NLB: completion of the acq. of Komercijalna Banka

December 30, 2020

NLB becomes the third largest bank in Serbia in total assets following the completion of the acquisition of Komercijalna Banka a.d. Beograd

Pursuant to the provisions of the Rules of the Stock Exchange, Article 17 of the Regulation (EU) No. 596/2014, and Article 130 of the Market in Financial Instruments Act (ZTFI-1), Nova Ljubljanska banka, d.d., Ljubljana with registered office: Trg republike 2, 1000 Ljubljana, hereby publishes the following notice:

With today's completion of the acquisition of an 83.23% ordinary shareholding in Komercijalna Banka a.d. Beograd (KB), NLB has achieved a final milestone in this important transaction to further execute our strategy of becoming the leading financial institution focused on and headquartered in our home, the SEE region.

The transaction received all of the necessary regulatory approvals, including approvals from the European Central Bank and the National Bank of Serbia. The final purchase price (accounting for interest since 1 January 2020) amounted to EUR 394,7 million in accordance with the provisions of the share purchase agreement ('SPA') entered into with the Republic of Serbia on 26 February 2020.   

"Families grow and evolve and so has ours. We are extremely happy to be able to wish our new colleagues from Komercijalna Banka a very kind and warm welcome to the NLB Group family. We are also extremely proud that we have brought this acquisition process to an end in accordance with the timeline that we anticipated at the time of signing. The transaction is another important milestone in NLB Group's transformation to become a regional champion," emphasized NLB's CEO Blaž Brodnjak.

The Minister of Finance of the Government of the Republic of Serbia Siniša Mali stated at the completion of the process: "We are extremely pleased with the successful closing of this transaction as an important indicator of investor confidence in Serbia despite all of the challenges that the whole world faces this year. The decisive and timely reaction of our government ensured maintained macroeconomic stability, all the while keeping public finance under control. As a result, Serbia achieved the best result in terms of economic growth in Europe, which is exactly what a serious financial institution such as NLB recognized. I am confident that with a clear vision and strategy, NLB is bound to bring fresh and positive energy to our financial sector. Moreover, the financial injection generated through this transaction will be used responsibly, both to repay some longstanding and expensive debt, and for new investments so as to further support economic growth in Serbia. In addition, with this investment, the total inflow of foreign direct investments in Serbia will be nearly EUR 3 billion at the end of this year."

"Komercijalna Banka is performing very well despite the many challenges that the COVID-19 pandemic has brought to all of our economies and societies. I am therefore very confident that the bank's performance will be further enhanced by joining the NLB Group as part of a banking group active across SEE. This has been a demanding process that has required a lot of work and expertise, so we are especially pleased that we have completed it successfully and transparently," added President of Executive Board at Komercijalna Banka Vladimir Medan.

Focusing on our clients and home region

Serbia has long been a strategically important market for the NLB Group in the context of the strategy to be the leading international bank headquartered in and focused on the SEE region. Whilst in all countries of Group's operations NLB has a top three market position, in Serbia (the largest market by population) it was, until today, sub-scale.

As a result of the transaction, NLB will become the third largest banking group in Serbia with the acquisition of KB increasing NLB's market share from approximately 2% by total assets to over 12% as at 30 September 2020. The business operations of the NLB Group in Serbia will be (besides the Slovenian market) the largest and most important one, adding more than 800,000 active retail customers and the largest distribution network in the country of 203 branches to NLB's existing operations. Through KB's subsidiary banks in BIH and Montenegro, the transaction will further strengthen our strong existing position in those two markets.

The acquisition of KB will increase loans to customers of NLB Group by almost EUR 1.8 billion and deposits by approximately EUR 3.3 billion. KB achieved approximately EUR 170 million in net banking revenues in year 2019. In the first half of year 2020, marked by the COVID-19 pandemic, KB continued its stable business performance, as it successfully generated almost 80 million EUR in net banking revenues. NLB is acquiring a stable franchise that will help increase shareholders' value through EPS accretion driven by the existing operation and envisioned strong future growth. Capital ratios for the enlarged NLB Group after the acquisition will remain above regulatory requirements and above management TCR target (15.75%), allowing for the resumption of dividend payments.

