Shareholders of NLB to Decide on Capital Injection
NLB's Core Tier 1 ratio has to be raised from just below 6% to 9% by the end of the month, as required by the European Banking Authority (EBA) and Slovenia's central bank, meaning that some EUR 510m have to be fed into the state-owned bank.
After it became clear that the negotiations with private investors, including the second-largest owner of NLB, the Belgian financial group KBC, would not bear fruits before the end of June, the government said it would conduct the much needed capital injection by issuing contingent convertible bonds (CoCo bonds).
The bonds may be issued by a bank that is in need of extra capital and has Core Tier 1 ratio of at least 7%, while the bond buyers will secure the necessary funds for the bank, but their contribution will automatically be converted into stock if Core Tier 1 falls below 7%.
Thus, the most of the capital would be raised by issuing 5.5 million new shares at EUR 68.71 apiece to be exchanged for CoCo bonds. However, the opposition raised concerns that this would allow KBC to gain control of NLB through the back door.
The Finance Ministry rejected these concerns, stressing that it was a temporary solution until a private investor for the bank is found.
Apart from the recapitalisation, the agenda of the general meeting includes the government proposal to change all remaining supervisors of the bank.
Following the resignation of Stojan Petrič in January, shareholders are expected to call off Marko Simoneti, Rasto Ovin, Andrej Baričič, Jurij Detiček, Igor Masten, Anton Macuh and Boris Škapin, while the names of the new candidates will be revealed just before the meeting.
PM Janez Janša moreover said yesterday that the issue would also be discussed by the government at today's session of the cabinet.