Brussels, 18 December 2013
State aid: Commission approves rescue or restructuring aid for five Slovenian banks
The European Commission has approved in five distinct decisions state aid measures in favor of five Slovenian banks. The Commission approved the restructuring plans of Nova Ljubljanska banka d.d. (NLB) and of Nova Kreditna Banka Maribor d. d. (NKBM), in particular because they will enable the banks to become viable in the long term without unduly distorting competition. The Commission also approved aid for the orderly winding down of Factor Banka d.d. and Probanka d.d., in particular because the distortions of competition created by the aid will be minimised by the complete market exit of the two banks. Finally, the Commission temporarily approved rescue aid in favor of Abanka Vipa d.d., for reasons of financial stability. The final decision will be taken in the context of the assessment of Abanka's restructuring plan, which Slovenia committed to submit within the next two months.
Commission Vice President in charge of competition policy Joaquín Almunia said: "Today's decisions on NLB, NKBM, Factor Banka, Probanka and Abanka will strengthen confidence in Slovenian banks. Following the results of the asset quality review and stress test, the restructuring and resolution measures foreseen will ensure that Slovenia's economy can count on a viable, healthy banking sector."
The Commission assessed the measures in favour of NLB, NKBM, Factor Banka, Probanka and Abanka under the state aid rules for the restructuring of banks during the crisis, and in particular the requirements of the 2013 " Banking Communication" that applies from 1 August 2013 (see IP/13/672 and MEMO/13/886). Given the need to absorb losses, all five banks will fully write-down shareholders' equity and outstanding subordinated debts before they can start receiving new state support. The Commission concluded that this will ensure an appropriate contribution by the bank and its owners to the restructuring effort, in line with the 2013 "Banking Communication". EU state aid rules do not require any contribution from depositors or other senior debt holders.
NLB is the largest Slovenian bank holding approximately 30% of domestic banking assets. It had received two State recapitalisations, one of € 250 million in 2011 (see IP/11/264) and one of € 383 million in 2012 (see IP/12/724). Its restructuring plan includes a third State recapitalisation of € 1 558 million and an asset transfer to the Slovenian Bank Asset Management Company (BAMC) of € 2 300 million (nominal amount). NLB will limit the scope of its activities to its core business and improve its corporate governance and risk management policy. The transfer a pool of non-performing loans and a list of equities to BAMC will clean up its balance sheet and build a profitable business model that will foster its return to viability. The Commission has therefore approved the measures and closed its in-depth investigation, opened in July 2012 (see IP/12/724).
NKBM is the second largest Slovenian bank with around 10% market share. It has received a first State recapitalisation of € 100 million in 2012 (see MEX/12/1220). Its restructuring plan includes a second State recapitalisation of € 870 million and an asset transfer to the BAMC of € 1 149 million (nominal amount). NKBM will refocus its operation to its core activities, in particular via a transfer of impaired assets to the BAMC. NKBM will also improve its governance structure and risk model to ensure a return to profitability. The Commission concluded that these measures are necessary to restore the viability of NKBM and are therefore in line with EU state aid rules.
Factor Banka and Probanka
In September 2013, Slovenia granted State guarantees on newly issued liabilities of Factor Banka and Probanka (see IP/13/822). In November 2013, Slovenia notified winding down plans for both banks, including asset divestment and the phasing out of portfolios and activities over three years, i.e. until 31 December 2016. To implement the winding down, the plans grant new aid in form of a State recapitalisation and liquidity support of € 236 million and € 325 million respectively for Probanka and of € 285 million and € 400 million respectively for Factor Banka. Slovenia committed that Factor Banka and Probanka will not provide financial services to new customers and will progressively phase out their business with existing customers. Both banks will exit the market on 31 December 2016. The Commission concluded that the new aid was necessary to ensure an orderly winding down of the two banks and that the distortions of competition brought about by the aid would be limited by the complete market exit of the two banks.
Abanka is the third largest bank in Slovenia, with a market share of around 8%. In November 2013, Slovenia notified its intention to recapitalise Abanka with a maximum amount of € 348 million. The bank was facing a gradual deterioration of its loan portfolio against the background of an unfavourable economic environment and the recent withdrawal of private investors that had shown an interest in the bank. Under these exceptional circumstances, the Commission temporarily approved the recapitalisation, because it was necessary to preserve financial stability in Slovenia. Slovenia committed to notify a restructuring plan within two months of today's decision.
The non-confidential version of the decisions will be made available in the State Aid Register on the DG Competition website, once confidentiality issues have been resolved, under the case numbers SA.33229 (NLB), SA.35709 (NKBM), SA.37643 (Factor Banka), SA.37642 (Probanka) and SA. SA.37690 (Abanka). New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.