Slovenia’s government approved Slovenian Sovereign Holding’s (SSH) 2017 privatisation plan on January 19. The plan includes the sales of two 100% state owned banks, Slovenia’s largest lender Nova Ljubljanska Banka (NLB) and Abanka.
Slovenia is the most developed economy in Southeast Europe but its population still resists privatisations of state-controlled assets, a hangover from the communist era. Thus, every privatisation plan in the country represents a challenge for the government, even for stable governments like the current cabinet under Prime Minister Miro Cerar.
The largest and most challenging privatisation planned for this year is the sale of NLB, one of the best known and respected brands in the country and abroad. Messages from the Slovenian authorities about the privatisation have been contradictory.
SSH initially announced that NLB’s privatisation would be launched in 2016, but September it indicated that no decision would be made until early 2017. Meanwhile, Cerar said in November that his government had not given up on the sale of NLB and would keep the promise given to European Commission to privatise the bank. However, he added that conditions at the time were "unfavorable" and that he expected to secure an extension of the end-2017 deadline for the privatisation from Brussels. Most recently, on January 16, Slovenia's ministry of finance said it was looking at "various possibilities" for the privatisation of NLB but denied it had asked the EU for a five-year extension of the sale deadline.
There could also be resistance to the privatisation of Abanka, but on a smaller scale since it is only the country’s third largest lender. Abanka Vipa and Banka Celje merged in 2015, in a major milestone in the restructuring of the Slovenia's banking system, with the new entity named Abanka.
Also on SSH’s Annual Asset Management Plan 2017, which lists the assets for sale, is tool manufacturer Unior, which is 39.42% owned by SSH. Unior is among the country’s largest exporters, placing its goods on 90 markets around the globe. As the second biggest company in the domestic metals industry, it is also among largest employers in Slovenia with more than 2,000 workers.
Some of the companies on SSH's list are already partway through the sale process. They include automotive components manufacturer Cimos and hygienic tissue producer Paloma. The government owns 24.26% of Cimos, with Slovenia’s bad bad BAMC also holding a substantial stake, while SSH owns 37.3% of Paloma.
The €110mn sale of a 92% stake in the Slovenian automotive components manufacturer to Italian Palladio Holding Group has been in limbo since the buyer asked for a state guarantee to pay potential compensation related to Cimos's outstanding debt to Croatia's Rijecka banka. Aside from regulatory approval, the deal struck in October was conditional on an agreement with the Croatian state agency for deposit insurance and bank resolution.
In July 2016, SSH said it supported an €18.2mn capital increase in Paloma to be carried out by Slovakian financial and industrial group Eco-Invest at a price per share of €4.01. According to SSH, it endorsed the deal since the existing owners could not provide the funding needed for the development of the company.
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