The boards of state-owned Abanka Vipa and Banka Celje have signed a merger agreement that will create the country's second largest bank by assets before it is privatised. The merger is to be completed in the final quarter of this year, the banks announced on Wednesday.
The move is in line with the European Commission's state aid clearance which stipulates that the banks, which were bailed out and nationalised last year, must be merged and privatised by mid-2019.
Both banks have also been listed in the recently adopted asset management strategy as portfolio investments in which the state does not plan to retain a stake.
Pending approval by both banks' AGMs and clearance from the regulators, the new bank, which plans to focus on small and medium-sized companies and households, will be named Abanka and it will be headquartered in Ljubljana.
When the merger becomes effective, all Banka Celje assets and liabilities will be transferred to Abanka as the legal successor.
Abanka chairman Jože Lenič said the agreement "sets the foundations for a new strong bank that will combine the best of both banks" and become "interesting for future investors."
The two banks combined had a market share by assets of about 12% in 2013, the latest year for which data are available. This compares to 23% for market leader NLB and under 10% for the current runner-up, NKBM.
Abanka reported a net loss of almost EUR 200m for 2014, largely due to the transfer of non-performing loans to the bad bank, while Banka Celje ended the year with a net loss of just over EUR 21m.
But both banks are now financially much more sound: Banka Celje had a capital adequacy ratio of over 18% at the end of the year, with Abanka at 18.7%. Both also posted substantial profit before impairments and write-offs.
Source: TheSloveniaTimes
