The Slovenia Times

NKBM Boss Advocates Private Ownership for Bank


Hauc reiterated that the bank was bent on selling its 51% share in ZM, announcing that the procedure was being conducted as planned. In addition to the proceeds from that sale, the bank also plans to conduct a CoCo bond issue in a bid to solidify its capital adequacy in the face of losses stemming from bad loans issued in the past.

"If we successfully carry out the sale of ZM and the repurchase of the subordinated debt [through the issue of the CoCo bonds], there will be no need for a fresh capital injection," said Hauc in presenting the bank's efforts to shore up its capital base without state assistance.

"We will be doing everything in our power to ensure that capital adequacy is provided without burdening our biggest owner, the state," said Hauc about the bank's plans.

Hauc indicated that this strategy was part of his vision of promoting private ownership for the bank. "I would personally want to see NKBM solidify its ownership with private investors; after all, the state has already decided it wants to keep just 25% plus a share in the bank.

"This would be beneficial for the bank, as dispersed ownership would contribute to better development, profitability and success. I'm not saying the state is a bad owner, but private investors pursue certain goals that would spur the bank to be even more successful.

"Perhaps in the future the bank would not even hold on to the 25% stake, but would rather hand over the bank to private investors for a suitable price."

Asked whether his vision of private ownership for the bank included Russian capital, Hauc said that all investors were welcome. "We have carried out a number of visits to existing and potential shareholders at home, in Poland and in Russia. We have very good contacts with investors and all newcomers are welcome.

"During the recent visit to Moscow we established many contacts with financial institutions, which have expressed a certain interest in working with us. It is also true that the bank will become more appealing when it will be cleaned of bad claims and provided with capital adequacy."

In this respect it is essential that that bad bank law is implemented as soon as possible, he said, adding that the threat of a referendum against the bad bank law "only hurts the state and the banks."

"If Germany, Ireland and others opted for a bad bank, this model surely cannot be bad," said Hauc, who said that a defeat of the bad bank law in a referendum would result in further downgrades in Slovenia's credit ratings, which would subsequently lead to even higher interest rates.

Defending the decision to exclude first-buy rights to existing shareholders in the event of a fresh share issue, Hauc said that the goal is not to exclude existing shareholders but to speed up the process given the low interest in participating in a fresh share issue among existing shareholders.

"This is the reason we decided on the capital injection by private placement...What the small shareholders are proposing would require a public offering, which would stretch out the procedure and would also put the effectiveness of the capital injection in doubt. Our proposal does not envisage a mass capital injection, but a capital injection of EUR 50m, which is much smaller than the previous capital injection."

Meanwhile, Hauc admitted that the bank would not be selling ZM, one of its most profitable assets, were it not for the ongoing write-downs stemming from bad loans. But he added that this was the best solution for the shareholders given the bank's current position.

"What is truly important is that the bank focuses on its core activity and optimises the group in a way that will allow it to achieve maximum synergies with its subsidiaries," said Hauc, adding that this would "require a thorough overhaul of the group's development philosophy".

"We will not have as many companies with as many activities as we have now. The bank will be leaner, as will the group as a whole. But what remains will, in our opinion, bring better returns and greater efficiency."

Downplaying the power of local interests in preventing the sale of ZM, Hauc said that the sale was entering its final stage and that, barring unexpected setbacks, the conclusion of a deal could be expected in the coming weeks without providing additional details.

Asked about what assets the group may decide to sell in the future, Hauc said the NKBM was examining the possibilities in the area of leasing, foremost possibilities for an alternative group structure.

"We own three leasing companies - KBM Leasing, Gorica Leasing, KBM Leasing Hrvška - and we are examining the best business models for continuing to pursue this activity. However, we're not considering selling any of these parts of the group."

This includes retaining its interests in Credy Banka from Serbia and Adria bank from Vienna. "These assets were acquired with the purpose of expanding our market share in the region."

Hauc also touched on the audit of deals conducted by previous management boards, saying that a report should be ready in January. Based on the report, the current management will take decisions, including by launching lawsuits against responsible parties should illegal activities or damage to the bank be established.

Asked about possible lay-offs at the bank, Hauc would not go into details, but to say that "everyone will have to tighten their belts". "The bank is intensively working on a fitness programme of reducing costs across all areas. There will by all means be a cut in the number of employees, but I cannot speak about the exact numbers."


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