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Govt Open to Strategic Partners for NKBM Bank

Ljubljana, 13 January (STA) - The government said on Thursday that foreign partners were welcome to participate in a planned capital increase at NKBM, the country's second biggest bank, provided that the state preserves a majority stake and certain privileges.

Presenting this view, which was issued as an opinion for the State Asset Management Agency, Finance Minister Franc Krizanic said that several investors had expressed interest.

According to him, the reasons for the capital increase include the wish to boost crediting as well as the strengthening of the NKBM group structure and the bank's capacity to expand in the region, for instance to Italy and Austria.

Krizanic said that after NKBM drew up a proposal for a capital increase, the State Asset Management Agency needed strategic guidelines from the government regarding the procedure and less so the amount of the increase.

The NKBM announced in December it would seek a capital increase in 2011 with the issue of up to 13 million new shares that will be listed on the Warsaw Stock Exchange.

Krizanic pointed out that the government already endorsed plans for a capital increase at an AGM in July 2009, while it told the agency today that it was ready to refrain from participation in the recapitalisation if a strategic partner is found.

The partner would need to agree to a 51% stake staying with the government and sign a shareholders' agreement that would give the government pre-emtive rights to purchase shares in case the investor withdraws. Krizanic expects that the share price will rise as the economy recovers.

If this does not happen, the government is still open to institutional investors entering the ownership structure of the bank, it will however protect its interests by participating in the capital increase.

As with the NLB, the biggest bank, which is also majority state-owned, the government will secure the funds by selling off state assets and thereby avoid increasing debt.

Krizanic said that the Finance Ministry was engaged in intensive talks with interested strategic partners, while announcing that the capital increase is expected in the first half of 2011.

The minister repeated that the decision on NLB was final and that the EUR 250m capital increase was underway in two phases and at EUR 116 per share.

He added that the government was still interested in having the second biggest owner, Belgian banking group KBC, participate in the supply of fresh capital with an appropriate share. Talks with KBC are now being conducted by the State Asset Management Agency, which is regularly briefing the ministry.

As regards registration of the capital increase with the European Commission, Krizanic said that given the current situation in the financial system, Brussels' attitude towards state capital injections for banks was positive.

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