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NLB, KBC consider joint sale of Slovenian life insurer NLB Vita

Author Iskra Pavlova
NLB, KBC consider joint sale of Slovenian life insurer NLB Vita Slovenia's NLB Vita, Photo: Jure Erzen

LJUBLJANA (Slovenia), August 21 (SeeNews) - Slovenian lender Nova Ljubljanska Banka (NLB) and its Belgium-based peer KBC said they are investigating the possibilities to jointly sell Slovenian life insurer NLB Vita, in which each of them controls 50%.

The divestment of NLB Vita has been requested by the European Commission as an additional commitment due to the delay of NLB's privatisation on the part of the government, the two banks said in joint statement on Tuesday, following media reports that the EC is pressing for NLB Vita's sale.

"Given that this additional commitment is still pending despite successful completion of the first phase of the bank’s privatisation process in November last year, both owners, NLB and KBC, are looking into the possibilities to jointly divest their stakes in life insurer NLB Vita, while the Slovenian market is non-core to KBC," the statement said.

However, the two banks noted that they will not provide any details on the course of the process or the parties involved for the time being, saying they hope to find "a single potential buyer with the utmost care".

"Both NLB and KBC believe that the NLB Vita is an interesting investment, as its business results and efficient sales have already proven the success of the banking-insurance model on the Slovene market," the statement said.

NLB Vita is the second largest life insurer in Slovenia with a market share of 14.8% at the end of 2018, the statement added. The company was established as a 50/50 joint venture by NLB and KBC Insurance NV.

Regardless of who owns NLB Vita, the company will continue to use NLB’s distribution network of 93 branches and internet sale for the sale of its current portfolio of 25 different individual and group insurance products, the statement said.

The EC has been insisting on the sale of NLB Vita due to the previous delay of the Slovenian government in divesting 75% minus one share of NLB's capital. The transcation was a crucial element of the viability assessment in the NLB state aid decision of December 2013, under which the Commission approved the granting of over 2 billion euro ($2.2 billion) of state aid to the bank.

In line with the originally proposed commitments, Slovenia was due to carry out the sale before the end of 2017. However, in the spring of 2017, the government of prime minister Miro Cerar decided to suspend an announced initial public offering (IPO) in NLB shares on the London and Ljubljana stock exchanges due to price concerns.

In August 2018, the EC approved the new commitment package for NLB of the Slovenian government, which this time had pledged to complete the sale of 75% minus one share of the bank's capital by the end of 2019.

As a result, in November 2018, Slovenia sold 59.1% of NLB's issued share capital in an IPO on the Ljubljana Stock Exchange, while in June 2019, Slovenia’s sovereign holding company, SDH,  successfully concluded NLB's privatisation by completing the placement to institutional investors. This had left the government with 25% plus one share in NLB.

Back in 2013, the Slovenian government stepped in to recapitalise NLB and two other lenders - NKBM and Abanka, narrowly avoiding an international bailout. The same year, Slovenia committed to the European Commission to sell part of NLB within four years.

($=0.9006 euro)