26. фебруара 2020.

Contract with Nova Ljubljanska banka on purchase and sale of shares of the Republic of Serbia in Komercijalna Banka signed

Minister of Finance of the Government of the Republic of Serbia Siniša Mali, President of the Executive Board of Nova Ljubljanska banka dd (NLB) Blaž Brodnjak and member of the Executive Board of that bank Archibald Kremser signed today, at the Ministry of Finance, an Agreement on the sale of shares, in relation to 83.23% of ordinary shares of Komercijalna Banka a.d Belgrade. By signing this Agreement, the bank will get a new strategic partner, who will take over the management of the bank after the transaction is completed.

By the end of the transaction, the Republic of Serbia will have a total revenue of more than EUR 450 million. Serbia’s shares in Komercijalna Banka were sold for EUR 387.02 million, and, additionally, the state will receive revenue from interest rate of 2% per annum, which NLB will be obliged to pay to the Republic of Serbia, for the period from January 1, 2020 to the date of the completion of the transaction. The agreement also stipulates that 50% of the reported revenue for 2019 will be paid as a dividend, on the basis of which the Republic of Serbia will receive an amount of approximately EUR 31 million. In addition, the payment of dividends from previous years is foreseen, on the basis of which the Republic of Serbia will have revenue of approximately EUR 26 million.

Finance Minister Siniša Mali stated that he was very pleased with the successful completion of the process and with the price offered.

– We are pleased with the price offered, which is among the most favorable in comparison to comparable, recent and relevant transactions in the region. This financial offer also exceeds our expectations based on the bank’s valuation made by our financial advisor Lazard. The state will invest the total revenues realized from this transaction in a smart way, primarily in the investment plan “Serbia 2025”, as well as in repayment of expensive loans from the past. This will further contribute to improving the quality of life of our citizens and to the greater economic growth. Therefore, Serbia has become an attractive investment destination and we expect even higher growth rates, as well as further increases in salaries and pensions. On the other hand, Komercijalna Banka has been doing great, but it can do much better, and I believe it will be possible thanks to a new strategic partner. When it comes to financial services, we believe that, where there is an open market, a private individual can be a much better owner than the state. It is a serious bank, which has a clear strategy and vision, and it is the only regional financial institution listed on the London Stock Exchange. Hence, we are very pleased with the process, which was fully transparent and was brought to a closure with great success. We hope that the transaction will be successfully closed in the next few months – said Minister Mali.

The Chairman of the Executive Board of NLB d.d. Blaž Brodnjak emphasized that the bank would remain committed to strengthening and further development of Komercijalna Banka.

“This transaction represents another very important milestone in NLB’s development, following the successful conclusion of NLB’s own privatisation process in 2019. Strengthening our presence in Serbia, as our largest and very attractive foreign market, has been our key strategic priority. As a result of the transaction, the market share of NLB’s total assets in Serbia will increase to over 12%, making NLB the third largest banking group in the country and meeting its strategic goal to become one of leading banks across all markets of Group’s presence. NLB’s operations in Serbia will be by far the largest within the Group outside of Slovenia, which will significantly affect our position as a regional, systemic financial institution. We have been impressed both with the quality as well as with the potential of Komercijalna Banka’s franchise and commend the Republic of Serbia’s commitment to the very transparent and professional privatisation process. NLB will be strongly committed to further development of the bank, using the experience gained from its long-standing presence in the region, the approach focused on the needs and experience of the clients, leveraging its significant potential in the market in Serbia. For this and many other reasons, we look forward to welcoming all of Komercijalna Banka’s shareholders – and in particular its employees and clients – to the NLB family.”

Within the period of five to nine months, upon the signing of the Agreement, approval of the European Central Bank (ECB), the National Bank of Serbia (NBS), central banks, and competition authorities in the countries in which NLB and Komercijalna Banka operate, is expected, and therefore, once the said approvals have been obtained, the transaction will be completed.

The process of finding a strategic partner for Komercijalna Banka was initiated with a public invitation on May 31, 2019, during which the Lazard Investment Bank, which is an advisor to the Republic of Serbia in this process, contacted 28 reputable financial institutions worldwide, half of which constituted banks. and the other half were investment funds. Out of all of these, six sent Letters of Interest, followed by four non-binding offers, subsequently followed by three binding ones. After a comprehensive analysis of the binding offers and the recommendations of the advisers had been conducted, their ranking was done. Negotiations with the first-ranked bidder, Nova Ljubljanska banka, began on December 27, 2019. Upon completion of the negotiations, the Government of the Republic of Serbia, at its session on February 20, 2020, adopted the Draft Purchase Agreement for 83.23% of Komercijalna Banka’s shares.

The procedure was two-stage, fully transparent, and with the active participation of a reputable advisor. This process is one of the reform objectives in the current arrangement of „the Policy Coordination Instrument“ of the Republic of Serbia and the International Monetary Fund (IMF).