Ljubljana, 27 June (STA) - Moody's has upgraded the credit rating for the NKBM bank from Baa3 to Baa2 while it preserved the rating for Abanka, just sold by the state to NKBM pending regulatory approval, at Baa2.
The rating review was conducted a week after Slovenian Sovereign Holding (SSH) sold the state's 100% stake in Abanka, Slovenia's third largest bank, to NKBM for EUR 444 million to comply with commitments given by Slovenia to the European Commission during the 2013 banking system bailout.
Moody's wrote the acquisition of Abanka, which had the lowest share of non-performing loans among all Slovenian banks at the end of last year, will consolidate NKBM's position on the market, raising its total assets to EUR 8 billion and its market share to 22%.
The credit rating agency expects the share of bad loans at the bank to be halved by the end of the year to 5%. The non-performing loans will continue to be covered adequately and liquidity will remain high.
The outlook for the bank is positive, with Moody's arguing that the synergy effects will only show in a while. The next credit rating will also depend on the credit rating for Slovenia.
The NKBM-Abanka merger, which is expected to be wrapped up in the first quarter of 2020, will create the second largest bank group in Slovenia.
It comes shortly after the privatisation NLB as Slovenia's largest bank and after NKBM, the no. 2 bank, was sold by the state to US private equity fund Apollo (80%) and the EBRD in 2015.