Komercijalna Banka sold for EUR 387 million – NLB to become the third largest bank in Serbia through the acquisition of 83.23% shareholding

On February 26, 2020, Nova Ljubljanska banka (NLB) entered into a share purchase agreement with the Republic of Serbia for the acquisition of an 83.23% ordinary shareholding in Komercijalna Banka a.d. Beograd at the price of EUR 387 million.

The closing of the transaction is expected in Q4 2020 and is subject to mandatory regulatory approvals from, among others, the European Central Bank, Bank of Slovenia and the National Bank of Serbia, NLB says in a press release.

– The consideration for the 83.23% shareholding amounts to EUR 387 million, which will be payable in cash on completion. In accordance with Serbian bank privatization regulations, NLB is not required to launch a mandatory tender offer for minorities’ shareholdings in KB – NLB emphasizes.

They also explain that “the purchase price implies a valuation of EUR 465 million for 100% of KB’s ordinary share capital, representing a multiple of 0.77 x KB’s IFRS consolidated shareholders’ equity as at June 30, 2019, and a multiple of approximately 6x KB’s estimated earnings for 2019”.

The purchase price, as said, will be subject to a 2% annual interest rate between January 1, 2020, and closing, with NLB benefiting from KB's earnings during that period under a "locked-box" mechanism.

Subject to National Bank of Serbia approval, declared but unpaid dividends and employee benefits for prior financial years will be paid before closing. KB’s existing shareholders will also receive a dividend equating to 50% of 2019 net income up to a maximum of EUR 38 million before closing.

As NLB points out, through the transaction, Serbia will become the largest foreign subsidiary of the NLB Group, contributing 24% of the enlarged assets.

– KB will add more than 770,000 active retail clients and the largest branch network in the country with 203 branches to NLB’s existing operations in Serbia. KB’s subsidiaries in Bosnia-Herzegovina and Montenegro will also complement NLB’s existing operations in those markets.

Blaž Brodnjak, CEO of NLB, stated that, as a result of the transaction, NLB’s market share in Serbia will increase to over 12.1% by total assets, making NLB the third largest banking group in the country.

The Minister of Finance of the Government of the Republic of Serbia, Siniša Mali, stated that Serbia is satisfied with the price achieved.

– The state is planning to invest the funds wisely, especially in the “Serbia 2025” investment plan, which will improve the quality of life of our citizens and further GDP growth. The performance of Komercijalna banka is excellent, but it can get even better, and I’m convinced that this can be achieved with the help of the new strategic partner. We believe that in the case of financial services in the open market a private owner can be a better owner that the state. NLB is a serious bank with a clear strategy and vision, and at the same time it is the only regional financial institution with listed GDRs on the London Stock Exchange. We hope that the transaction will be closed in the next few months – Mali said.

Nova Ljubljanska banka d.d. Ljubljana

NLB Komercijalna banka AD Beograd

Ministarstvo finansija Republike Srbije

Nova Ljubljanska banka

NLB

NLB Group

Komercijalna banka

Ministry of Finance

Siniša Mali

Blaž Brodnjak

sale of Komercijalna banka