Introduction

The NLB Group is the largest Slovenian banking and financial group. As of December 31, 2009 it consisted of NLB and 53 banks and companies and, in addition, a branch and three NLB representative offices abroad.

Banking is the NLB Group’s most important activity, and other financial activities such as leasing, factoring and forfeiting, insurance, and asset management are gaining strength.

The NLB Group operates in 17 countries, covering 18 markets, and includes:

• 12 banks and 1 branch abroad;
• 11 leasing companies;
• 11 factoring and forfaiting companies;
• 5 insurance companies;
• 1 asset management company; and
• 14 companies performing other activities

Awards and Recognitions

In 2009, NLB received several awards for excellence from industry experts and the general public for both its business and marketing performance.

Awards for Excellence in Business Performance

For the eleventh consecutive year, in 2009 NLB received the “CEE Awards of Excellence” as the best bank in Slovenia from the British financial magazine Euromoney.

The international financial magazine The Banker named NLB Tutunska Banka (i.e., a member of the NLB Group) the best bank in Macedonia for the fifth consecutive time. Furthermore, NLB was recognized as the best bank in Slovenia in 2000, 2001, 2002, 2003, 2004, 2005, 2006, and 2007.

The renowned magazine Global Finance recognized NLB as the best bank in Slovenia for the twelfth consecutive year. NLB was also named as the best bank in emerging markets in 2006, 2007, and 2008, and the best bank for foreign exchange trading in Slovenia in 2004, 2005, 2006, 2007, 2008, 2009, and 2010.

Awards for Excellence in Marketing

Readers of Reader’s Digest recognized NLB as the most trusted bank in Slovenia, awarding it “Trusted Brand 2009” in the banking category.

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Banks in SE Europe

The NLB Group is the largest banking and financial institution in Slovenia, with a special interest in further expansion into SE European markets. The NLB Group operates in the following strategic SE European markets: Bosnia and Herzegovina, Macedonia, Serbia, Montenegro and Kosovo.

Bosnia and Hercegovina

The NLB Group operates in both entities, the Federation of Bosnia and Herzegovina and Republika Srpska.

NLB Razvojna Banka is a full-service bank also registered to trade securities. In the Republika Srpska, it has the second biggest branch network. In terms of the number of clients it is the largest, and in terms of total assets the second biggest in the Republika Srpska.

NLB Tuzlanska Banka offers comprehensive banking services and has over a hundred-year tradition of providing financial services in northeastern Bosnia. The bank is the fifth largest in the Federation of Bosnia and Herzegovina based on balance sheet totals.

Montenegro

NLB Montenegrobanka offers comprehensive commercial banking services and has been owned by the NLB Group since 2003. During this period, the bank has developed into one of the most prestigious and recognized banks in the area, which is also proven by the fact that it was named best bank in Montenegro by the British financial magazine Euromoney also in 2008. In terms of total assets it is the second-largest bank in the country.

Macedonia

NLB Tutunska Banka offers comprehensive commercial banking services, and is one of the most successful members in the Group. The financial magazine The Banker for five consecutive years named the bank as the best in Macedonia. The bank targets small and mid-size businesses.

Measured by its total assets it is the third largest bank in the country.

Serbia

In the Serbian market, the NLB Group operates through NLB Banka, which emerged from the merger of two banks: NLB LHB Banka Beograd and NLB Continental Banka. The merger process was finalized on December 31, 2008. NLB Banka offers all-inclusive banking services to individuals and to businesses, banks, and international institutions.

Kosovo

The NLB Group has been present in Kosovo since spring 2007. NLB Prishtina was established on January 1, 2008 by the merger of NLB Banka e Re e Kosovës and NLB Kasabank.

NLB Prishtina is, in terms of total assets, the third largest bank in Kosovo. It provides a solid foundation for comprehensive banking and financing, and offers high quality customer services in the emerging Kosovo market. The bank advances closer business and economic ties between Slovenia and Kosovo, where many Slovenian companies already operate.