"This milestone will not alter the overall strategic focus of the NLB Group, nor will it affect our vision. We are committed to building a modern, digitalized, and efficient bank, and to become the leading bank on the Serbian market by 2025. We will continue to serve the community and aim to improve the quality of life in the region through a responsible and sustainable approach to our business operations, as well as the role we play in the society as a systemic institution. Together, we will be one of the most meaningful companies. Because for us, this region is not just a spot on the map. We treat it as our home," emphasized NLB's CEO.

No change in clients' regular banking operations

NLB and KB banks in all countries where both banks are present will continue working as separate banks until the legal mergers have been affected. NLB will be focused on managing the integration processes as seamlessly as possible, to ensure a smooth transition and retain operational efficiency, keeping our focus on NLB's and KB's clients and their needs, employees, and all other stakeholders.

In the short term, there will be no changes to clients' regular business operations. All our services will continue to work smoothly, all deposits, loans, and accounts will remain under the same conditions. Since we see considerable potential to strengthen the range of products and services that Komercijalna Banka offers, drawing on NLB's own expertise and capabilities, as well as synergies with the NLB Group's operations across the region, the services of the combined bank will be enhanced and their quality even better. In the coming weeks, an extensive welcome package including a combined ATM network free of charge in the whole NLB Group will be available to clients of both our banks, as well as to everyone who wishes to become a part of our family. Further on, development of the Retail segment will remain our strategic ambition, and we will focus on rapidly and intensively building best-in-class client service and experience.  In addition, we will continue strengthening relationships with our corporate clients, to whom we will offer improved services, such as a regional platform for trade financing, factoring, leasing, and other services. We will make sure, that with us, together, at their side, our clients are ready for whatever may come.

************************************

About the NLB Group: NLB Group is the largest banking and financial group in Slovenia, with an exclusive strategic interest in South-eastern Europe. It covers markets with a population of approximately 17.4 million people. In addition to NLB d.d., a main entity in Slovenia, NLB Group is comprised of six subsidiary banks in SEE of which four exceed the market share of 10%, several companies for ancillary services (asset management, real estate management, etc.), and a limited number of non-core subsidiaries in a controlled wind-down. NLB is a publicly listed company with shares listed on the Ljubljana Stock Exchange and Global Depositary Receipts listed on the London Stock Exchange. NLB Group is the only financial institution focusing solely on the SEE and on delivering innovative, simple, customer-oriented solutions and the best customer experience on these markets. With a clear business strategy, it is committed to justifying the trust of its shareholders. Moreover, NLB Group is not merely a financial group. In addition to good business performance and financial results that contribute to economic development of South-eastern Europe, it also works to shape and improve the social environment in which it operates, as well as contribute to better quality of life. Most importantly for us, this region is not just a spot on the map. This is our home.

About KB: Komercijalna banka a.d. Beograd is the third largest bank in Serbia ranked by total assets with a 10.2% market share and is Serbia's largest bank by number of branches. It is a universal bank with over one million retail customers, of which more than 800,000 are active customers. The bank has subsidiaries in two other SEE countries: Bosnia and Herzegovina and Montenegro. It also provides investment fund management services through KomBank Invest a.d. Beograd. The bank was founded in 1970. It has been listed on the Belgrade Stock Exchange since August 2006. Also, since the end of November 2019, the Republic of Serbia has been the majority shareholder with an 83.23% ordinary shareholding having purchased shareholdings back from a number of international financial institutions (such as the EBRD and IFC).

Contacts:

Ms. Valerija Pešec

Head of Investor Relations

Tel.: +386 1 476 9122

E-mail: [email protected]

Mr. Andrej Krajner

Director of NLB Communications

Tel.: +386 1 476 2967

E-mail: [email protected]

NLB d.d., Ljubljana

Investor Relations