Ljubljana, 13 October (STA) - Slovenia's NLB bank has given up trying to get a EUR 400m capital increase, as the supervisory board on Wednesday amended the bank's 2010-2015 strategy to require a EUR 250m capital raising coupled with streamlining of operations, including the sale of Banka Celje.
The capital increase, which will be put to shareholders at the 25 November general meeting, should be completed by the end of March next year, the supervisors of the majority state-owned bank said.
The strategy was amended in view of new international capital adequacy rules, called Basel III, demands for improvement of the bank's capital and altered macroeconomic environment, the press release reads.
The slimming-down will involve withdrawal from non-strategic markets such as Austria, Bulgaria, Czech Republic, Germany and Slovakia as well as disposal of non-core businesses including property leasing and factoring.
NLB also plans to gradually pull out of Italy and Serbia, the latter defined in the previous version of the strategy as a secondary market in Southeast Europe.
In Banka Celje, which has a 5% market share in Slovenia, NLB has 49.42% of voting rights and a 40.99% ownership stake that is being valued by financial media at EUR 82m.
Supervisory board chairman Marko Simoneti is quoted as saying that the bank will reduce exposure to individual groups of clients to 5%-15% of assets and improve the loans-to-deposits ratio to 108%.
Given the implementation of all the measures, including the capital increase, NLB is aiming for a capital adequacy ratio of 11% and Tier 1 capital of 9% by 2013.
Today's decision marks a turning point for the bank, which has long argued that it needed EUR 400m to beef up its balance sheet.
However, the figure has been challenged both by the central bank, which has said the bank needed to slim down, and Belgian bank KBC, the second-largest shareholder with a 30% stake.
KBC and the government have been at loggerheads over how to proceed with the capital increase, as the KBC has been reluctant to put money into the bank and has for some time been suggesting it might pull out as an owner.
The government, on the other hand, does not have the money to provide capital to the extent that the bank wanted, as it grapples with reducing the budget deficit below levels prescribed by the EU.
At issue is whether the state will retain a majority stake in the long term or reduce it to controlling stake with the arrival of a new strategic partner, an option that Prime Minister Borut Pahor has hinted at on several occasions.