Slovenia completes bank privatisation
The state's 100% stake in Abanka, the country's no. 3 bank, was sold to NKBM, Slovenia's second largest bank, for EUR 444 million.
The transaction is supposed to be completed by the end of the year pending regulatory approval, according to Slovenian Sovereign Holding (SSH), which said the deal satisfied "all of the commitments given by the Republic of Slovenia to the European Commission with regard to state aid."
The price, within the EUR 400-500 million range forecast by most analysts, means Slovenia has not entirely recouped the EUR 781 million cost of recapitalising Abanka and Banka Celje, which was later merged with Abanka, in 2013.
But SSH said the state had also received EUR 178m in dividends from 2016 to 2018 and would still receive the proceeds from the sale of assets that had been transferred to the bad bank. "It has been estimated that these inflows will exceed the value of the [bailout] measures."
NKBM is owned by the US private equity fund Apollo (80%) and the European Bank of Reconstruction and Development (EBRD).
The two banks combined will have a market share roughly equivalent to the current market leader, NLB, and since it is not a long-term owner, Apollo is expected to consolidate and sell the bank in several years.
Just a day before completing the Abanka privatisation procedure, SSH sold the remaining 10% in NLB that it was obligated to offload in line with state aid commitments, leaving the state with a controlling stake of 25% plus one share.
The stake was sold to institutional investors for EUR 109.5 million, bringing the combined proceeds from the sale of 75% of the bank to EUR 779 million. Together with dividends of EUR 428 million, the treasury pocketed a total of EUR 1.2 billion, well short of the EUR 1.55 billion package for the bank.
The completion of both privatisation procedures means that restrictions on both banks imposed by the European Central Bank (ECB) because of the state aid will be lifted, giving them both more room to grow.
NLB chairman Blaž Brodnjak said yesterday that NLB "will be able to more actively seek opportunities to strengthen its position as a systemic player on our markets".
Nowhere will the competition be fiercer than on the domestic market. A merger between Abanka and NKBM would create a bank with combined total assets of EUR 8.71 billion or a 22.5% market share. NLB has total assets of EUR 8.81 billion.
This puts the US private equity fund Apollo, owner of 80% of NKBM, in prime position to shake up the Slovenian banking system, having already led the consolidation by integrating two smaller banks into NKBM since it bought the bank from the state in 2015.
The privatisation of all three banks that were bailed out in 2013 has been highly controversial politically, pitting advocates of national interest on the left against conservatives who have welcomed it as a rare means of reducing the state's overbearing role in the corporate sector.
NLB's privatisation had been delayed by more than a year due to concerns about its contingent liabilities for Yugoslav-era loans in Croatia, and the privatisation of Abanka encountered some last-minute hurdles when Prime Minister Marjan Šarec suggested earlier this month that SSH may want to reconsider due to lingering uncertainty over the bailout, which is still subject to multiple police inquiries and court procedures.
But Šarec said he consulted jurists only to conclude that privatising the bank was the only option considering the commitments Slovenia was bound by.
The privatisation has the potential to even provoke a government crisis, after the Left, which supplies the minority government with missing votes in parliament, said it would decide in mid-July whether to continue extending its support.
Šarec appeared unfazed by the prospect, saying that "If there are not enough votes in parliament, the government will fall, there is no other option ... If the desire to continue cooperating exists, we will, if not, something else will open up."