NLB withdraws from Serbia in 2012 - Plan for recapitalization of Nova Ljubljanska Banka failed

Since the plan for EUR 400 million worth of recapitalization has failed, the management of Nova Ljubljanska Banka has made the decision on a radical cut in the operations. Marko Simonetti, the Head of the management, announced in Ljubljana that NLB would sell Banka Celje in Slovenia and reduce the credit portfolio by EUR 1 billion. That should be followed by NLB's withdrawal from the majority of foreign markets, including Serbia.

The shareholders are expected to confirm at the forthcoming assembly the timing by which NLB will sell Adria Bank in Vienna and Bulgarian NLB Sofia (bank and leasing company) in 2011. The sale of banks in Serbia will start in 2012 when NLB also plans to close its German branch office LHB Frankfurt, Swiss NLB Interfinanz, and NLB Faktoring in Czech Republic and Slovakia.

In the meantime, the amount of loans granted by NLB to its clients abroad will be as high as the amount of investments in the local branch offices of NLB. We also learn that the management of NLB plans to sell its packages of shares of Mercator, Petrol and Lasko brewer.

Such measures are the consequence of the fact that the Slovenian opposition parties refused to approve the plan of Borut Pahor's government to recapitalize NLB with nearly EUR 0.5 billion. The news that Slovenian tax payers may pay a price for NLB's bad investments has caused a dissatisfaction among the local public, especially because the "holes" in the Bank's positive balance have been created because of the approval of so-called tycoon loans to the bosses of certain Slovenian companies over the past few years.

In that way, based on the banking loans, the managers of Istrabenz, Lasko brewer, Merkur and other companies have been purchasing shares and becoming the majority owners of "their" companies. Their operation has failed due to the global economic crisis and a crash in the prices of shares has pushed the companies like Istrabenz and Merkur to the edge of bankruptcy.