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NLB Chairman Says Bank Needs Capital Increase

Ljubljana, 15 May (STA) - The state will have to decide whether it wants to stay majority owner of NLB and, if so, provide capital increase, chairman of Slovenia's top bank Bozo Jasovic said in an interview with Delo's Saturday supplement Sobotna priloga.

If the state wants to retain its majority stake in NLB, it must be aware of its responsibility for providing fresh capital to the bank, Jasovic said.

Compared to other medium-size European banks, NLB lacks capital, especially the top quality capital, the chairman said.

He believes EUR 250m of fresh capital should be enough to replace a part of subordinated and hybrid instruments and take the bank's capital adequacy to a higher level. Thus the bank would become more stable and resistant to potential shocks, he said.

"As for the future, we expect to generate capital for organic growth ourselves. After all, we're a business institution that has to make profit."

Jasovic expects that the two major owners, the state and the Belgian financial group KBC, will reach an agreement on whether and how they will provide fresh capital to the bank.

He believes however that the final call on the capital increase will be made in parliament.

NLB could also offer its shares on the global market, Jasovic said, confident that the bank would attract investors.

The strategy which the management is working on will define NLB as a universal bank with two main activities - doing business with individuals and doing business with companies.

"We'll surely devote more attention to our activities concerning individuals in the future, but this in no way means that we'll be turning into a savings bank."

The Slovenian market will stay NLB's top market, but the bank will also operate in SE Europe and the Balkans, where its strategic markets are.

On the other hand, it will retreat from Western Europe, because its subsidiaries there are no longer needed as Slovenia is a member of the eurozone, Jasovic announced.

The management will moreover propose that the NLB is listed at the Ljubljana Stock Exchange, he said.

The group around NLB should register a moderate 3-5% growth in the next three to four years, its profitability should range between 10% and 12% and its capital adequacy should be much better than it is now, reaching some 12%, he added.

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