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NLB Says it Needs Another EUR 250m Capital Rise (adds)

Ljubljana, 30 June (STA) - Three months after an almost entirely state-funded EUR 250m capital increase at NLB, the management of the biggest Slovenian bank announced at a shareholders' meeting on Thursday the need for another capital injection of equal size.

The chairman of the state-owned bank Bozo Jasovic told shareholders that two options existed for the capital increase: either existing owners come to an agreement and provide it, or the money is found on the market.

An improvement of capital adequacy and target capital adequacy ratios was demanded by central bank Banka Slovenije and the action plan for meeting the demands was backed before the shareholders' meeting by the banks supervisors.

The next steps are possible only through an agreement and consensus by the two largest owners - the state and the Belgian KBC group -, which will be asked by the supervisors to take a stance on the proposal.

In case there is no agreement, a capital increase through a public share offering under market conditions will be put to the vote at the next shareholders' meeting.

"There is still time for an agreement and I hope it will be reached," Jasovic told the press after the session. He added that public offering proceedings would have to be launched if July also failed to bring an agreement and that the capital increase could be completed before the end of the year.

Meanwhile, the assembly, at which 85% of the bank's capital was represented, brought a discharge for the management and supervisors for 2010.

The shareholders on the other hand failed to appoint Dirk Mampaey as the supervisory board representative of KBC to succeed Jan Vanhevel, who steeped down in February. The proposal only received 35.8% backing.

"This is not a bad sign or anything like that," Jasovic told the press, arguing that "talks between the state and KBC are still underway and this post is still waiting for a potential candidate the owners will agree on".

As regards NLB's operations following a EUR 183.4m loss in 2010 that had to be covered by profit reserves, Jasovic announced that the bank would finish this year in the black. "The positive result will be weak and subject to many uncertainties," he added.

Elaborating on the poor 2010 results, Jasovic pointed to the crisis but also to NLB's intensive expansion in the past years, which led to poor management and oversight, and a loss of trust in the public.

Touching on some of the measures adopted, the chairman said that efforts to cut costs by 15% in two years already began last year, including with a reduction by 450 in the number of people employed.

The bank moreover introduced two sets of procedures for establishing civil and criminal liability on the part of former leading executives and other employees, with Jasovic revealing among other things that criminal complainants are to be filed against five former leading NLB officials, who remained unnamed.

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