ANNOUNCEMENT 14 Jan 2011In January 2011, the government of Slovenia announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
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=3_SA_32261 >
Banking sector analysis by the OECD , stakeholders of the top 5 banks as affected countries
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 willpurchase 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.
Update: Second recapitalisation SA.34937& third recapitalisation SA.33229
On 2 July 2012, the EC approved a second recapitalisation of NLB. The plan notified by Slovenia foresees a capital injection of EUR 382.9 million. While EUR 62.9 million will be injected in the form of equity capital, EUR 320 million are provided in the form of contigent convertible instruments.
On 7 January 2013, Slovenia presented an amended version of the restructuring plan, including an additional recapitalization and a transfer of impaired assets. On 17 May 2013 Slovenia provided the EC with a preliminary list of assets to be transferredamounting to EUR 1.9billion. Furthermore, the measure foresees another capital injection of EUR 1.558 billion. (par. 24, letter from the EC to Slovenia, Brussels 18.12.2013)
The restructuring process will continue until 31 December 2017. (par. 50)
The list of affected countries is based on the subsidiary markets as well as the ownership structure of competing banks on the Slovenian market. (sources)
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.