Business News

Impairments Cause Heavy Losses at NKBM

Maribor, 01 March (STA) - Slovenia's second-largest bank, NKBM, made a group net loss of EUR 53.66m in 2011, with the parent bank's net loss at EUR 59.63m due to higher then expected provisions and impairment losses.

The uncertain situation on financial and capital markets worldwide affected NKBM's operations, the outgoing chairman Andrej Plos commented at a press conference in Maribor on Thursday.

"The heaviest write-downs were in the segment of construction and real estate, and somewhat lower but also substantial in the field of financial holdings," Plos said.

The bank also cited lower than projected net interest income and weak other net income as the main reasons for the loss. Plos said that costs were managed the same way as the year before, but announced considerable cuts in expenditure for this year.

However, despite the losses, he does not think a new recapitalisation would be needed at this point, as the bank's capital adequacy is satisfactory, but he also announced divestment.

Still, he assured reporters that the bank was not planning to reduce liquidity available to the economy. The bank hired a loan with the European Central Bank on Wednesday, using half of its potential of EUR 700m.

The group's profit before provisions and impairment losses totalled EUR 76.31m, or 75% of the figure planned for last year. Net loss was EUR 53.66m, which was EUR 15.39m lower than the loss from continuing operations, due to the positive effect of deferred taxes.

The group's total assets at the end of 2011 amounted to EUR 5.84bn, down 0.5% from the end of the year before.

The parent bank's profit before provisions and impairment losses was EUR 57.63m, which is 83.1% of the target figure for 2011. The loss from regular operations was EUR 73.59m.

The bank had EUR 4.83bn in total assets at the end of 2011, up 0.5% from the beginning of the year due to recapitalisation and an increase in debts to clients that are not banks.

The state-run Capital Assets Management Agency (AUKN) has requested a shareholders' meeting to replace the whole of the supervisory board, who are currently looking for a new chairman after Plos stepped down last month.

Asked about the general meeting, Plos he said further explanations from the agency were expected, but added that it was important new management members were appointed as soon as possible.

The supervisory board had already sent out ten invitations to prospective candidates for a new chairman after Plos stepped down, but not all of them replied, chief supervisor Dušan Jovanovič said.

He would not talk about the names or how many responded, but said that supervisors would meet the candidates interested in person to learn about their vision and development strategy they are proposing for the bank.

Unofficially, the candidates invited include the boss of postal company Pošta Slovenije Aleš Hauc and the former chairman of the state-run Pension Fund Management (KAD) Tomaž Toplak.

Plos would also not wish to comment on the government's decision on Thursday to demand of AUKN a report on NKBM's capital adequacy and on the details of last year's recapitalisation.

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