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State to Take Part in NLB Capital Rising, Sum Still Open (adds)

Ljubljana, 21 October (STA) - The government's short-term goal for Slovenia's leading bank is to consolidate and stabilise the state stake in NLB, while the strategic goal is to keep the bank independent with several strategic partners, in line with a document adopted by the government on Thursday.

Finance Minister Franc Krizanic could not yet disclose the amount of equity funding at NLB as he presented the document to reporters after the government session.

The management proposes a EUR 250m capital rising in the strategy for the NLB group, while the biggest two owners, the state and the Belgian KBC bank, propose the amount should be rationalised and cut, Krizanic said.

But Prime Minister Borut Pahor said the capital injection "will not exceed 240 million euros" and that KBC (which owns about 30%) would participate. The government would secure the funds through the sale of non-strategic assets.

The government decided to consolidate the state stake at above 50%, and then, when the price of the now undervalued share rises, allow the stake to be reduced, while keeping a controlling share. This "is the most economical decision at the given moment", Pahor said.

"Regardless of what the capital injection will be, I expect the shares to be on sale at low, book value, so that those who sell achieve a 2.5-fold increase in the value in a few years."

Krizanic said that capital would be raised by the existing partners, except if a new one could be found in a very short period of time. The remaining share of NLB, up to 49%, would then be offered on the stock market.

The Finance Ministry's calculations show the state could gain EUR 500m-1bn if "we take part in the new share issue, wait for provisions to be reduced and sell the bank profitably at 2.5 times the current value, thus reducing the state stake and letting strategic owners in".

"I cannot say yet in what share the state will participate or in what the others. The sum is open too," he said, adding that the existing partners would exchange their views on the capital rising demanded by the regulator, and then start looking for partners that could enter the group for the long term.

The government today reviewed the strategy for the NLB group. It has some objections, which it will refer to the management via the supervisory board and the State Enterprise Asset Management Agency, Krizanic said, expressing the hope the management would take them into account.

"The strategic goal of the state is to preserve this financial institution as independent with several strategic partners, linked by a properly secured shareholders' agreement, probably through the articles of association; the rest will be available to short-term portfolio investors on the market."

Commenting on the NLB management's plans to offload the 41% stake in the bank Banka Celje, Krizanic said that the bank could not be kept in the way it is now with NLB as portfolio investor. "It either needs to be consolidated or sold," he said, wishing for at least one more round of talks with the regulator.

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