Slovenia’s largest lender Nova Ljubljanska Banka (NLB) appointed five new supervisory board members on February 10 at a general shareholders meeting held by Slovenian Sovereign Holding (SSH), representing the state as the bank’s sole shareholder.
Replacing the board is an important step before the start of the privatisation process. SSH announced on December 3 that NLB’s privatisation will be launched in 2016, but it expects NLB will be challenging to offload. NLB, which was nationalised in 2013, is the largest of around 20 companies SSH plans to sell off in 2016.
The bank said in a statement that two board members, Gorazd Podbevsek and Miha Kosak would be removed. Meanwhile, five new appointments were made to fill vacancies and expand the board to nine members. The four-year term of office of the new members started on February 10.
Three of the new members - Anton Ribnikar, Anton Macuh and Janko Gedrih - previously held senior positions at NLB, according to Slovenian Press Agency (STA).
Primoz Karpe is the boss of the Zagreb-based private equity fund Blue Sea Capital and has previously worked at several Slovenian banks while Laszlo Urban from Hungary has held senior positions at several Hungarian banks and was until 2011 a member of the supervisory board of the European Bank for Reconstruction and Development, STA said.
SSH chairman Marko Jazbec told journalists after the shareholder meeting that NLB was embarking on a demanding privatisation procedure, hence the decision to let the four of its existing members stay on.
He said the new supervisory board was "balanced": two members have previous experience as bank supervisors, two have careers in banking law, two are "renowned foreigners with strong international credentials" and two are successful Slovenians.
Under the planned privatisation procedure for NLB, the state is expected to keep 25% plus one share in the bank in order to remain controlling stake.
However, Jazbec said a financial advisor would be picked soon and would help decide the best privatisation model. In the event a new model is selected, it will be put to parliament, presumably by the end of May.
Shortly, few days prior to appointment of the new board members, the bank’s CEO Janko Medja resigned. Local media suggest Medja would probably have been sacked by the new supervisors anyway, which Jazbec confirmed after the meeting on February 10.
Jazbec said Medja had "taken the pressure off today's proceedings" by stepping down himself, noting that the SSH board had "serious doubts about Medja's integrity and honesty", STA reported.
According to STA, the key reasons why Medja would have been dismissed include the slow pace of reduction of non-performing loans, the bank's failure to sufficiently hedge its exposure to Swiss francs, and Medja's personal role in the hiring of consultants.
"There are indications [Medja] to a certain extent overstepped the boundaries," Jazbec said.
Jazbec expects that the supervisory board will now issue an international call for applications for the CEO position. He did not specify whether he expected other management board members to be replaced as well.
The appointments have been met with sharp criticism centering on the fact that several old NLB hands have made a return, which is seen as a continuation of the nepotistic ties that led to the late-2013 bailout.
The opposition New Slovenia (NSi) party commented on the changes, demanding that SSH publicly present documents proving the case for the overhaul, which its deputy leader Jozef Horvat said was "legitimate but not transparent".
Meanwhile, the Chamber of Commerce and Industry (GZS) urged SSH to disclose the standards against which it benchmarks the performance of managers and supervisors of state-owned companies, arguing that bad governance practices "must be discontinued".
“NLB is a systemic bank and the way key stakeholders have communicated, and the resignations and dismissals in the recent days can hamper efficient decisions on lending in such a bank and raise doubts among deposit holders," STA quoted the chamber as saying.
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