Banks in Other EU Countries

LHB Internationale Handelsbank operates as a bank, specialized for operations in SE Europe. In 2009, NLB increased its participation in the bank’s capital to 100%.

NLB Banka Sofia, which was renamed from NLB West-East Bank in 2009, was founded to provide financing for trade between Slovenia and Bulgaria, as well as other central European and Mediterranean countries. Most of its business is with mid-size and smaller firms primarily engaged in commerce, agriculture, and construction.

The associated bank, Adria Bank in Vienna, and Trieste Branch complete the list of NLB Group banks in EU countries.

Trieste Branch, which operates as NLB branch, is primarily involved with mid-size enterprises from northern Italy that conduct business with Slovenia and Central and SE Europe. The bank has two offices in Trieste and Gorizia.

Non-Banking Activities

Leasing

The leasing companies of the NLB Group are comprehensive providers of leasing services to individuals and corporate clients, as well as to sale traders. Their main business is financing real estate, personal and commercial vehicles, computer and other information technology equipment, industrial and office furnishings, agricultural equipment and the like.

NLB Leasing Group Ljubljana and other leasing companies provide leasing services for the NLB Group in the Slovenian and SE European markets. Leasing is an important activity for the Group and involves 11 leasing companies: three in the Slovenian market and eight in the markets of SE Europe. The leasing companies together employ 174 people.

The NLB leasing companies’ market share in Slovenia is 7.4%, placing them fifth in the country. The NLB Group is among the leaders in leasing in Macedonia and Montenegro. NLB Lizing Skopje deserves special mention, as it is not only the biggest leasing company in the Macedonian market, but also the first.

Factoring and Forfaiting

The NLB Group provides factoring and forfeiting services in the Slovenian market through Prvi Faktor Group and LHB Finance. The Group also provides these services in the markets of SE Europe, in Switzerland, in the Czech and the Slovak Republics. Factoring and forfeiting employed 210 people.

NLB InterFinanz Zürich provides mainly forfeiting services, but also offers other commercial banking products.

NLB Factor and NLB Factoring companies focus mainly on factoring services (including claim collection, administration and insurance), as well as on short-term and investment loans and financing of real estate and development activities.

NLB Group has a 50% stake in the companies of the Prvi Faktor Group (with SID Bank owning the other 50%). Prvi Faktor Group companies are specialized to offer complex factoring services (acquisition, insurance and management of accounts receivable in domestic and foreign markets). The largest of these operations in the Group is Prvi Faktor Zagreb, which is also the leading factoring company in the Croatian market. Parent company Prvi Faktor Ljubljana is a member of the international factoring association, Factor Chain International (FCI), while Prvi Faktor Belgrade is part of the International Factoring Group (IFG).

Asset Management

The NLB Group's NLB Skladi has operated in this market since 2004. The company is among the leading providers of investment fund management in Slovenia. Its market share is 17.5% (by assets of mutual funds from nonprivatisation sources). In addition to the general advantages of mutual funds, NLB Skladi offers additional advantages, such as adjustable savings plans, competitive commission rates and expenses, management in line with international standards, genuine transparency of investment policies, timely information for investors, and state of the art services to investors by the banking network of the NLB Group.

Life and Pension Insurance

The NLB Group provides life and pension insurance services.

NLB Vita, which is 50% owned by the NLB Group (the other 50% is owned by the Belgian KBC group), offers life insurance products tailored to fit specifics of sale exclusively through its banking network. NLB Vita’s Slovenian market share is 4.6%.

Skupna Pokojninska Družba is an associate member of the NLB Group and is the leading provider of voluntary pension insurance in Slovenia, holding a market share of 24.5%.

NLB Group also provides pension insurance services in SE Europe: in Macedonia (NLB Nov Penziski Fond with market share of 47%), Serbia (NLB Nova Penzija with market share of 3%) and Montenegro (NLB Penzija, which is still in the process of acquiring a concession/license).

NLB Group
Annual Report 2009