Brussels expected to make decision on NLB
Outgoing Finance Minister Mateja Vraničar Erman does not expect any surprises considering the Slovenia has tweaked its commitments in negotiations with Brussels. The government submitted the changed plan to Brussels on 13 July. The minister was upbeat that the Commission would take its decision swiftly.
In the meantime, privatisation procedures have been launched. Acting on the government's behalf, Slovenian Sovereign Holding (SSH) has drawn up a timeline, which is expected to be endorsed shortly. Slovenia's largest bank also says that it is well prepared for privatisation.
The bank will be sold via an initial public offering (IPO), which is expected to be conducted in a similar way as it had been planned in the initial attempt last year, before the government halted the process.
According to unofficial information cited by the business newspaper Finance, NLB is to hold a non-deal roadshow and release half-yearly results by 17 September. After record-breaking results in 2017, the bank is said to be in an even better shape this year.
Until 8 October, roadshows are to follow in all major European, US and possibly Asian financial capitals. Last year they were held in the City of London, New York and Boston, while this time the roadshows are also expected to be held in Frankfurt, Vienna, Warsaw, Prague and possibly in the Middle East and elsewhere in Asia.
An intention to float 75% minus one NLB share is expected to be announced on the stock exchanges in Ljubljana and London on 15 October. Initially, small shareholders in Slovenia are to be offered 10% of the NLB shares on offer, after which 90% of shares would be offered to institutional investors.
According to Finance, the share price range is to be determined on 23 October, to be followed, between 29 October and 8 November, by collection of orders. The sales price and distribution of shares among the buyers is to be determined on 8 and 9 November.
The procedure is to be finalised on 14 November when NLB shares will be listed on the Ljubljana and London stock exchanges.
When the sale was halted last year, the book value of NLB as of late March was EUR 65.50. The government deemed the price range of between 55 and 71 euro too low. By March this year the share's book value had risen to EUR 72.20. Pundits expect the offered price to be at around the latest book value.
NLB will update the book value as to the end June once it releases the semi-annual results. Last year the bank tripled its net profit to EUR 189m, while the group net profit doubled to EUR 225m. Group net profit in the first quarter of 2018 was down 29% year-on-year to EUR 57.7m due to lower release of provisions.
In a move that paved the way for the bank's privatisation, the National Assembly passed in July a bill that shields NLB from claims in Croatia stemming from Yugoslav-era deposits of Croatian citizens with the defunct Ljubljanska Banka (LB).
The law will make it possible for the Slovenian Succession Fund to refund the bank in case of potential enforcement of claims in Croatia. It will also allow NLB to ask the European Central Bank's clearance to pay out dividends. The amount of the profit to be paid out is to be endorsed by SSH in September.
The Finance Ministry has assessed that the law shielding NLB from Croatian claims saved at least EUR 700m. Had it not been passed, the NLB sale would fetch at least EUR 430m less, while the state would also not be eligible for last year's dividend of EUR 189m and EUR 80m in retained profit.
Through the distribution of profit for 2015 and 2016, NLB paid just over EUR 100m back into the state budget. Including the dividend for 2017 and the purchase money in the amount of at least 0.85% of the book value per share, the total would come close to the bailout value of EUR 1.55bn in late 2013.
Since the bank will be sold via an IPO in which no institutional investor can buy more than 25% plus one share, which is the interest to be kept by the state, it is in the state's interest to sell as much shares as possible in the first go and thus avoid doubling of costs and the risk of a lower price in a potential second stage, planned by the end of 2019.
What is more, until Slovenia has sold 75% of the bank minus one share as committed when the European Commission approved the 2013 state aid, the bank will continue to be subject to restrictive measures such as independent corporate management, business limitations and a ban on takeovers and project financing, in particular in the Balkans.
NLB has had to withdraw from some non-core activities. If the sale failed again, the bank would also have to reduce the scope of its operations at home. Unofficial information has it that the bank would have to close down some 15 branch offices and offload its insurance company NLB Vita.