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Sava Boss: Foreign Capital Needed for Gorenjska Banka, Abanka Merger (interview)

Kranj, 22 June (STA) - Janez Bohoric, the boss of conglomerate Sava, has told the STA that foreign capital would be needed if the long-held desire to merge the banks Abanka and Gorenjska banka, in which Sava has significant interests, is to be fulfiled.

"There are ways to merge the two banks, but foreign capital which would not mean majority foreign ownership will be needed. How things proceed will become clear in the coming weeks and months, but there are realistic chances to attract Arab capital," Bohoric said.

The merger between Abanka, in which Sava is the second largest shareholder with 23.8%, and Gorenjska banka, where Sava's stake is just below 50%, has been in the works for at least three years, but little headway has been made beyond Gorenjska banka acquiring 9.99% of Abanka.

Bohoric said Sava would concede to having less than 25% of the merged bank, provided all other shareholders do not exceed the threshold. "Arab capital, for example, is not looking for management rights, they are looking for guaranteed returns," he said.

As Bohoric put it, the two banks are a natural fit. "The project is so good and logical that it ought to happen. On one hand is Gorenjska banka, which has a strong capital base, and on the other is Abanka, which has a strong market standing."

He says it will come down to what the shareholders and the state decide. "There is no domestic bank which would buy Abanka, but when thinking about selling to a foreigner we tend to get this nagging doubt," Bohoric said.

Asked about the best way to merge the two, Bohoric said the most important thing is to carry out the merger so that "Sava gets the money we need to conduct our business normally. Financing sources that Sava has used dried up as a result of the crisis," he said, referring to dividends on investments.

Sava also has a 10% stake in hardware chain Merkur, which is struggling with high debt after a leveraged management buyout and intends to sell its core business, the chain of retail stores in Slovenia and countries of the former Yugoslavia, to retailer Mercator. Bohoric disagrees with the plan.

"It's questionable what will be left of Merkur if the retail division is sold...It's better to financially consolidate and restructure the whole of Merkur, but probably not with the same management. Merkur was and still can be an excellent store, but it has to be managed the right way," he told the STA.

Just days after Bohoric gave the interview for the STA, daily Delo reported today that Merkur's creditors and shareholders, foremost among them big Slovenian banks and Sava, were planning to replace Merkur CEO Bine Kordez with Bojan Knuplez, the boss of Merkur's home entertainment division Big Bang.

Knuplez confirmed for Delo that he had agreed to take over. "It is in the interest of all banks to get their loans repaid. Of course they could also become shareholders, but in principle banks are not good owners, they are in the business of borrowing and lending, not retail," he said.

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