ministry nor the prime minister's office would comment on this information.

The ministry’s statement was reportedly issued during a session of the SSH supervisory board that was supposed to determine the price range for the forthcoming IPO. 

The SSH supervisory board was expected to approve the price range for the NLB initial public offering but the decision has now been deferred, STA reported sourcing SSH. Unofficial information indicates the supervisors will be in session again on May 30.

If consensus is not achieved by the SSH supervisors, the ultimate decision could be made by the government, which by law acts as the sole shareholder of SSH, STA reported.

NLB was nationalised in 2013 and Slovenia had committed to sell 75% of the bank by the end of 2017 in a restructuring plan that served as a basis for the European Commission's approval of state aid to the bank in the 2013 bailout. Initially the government planned to reduce its current 100% stake to 25% plus one share via an IPO in 2017. However, the European Commission endorsed, on May 11, a request from the Slovenian government for a more gradual sale of the bank - 50% stake by the end of 2017 and a further 25% by end-2018.

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