Slovenia: Recapitalisation in favour of NLB
Description
On 14 January 2011, the Slovenian authorities notified the EC a EUR 250 million recapitalisation of Nova Ljubljanska Banka Group (NLB).
NLB Group is the parent company of Slovenia's largest bank. Apart from Slovenia, NLB Group is present across southeastern Europe, where it has retail operations in Serbia, Bosnia and Herzegovina, Montenegro, Kosovo and the former Yugoslav Republic of Macedonia. These operations are of strategic importance to the Bank, as many Slovenian companies do business in the countries of the former Yugoslavia.
In 2009 and 2010, NLB Group registered losses after several years of profits. The deteriorating economic climate in Slovenia and south-eastern Europe in general has affected NLB's operations. In the current climate that level of capital is not enough and has led to concerns about the viability of the bank. As a result, NLB has decided that it needs to raise more capital. Given its importance to the Slovenian economy, the Slovenian government is prepared to supply that capital if the market does not.
NLB is set to raise EUR 250 million of equity capital through a public offering of its shares. The capital raising will take place in two tranches. The State's participation is the following. In the first tranche, Slovenia will purchase an amount of new shares in proportion to its pre-existing shareholding. Accordingly, it will purchase 49% of the new shares (approximately EUR 125 million). As regards the second tranche, Slovenia will purchase any shares not taken up by the general public.
The commission found that the measure constitutes State aid within the meaning of Article 107 (1) TFEU and gave the following assessment:
“The Commission finds that the measure is also able to affect trade between Member States and to distort competition as NLB is competing on, amongst others, the Slovenian retail savings markets, the Slovenian mortgage lending markets and the Slovenian commercial lending markets. In the Slovenian market, some of NLB' competitors are subsidiaries of foreign banks.” (par. 40 of the letter from the EC to Slovenia - Brussels, 7.3.2011 C(2011) 1565 final)
The Commission however concluded that the measure is: (i) appropriate; (ii) necessary; (iii) proportional and (iv) NLB is under the obligation to submit a restructuring plan. The Commission can therefore approve the measure.
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
Any Evidence-Based Deliberation:
| Question | Result |
|---|---|
| Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations? | |
| Is there any evidence that alternatives to the proposed measure were considered? | |
| Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government? | |
| Was such evidence identified? | |
| Is such evidence publicly available? | |
| Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives? | |
| Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken? | |
| Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory? | |
| Did the government state its intention to review the measure within one year of implementation? |
Date Discovered:
Implemented: Yes
Date of inception: 7 Mar 2011
GTA Evaluation: Red
Source:
the letter from the EC to Slovenia - Brussels, 7.3.2011 C(2011) 1565 final. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >
Government Response:
- 309 reads
