The European Commission has concluded that Slovenia's aid for Nova Ljubljanska Banka (NLB) remains compatible with EU State aid rules on the basis of a new commitment package submitted by the Slovenian authorities on 13 July 2018.
NLB is the largest banking group in Slovenia which has received three State recapitalisations from 2011 to 2013. The Commission approved €2.32 billion in State aid in December 2013 from these three recapitalisations, on the basis of the bank's restructuring plan and associated commitments. Slovenia committed to sell 75% minus one share of NLB by end 2017, which was a crucial element allowing the Commission to approve the granting of significant State aid. In May 2017, the Commission accepted a request from Slovenia for a more gradual sale of NLB. Slovenia still committed to sell (at least) 50% of NLB by end 2017 and the remainder of the shares by the end of 2018.
The new commitment package proposed by Slovenia 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. Furthermore, NLB can only grant new loans if the bank receives a minimum return on equity on those loans. NLB will also not re-enter the businesses it sold as part of the restructuring plan and will also strictly comply with an acquisition ban. Other additional compensatory measures are also included in the new commitment.
The Commission can exceptionally accept modifications to existing State aid commitments if the new commitments are equivalent to the original ones. In this case, the Commission's investigation concluded that the new Slovenian commitment package is sufficient to ensure NLB's viability to the same extent as the original commitments and address any additional competition distortions resulting from the delayed sale.
Source: EU Commission
TPA Global provides solutions in the area of BEPS, Value Chain Analysis for multinationals along with variety of tax, business and educational technologies. Let us show you how to improve your operations and move from “staying out of trouble” to “being in control”.