PROFILE OF NLB GROUP AND NLB

2002

Nova Ljubljanska banka Group ('the Group') is the strongest financial and banking group in Slovenia and is becoming a key regional player in south-east Europe. It has reached a market share of almost 40 percent of the Slovenian banking sector that now consists of 19 banks and is growing its market share in the important countries in the region.

The Group consists of 39 banks and companies in Slovenia and abroad. Nova Ljubljanska banka d.d., Ljubljana ('NLB' or 'the Bank') is the largest and most important financial institution, accounting for over three quarters of consolidated total assets. Group member banks in Slovenia include three daughter banks, Koroška banka, Banka Zasavje and Banka Domžale and an associate bank, Banka Celje. The Slovene companies include LB Leasing, LB Factors, Feniks, Fit Leasing, LB Maksima, LB Hipo, LB Propria, Real, Bankart, Prospera Plus and Skupna pokojninska družba. These companies are involved in a range of activities including leasing, factoring, fortfeiting, asset management and pension insurance.

The NLB Group abroad is present in two core geographical regions - the EU markets including candidate countries and southeast Europe markets. NLB holdings abroad include foreign banks: LHB Internationale Handelsbank, Frankfurt, Tutunska banka, Skopje and Commercebank, Sarajevo, Adria Bank, an Austrian affiliated bank. Other important foreign financial organisations include LB InterFinanz AG, Zurich, LB InterFinanz Praha and LB Factoring CZ, Ostrava.

NLB is among the best rated banks in Central and Eastern European region, with ratings A- (Fitch, Capital Intelligence), Baa2 (Moody's) and BBB- (S&P's).

In September 2002 the first phase of privatisation successfully concluded with a 34 percent stake of the state being purchased by the Belgian banking and insurance group KBC and 5 percent by the European Bank for Reconstruction and Development (EBRD).

The privatisation process has brought considerable change within the organisation with a change in the Management Board and the Supervisory Board that is now reflecting the new ownership structure. This has brought further improvement in corporate governance and provided a sound base for future growth.

On the business front NLB maintained its position as the leading bank in Slovenia, despite increased competition especially from foreign banks present in the local market.

At present 95 percent of the total assets of the NLB Group is represented by banks. Significant groundwork was completed in the preparation for development of new fields complementing traditional banking activities. In particular bankassurance and asset management, are areas that NLB will enter into while other strategic activities that are yielding dividends include leasing, factoring and forfaiting.

In 2003 NLB will offer clients bank-assurance services in cooperation with KBC. NLB and KBC are in the process of establishing a new life insurance company, NLB Vita. The operational plan is in process and includes how the company will approach the market, the target range of products and integral sales. At the same time, we will start to market new services within asset management by establishing a company NLB Skladi.

Operationally NLB continued its business rationalisation and technology development through the IT based SIGMA project. A number of new operations were ported onto the new IT platform during the year and a new delivery channel mobile phone banking was introduced.

With the intention of achieving greater quality of NLB operations, a new organisation structure was implemented at the beginning of 2003. Its primary advantage is combining business into five centers regarding customer segments. These centres are: Treasury, Investment Banking, Asset Management and Group Investments Value Centre, Retail, SME and E-Banking Value Centre, Corporate Banking Value Centre, International Banking, Information Technology and Operations (Value Centre) and Governance Centre.

2001

The state's shareholding in NLB capital reduced by 8.7 percentage points following the acquisition of three Slovenian daughter banks (Dolenjska banka, Banka Velenje and Pomurska banka). The integration of the three daughter banks enabled both the Group and NLB to further strengthen their core competitive advantages in the domestic market.

Koroška banka, Banka Zasavje and Banka Domžale while they are subsidiaries they still remain to be fully acquired in the next period. The Group also holds a share in its associated bank, Banka Celje.

Fitch upgraded NLB's long-term FX credit risk ratings to A- in July.

2000

Moody's and Capital Intelligence both upgraded NLB's long-term foreign currency credit ratings to Baa2 and A-.

Together with Slovenia's largest insurance company, NLB established a new pension insurance company, Skupna pokojninska družba d.d., Ljubljana.

With expansion outside Slovenia, NLB increases its operations. It acquires a significant capital shareholding in Tutunska banka a.d., Skopje.

Commercebank d.d., Sarajevo joins the NLB Group.

1999, 1998

NLB introduces electronic banking service for corporate clients (Proklik) and Internet banking for retail clients.

The Bank is increasing and strengthening its business volume in Slovenia.

1997

The official ending of the rehabilitation of NLB d.d., Ljubljana.

Standard & Poor's, FITCH IBCA, Moody's, Thomson Financial BankWatch and Capital Intelligence each assigned Investment Grade Ratings to NLB.

NLB becomes a major shareholder in Bankart, a card and ATM's processing company.

A renewed corporate visual identity of NLB is launched.

1994

Nova Ljubljanska banka d.d., Ljubljana is established by Legislative Act of the National Assembly of the Republic of Slovenia. NLB assumes the majority of the assets, liabilities and operations of LB d.d., Ljubljana, with the exception of certain liabilities and guarantees of LB incurred during the existence of the former SFRJ.

NLB establishes a company for managing investment funds, LB Maksima, and a joint stock company specialising in factoring, LB Factors.

1993

LB d.d. entered a program of rehabilitation, initiated by the Government of the Republic of Slovenia and the Bank of Slovenia.

Critical self-rehabilitation activities were implemented, which enabled strengthening of liquidity and solvency.

1991

Ljubljanska banka-Gospodarska banka, Ljubljana merges with LB d.d. and as a consequence LB d.d. acquires a significant network of domestic savings offices thereby enabling LB d.d. to adopt a universal banking status.

1990

All of LB banks become joint stock companies. The LB system comprises: Parent bank-LB d.d., Ljubljana, 5 subsidiaries and 14 member banks (formerly basic banks).

1978

Ljubljanska banka group is formed, consisting of: Ljubljanska banka-Združena banka and 22 associated banks.

1970

Kreditna banka and hranilnica Ljubljana is renamed to Ljubljanska banka, Ljubljana. The bank is in the top 100 banks of the World.

1955

Komunalna banka Ljubljana is formed.

1862- 89

First Slovene savings banks are established - 1862 in Maribor, in Celje 1865 and in 1889 Mestna hranilnica ljubljanska, predecessor of Nova Ljubljanska banka.