Slovenian lame duck government re-initiates NLB’s privatisation

Slovenian lame duck government re-initiates NLB’s privatisation
By bne IntelliNews July 15, 2018

Slovenia’s lame duck government adopted decisions necessary to reopen the sale procedure for the country’s largest banking group Nova Ljubljanska banka (NLB) on July 13. The cabinet also decided to submit a new proposal to the European Commission for the modification of its commitments with respect to NLB.

According to the new decision, the government will maintain a controlling stake of 25% plus one share, while at least a 50% stake in the bank will be sold in a repeated initial public offering (IPO) by end-2018 and the remainder by the end of 2019, reads the Ministry of Finance’s July 13 statement.

Slovenia had committed to sell 75% of the bank 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 by 2017, but scrapped a planned IPO in June 2016 amid a dispute over the pricing of the offer and an ongoing lawsuit over Yugoslav-era deposits in Croatia.

Minister of Finance Mateja Vranicar Erman told journalists on July 13 it was very likely that the European Commission would approve the plan which has been the subject of negotiations for months, Slovenian Press Agency (STA) reported.

On July 13, Slovenia’s outgoing government also defined the text of the bill to protect the value of the country's capital investment in NLB, and has sent it to the National Assembly through an urgent procedure, reads the ministry’s statement.

The bill is designed to shield the bank from claims in Croatia stemming from Yugoslav-era deposits of Croatian citizens with the defunct Ljubljanska Banka (LB), according to STA. It determines that the financial consequences stemming from such claims would be borne by the Slovenian Succession Fund, but the fund will cover only claims that are enforced, not claims that the bank may settle voluntarily. The settlement of the claims through the Succession Fund is in line with Slovenia's long-standing policy that the LB claims are a succession issue and should be settled in the framework of succession talks.

The bill, which will be fast-tracked in parliament, will enter into effect only if the European Commission clears the privatisation plan, STA said.

“The government's overarching aim was to preserve the bank as a strong international institution of regional importance that can support the Slovenian economy not just in Slovenia but also in the Western Balkans,” said Vranicar Erman, STA reported.

As part of a budget-funded bailout, NLB received €1.55bn in state aid in late-2013, after several previous rounds of recapitalisation. The EU cleared the state aid in exchange for the commitment that the bank will be privatised.