Belgian KBC Withdraws from NLB Capital Increase
Belgian financial group, KBC, the second largest owner of NLB confirmed that it would not participate in the recapitalisation of Slovenia’s largest bank. Finance Minister, Janez Šušteršič, however said that NLB would meet the requirements of the EBA and Slovenia’s Central Bank to raise the Core Tier 1 ratio to 9%.
KBC decided, after careful deliberation and consultation with all the relevant parties, that it would not participate in the recapitalisation of NLB, its share of which would have been to invest EUR 61m in the bank,according to the Belgian group. “KBC has remained in close and intense discussions with the Slovenian government and the National Bank of Slovenia regarding NLB’s capital position over recent months...and it has voted in favour of the short term capital solution proposed by NLB and the Republic of Slovenia,” a press release from the group reads.
According to KBC, all its decisions must be in line with the strategic plan KBC drafted in cooperation with the European Commission to get the green light for state aid. The plan includes divesting non-strategic investments such as NLB, according to KBC. “We believe that an agreement can be reached in the coming months and we are disappointed that KBC decided against participating in the first phase of the recapitalisation,” the Finance Ministry said in a press release. But this will not jeopardise the recapitalisation, the EUR 61m will be secured from the reserves of the state-run funds KAD and SOD, “which have been built over the past few years”, according to the Ministry.
In agreement with the European Banking Authority (EBA) and the Central Bank, all procedures regarding the EUR 381m recapitalisation, aimed at raising the bank’s Core Tier 1 ratio from just below 6% to 9%, will be carried out in July, the Ministry explained.
The EUR 320m hybrid loan aimed at bridging the time needed to find a private investor for NLB, will be raised through the issue of temporary convertible bonds which will be automatically converted to 8.7 million shares at an estimated EUR 36.7 per share in case NLB’s Core Tier 1 capital falls below 7%.
The Finance Ministry added that it would try to clarify with KBC in the coming weeks, whether there is still mutual interest to find a private investor and a lasting solution for NLB. KBC, which bought a 34% stake in NLB in 2002, was to increase its stake in NLB from 25% to 33.9% by participating in the recapitalisation, with Slovenia retaining a more than 50% stake in the bank.
Following a EUR 233m loss in 2011, NLB reported a EUR 36.5m in loss in the first quarter of 2012, mostly due to writedowns and provisions. Šušteršič also disclosed that the group around NLB had around EUR 3bn worth of bad loans but added that most of these would probably be reclaimed, although at some kind of discount.