Nova Ljubljanska banka Group ("the Group") is the largest banking and financial services organisation in Slovenia with total assets accounting for more than one third of the total assets of the Slovenian banking sector, encompassing 21 banks. Nova Ljubljanska banka d.d., Ljubljana ("the Bank" or "NLB") is a universal bank with a leading position in retail, corporate and investment banking. It has over 50,000 corporate and 900,000 retail customers in Slovenia alone. The Bank and its domestic bank subsidiaries have a market share of 38 per cent of total assets, 37 per cent of customer loans and 39 per cent of customer deposits, as at 31 December 2001. Within the Group, NLB is the largest institution, accounting for over seventy per cent of the Group's total assets and loans to non-banking customers.

The Republic of Slovenia's shareholding in the Bank's total share capital has been reduced by integration of daughter banks by 8.37 percentage points and is at the end of year 2001 74.71 per cent, with the state owned fund management companies Pension Capital Fund, holding 4.53 and the Restitution Fund, holding 4.15 per cent.

The Bank is one of the highest rated banks in Central and Eastern Europe with recent upgrades from Fitch IBCA, Moody's and Capital Intelligence. Investment Grade Credit Ratings (long-term) are: Moody's Baa2, Fitch IBCA A-, Standard & Poor's BBB-, Capital Intelligence A-. The Bank ranks amongst the 10 largest banks in Central Europe, has won Euromoney's "Best Slovenian Bank" award for five consecutive years, and The Banker selected NLB as Slovenian Bank of the Year 2001.

Investments in Slovenia

In 2001 the first steps were taken towards the consolidation of the Group; three banks becoming wholly owned subsidiaries of NLB. On 1 October NLB issued 776,894 new shares that were swapped for the shares of three daughter banks: Dolenjska banka d.d., Novo mesto, Banka Velenje d.d., Velenje and Pomurska banka d.d., Murska Sobota. As a result of the share swaps NLB increased its shareholding in these banks to 100 per cent and in a simultaneous act merged their operations. Consequently, these banks ceased to exist as legal entities and their minority shareholders became shareholders of NLB.

At the year end NLB held 41.33 per cent of the regular voting shares of Koroška banka d.d., Slovenj Gradec and 40.0 per cent of the share capital in both Banka Zasavje d.d., Trbovlje and Banka Domžale d.d., Domžale. The Group as a whole held a 35.56 per cent share in Banka Celje d.d., Celje of which 25.56 per cent was held by NLB itself.
NLB also owns 83.97 per cent of LB Maksima d.o.o., Ljubljana which manages investment funds, the balance is owned by other banks in the Group. Maksima manages five authorised investment companies and the Piramida mutual fund. The shares of all these investment companies are quoted on the Ljubljana Stock Exchange.

On 1 January 2001 Skupna pokojninska družba d.d., Ljubljana was established as a pension fund by both NLB and Zavarovalnica Triglav d.d., Ljubljana. They are the largest shareholders, each holding 26.94 per cent.

NLB, together with the member banks of the Group, holds a 39.44 per cent stake in Bankart d.o.o., Ljub-ljana, a card processor.

LB Leasing, d.o.o., Ljubljana, is wholly owned and deals with financial leasing and/or leases real estate, vehicles, ships and boats, farming and construction machines, office space, information technology and offers leasing of other equipment. The company has its own leasing operations in Maribor and in Koper and owns Optima Leasing d.o.o., Ljubljana. NLB now owns a further two leasing companies: Feniks d.o.o., Murska Sobota and Fit Leasing d.o.o., Velenje.

LB Hipo d.o.o., together with its subsidiary LB Propria d.o.o., are wholly owned Ljubljana based companies dealing with real estate and renting office space. Real d.o.o., Novo mesto, operates in the same market and is 90 per cent owned by NLB following the acquisition of Dolenjska banka.

Investments outside Slovenia

LBS Bank was established in New York in 1986 and is wholly owned by NLB. LBS is a universal bank, mainly financing trade between the United States, Slovenia and other Central European and Mediterranean countries.

LB InterFinanz AG, Zurich, is wholly owned and deals principally in forfaiting. Its subsidiary, LB InterFinanz Praha, performs financial and commercial consulting and also offers factoring and forfaiting services in Central and East European markets. LB Factors d.d., Ljubljana, involved in factoring insurance claims, is 70 per cent owned by LB InterFinanz AG, Zurich with the balance held by NLB.

NLB's shareholding in LHB Internationale Handelsbank AG in Frankfurt now exceeds fifty per cent and it has become a subsidiary. NLB holds 28.46 per cent of Adria Bank AG, Vienna, an Austrian affiliate of NLB.

As of December 2001, NLB had an 18.47 percentage share in the capital of Tutunska banka a.d., Skopje while the share of LHB Internationale Handelsbank AG, Frankfurt in this bank amounted to 34.62 per cent. In compliance with adoption of Bosnian banking legislation, Banka Domžale d.d., and LHB Internationale Handelsbank AG, Frankfurt increased the capital in Commercebank d.d., Sarajevo, member of the Group, in 2001. After the buyout of a part of shares from existing shareholders the indirect shareholding of NLB in the capital of this bank amounts to 67.6 per cent.

NLB has enhanced its presence on the Southeast European markets. During the year, NLB expanded its operations in the Federal Republic of Yugoslavia, principally to support Slovenian companies in that territory. This is in line with NLB's strategy.