Slovenia's largest banking group, NLB signed a deal to acquire the country's largest leasing company, Summit Leasing on 30 November in a step the bank hopes will pave its way to the Croatian market.

NLB acquired 100% stake in SLS Holdco, the parent company of Summit Leasing Slovenija and its subsidiaries from funds managed by affiliates of Apollo Global Management and the European Bank for Reconstruction and Development (EBRD).

The US fund and the EBRD retained Summit Leasing after selling the banking group NKBM to to the Hungarian OTP group in 2021 because the Hungarian bank already owned two other leasing firms through SKB bank.

Completion of the latest transaction is subject to regulatory and anti-trust approval and is planned for the second half of 2024.

NLB did not disclose the value of the deal beyond saying that it represented a "modest premium to the book value of Summit Leasing". Citing unofficial information, the newspaper Finance valued the deal at a good €100 million.

"Subject to the development of the business up until completion, the acquisition is expected to increase NLB's risk weighted assets by approximately €700 million, comfortably within €4 billion tactical capacity for mergers and acquisitions," NLB chairman Blaž Brodnjak told reporters.

Ticket to Croatian market

Despite the takeover NLB is in a position to acquire a larger bank or a group of smaller banks on the market in the region, said Brodnjak. "There are currently no such activities, but we are carefully monitoring developments in the region."

"The acquisition brings NLB the leading position on the Slovenian market and, with the acquisition of approvals, entry into the Croatian market, making us the first and only financial institution in the region to cover all markets of the former Yugoslavia," said Brodnjak.

NLB used to have a leasing arm, but had to sell it when it was bailed out by the state in 2013-14. After its privatisation was completed in June 2019, the bank again acquired approval to provide lease-to-buy services.

"We have reached a 9.2% market share through organic development in recent few years, and this acquisition, once the regulatory approvals are obtained, is making us the leading leasing company in Slovenia," he said, adding that NLB was also interested in the Albanian market.

The bank expects that cost and funding synergies will ensure that the transaction will increase its earnings from the first full year of acquisition, with full realisation of cost synergies targeted within a period of approximately 18 months from completion.

Having consolidated gross receivables of about €890 million, Summit Leasing is the leading provider of car financing in Slovenia and a leading provider of point-of-sale consumer finance in Slovenia with €95 million in gross receivables as of 30 September.

Summit Leasing has a network of over 750 dealers in Slovenia and Croatia, as well as over 550 points-of-sale in consumer finance in Slovenia. At the end of 2022, Summit Leasing managed about 140,000 outstanding financing contracts with over 110,000 customers.

"It is planned that in its mature phase, [leasing] will contribute more than €1 billion to the total assets of the NLB group, with the newest acquisition significantly accelerating this ambition," said Brodnjak.

The partnership was also hailed by Mitja Otorepec, CEO of Summit Leasing. "We believe the partnership will benefit our customers and vendor partners," he said.

"Since its inception in 2000, the company has undergone an amazing journey of profitable growth, including tripling its balance sheet since 2017. Today represents yet another important milestone in Summit Leasing's development," Otorepec added.

Acquisition in North Macedonia

NLB also announced that its asset manager NLB Skladi was entering the North Macedonian market, having signed a contract to acquire a majority stake in Generali Investments AD Skopje 13 days ago. The transaction is expected to be completed in the first half of next year.

"This also strengthens our position in the asset management market. We are becoming one of the leading asset management companies in North Macedonia, we are already the leading company in Slovenia, and with the transfer of NLB Komercijalna Banka to NLB Skladi we expect a very fast and accelerated growth of asset management services in Serbia as well," said Brodnjak.

Luka Podlogar, CEO of NLB Skladi, said that after the finalisation of the transaction, clients would be offered access to investment products in the network of NLB offices and the range of funds will be expanded.

NLB Skladi is the largest mutual fund management company in Slovenia and the largest asset manager in terms of total assets it manages.

General Investments AD Skopje is the third largest asset manager in North Macedonia with an 18% market share. The company manages approximately €37 million in assets in four different investment funds.