A few days ago, the Commission reached the conclusion that Slovenia’s aid for Nova Ljubljanska Banka (NLB) remains compatible with EU State aid rules on the basis of a new commitment package that was submitted to the EC by the country’s authorities on 13 July 2018.
“Slovenia has firmly committed to an ambitious time schedule for NLB’s sale with a first sale tranche of at least 50% plus one share by the end of 2018. Slovenia prolonged key commitments and also offered new commitments to compensate for the delayed sale and restructuring process of NLB.”
According to Commissioner Margrethe Vestager, in charge of competition policy: “The sale of NLB was an important remaining milestone of NLB’s restructuring plan, which allowed us to approve over €2 billion of State aid to the bank in 2013. Therefore, I welcome Slovenia’s commitment to a clear time path to achieve this sale. Thanks to this, the Commission can today approve Slovenia’s new commitment package for NLB, ensuring that the bank will be a viable long-term player in the Slovenian banking market.”
All along the way, NLB’s long-term viability has been a major issue of concern for the Commission in order for the latter to be able to allow further granting of significant State aid to NLB. The bank’s sale has been crucial so as to avoid “unduly influence NLB’s daily business operations”.
The proposed measured by Slovenia had to be in accordance with EU State aid rules.
“The Commission can exceptionally accept modifications to existing State aid commitments if the new commitments are equivalent to the original ones. In the case at hand, the new commitments should ensure NLB’s viability to the same extent as the original commitments and address any additional competition distortions resulting from the delayed sale.”
According to the EC’s statement, the current package of proposed commitments includes strict deadlines to complete the sale of 75% minus one share of NLB. A first significant sale tranche of at least 50% plus one share will be sold by the end of 2018 and the Slovenian government will reduce its stake in NLB to 25% plus one share by the end of 2019.
If Slovenia does not respect the deadlines foreseen, a divestiture trustee will be appointed to take over the sales process. This commitment is important, as the Commission in the January 2018 decision already suggested that a fully empowered divestiture trustee could further improve NLB’s viability.
NLB is the largest banking group in Slovenia and local authorities have been in charge of its restructuring plan in the past five years, committing to its sale. It has received three State recapitalisations, in three consecutive years: 2011, 2012, 2013. The sale was not achieved within 2017 as was the initial plan, since in May 2017, state authorities asked for a more gradual sale of the group…. /IBNA