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AUKN: State-Owned Companies Improved Results in 2011

Ljubljana, 11 July (STA) - Wholly or partially state-owned companies improved their results in 2011, according to the Capital Assets Management Agency (AUKN), which is taking the credit for this. For the first time, companies have clear goals, they are really being supervised and transparency has improved, AUKN board member Marko Golob told the press on Wednesday.

He noted that AUKN made its decisions public, not only for the government but also for investors and the general public to see.

However, instead of the necessary support "in clearing irregularities in the management of state-owned companies", the agency got political obstructions, Golob stressed, criticising the government for staffing and noting that cronyism in supervisory boards could lead to more corruption.

Commenting on the government's plans to set up the Slovenia Sovereign Holding, merging AUKN and the KAD, SOD and DSU funds, he said the holding could be very successful if the institutional framework is appropriate. But he warned that more time would be needed for preparing the legislation that planned by the government.

According to AUKN's annual report, companies in which the state holds a stake improved return on capital although they generated a net loss. The profitability in the 76 companies managed by AUKN increased to 0.23% last year from the previous year's -2.86%.

The companies' assets grew by 2.5% to EUR 8.84bn in 2011. Net sales revenues were up 12.8% to EUR 10.49bn and the net loss stood at EUR 136m, down to around a third of the EUR 396m from 2010. The state received EUR 33.79m in dividends in 2011.

Golob stressed that this showed that results in state-owned companies could in fact be improved and that selling unprofitable assets was not the only option.

Otmar Zorn of the agency's council said that the good results meant AUKN, which was set up in 2010, was also successful in its efforts to make companies more efficient and clean supervisory boards of politicians, state officials, those in conflict of interest and non-professional appointees.

Levelling strong criticism at the state of the Slovenian financial sector, Golob put the blame on the 2004-2008 period (the time of the first government of current PM Janez Janša), when bank crediting was surging 27% a year while deposits were only growing slowly.

Slovenia lost its financial and macroeconomic stability through the banking sector in four years, he pointed out, adding that "all the economic growth of 2004-2008 was bought on credit".

In this wild crediting, the biggest Slovenian bank, the majority state-owned NLB, was among the more conservative, Golob added, noting that the regulators also failed to limit excesses.

He said the Slovenian banking sector had the second lowest core capital among Western European countries, which he argued was only possible because the two biggest systemic banks in Slovenia were state-owned and because credit agencies had more trust in the state.

Pointing to notions that the state should offload NLB and NKBM banks, Golob said the required Core Tier 1 capital would increase instantly to between 10% and 12% as customary for comparable banks elsewhere if the state put its hands off the majority stake.

Golob added that a new owner could reach this in two ways: with capital injections or lower crediting. For him the key problem in the inappropriate management of bad investments, which he stressed should be offloaded and managed by experts for this area.

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