Report of the Supervisory Board of NLB

In the first half of 2009, the Supervisory Board of NLB d.d. was composed of the following members: Igor Marinšek (chairman), Peter Ješovnik (deputy chairman), Katja Božič, Iztok Bricl, Riet Docx, John Hollows, Marko Rus, Darko Tisaj, and Jan Vanhevel.

At the general meeting of 30 June 2009, a new Supervisory Board was appointed for the period until the conclusion of the Bank’s annual general meeting, which decides on the annual report for the fourth financial year. Andrej Baričič, Riet Docx, Gregor Dolenc, John Hollows, Igor Masten, Rasto Ovin (deputy chairman), Stojan Petrič, Marko Simoneti, Boris Škapin, Jan Vanhevel, and Stanislava Zadravec Caprirolo were appointed members of the Supervisory Board. After Stanislava Zadravec Caprirolo’s resignation in November 2009, Marko Simoneti was appointed chairman.

In 2009, four committees provided professional support to the Supervisory Board: the Risks Committee, the Auditing Committee, the Bonuses and Appointments Committee, and the Strategy and Development Committee. When the new Supervisory Board and new members of individual committees were appointed, the responsibilities of individual committees were also newly defined and their respective rules of procedure were correspondingly amended.

Supervisory Board operations

Accordingly, the Board adopted a number of decisions, the following being among the most important:

• It discussed and approved the 2008 Annual Report and the Supervisory Board’s report on verifying the annual report and proposal on the use of the balance-sheet profit;
• It approved the proposals to adopt decisions at the general meeting, including the proposed changes to the articles of association and the proposal to appoint new members of the Supervisory Board;
• It gave its consent to issuing bonds guaranteed by the Republic of Slovenia;
• It reviewed the findings of a special audit with regard to management bonuses and auditing specific transactions;
• It carried out personnel changes in the Bank’s management: upon the termination of CEO Marjan Kramar’s term of office, it appointed Draško Veselinovič as the new CEO; in addition, it appointed David Benedek as the sixth Management Board member, accepted Draško Veselinovič’s resignation, and appointed Božo Jašovič as the new CEO. Based on the establishment of an appointment-based system, Jašovič proposed the members of the new Management Board; thus, in addition to the two existing members David Benedek and Claude Deroose, Marko Jazbec and Robert Kleindienst were also appointed members of the Management Board;
• It reviewed the Bank’s and the Group’s capital projection until the end of 2009 and for the upcoming years, and approved the Bank’s capital-increase proposal;
• It reviewed the Bank’s and the Group’s 2009–2015 plans, which will be correspondingly updated after the approval of the new strategy, which is to be prepared by the end of Q1 2010; in the meantime, the Management Board must prepare a plan for immediate short-term activities;
• It adopted the 2010–2012 operations strategy of LHB Internationale Handelsbank and the operative action plan for its implementation;
• It regularly discussed the internal audit reports, inspected letters from the Bank of Slovenia and external auditing regulators, and monitored the implementation of their recommendations;
• It regularly reviewed the reports on the Bank’s participation in the Republic of Slovenia’s guarantee schemes and the movement of the Bank’s loan activities;
• It adopted a reformed system of awarding bonuses to the Management Board and established the criteria for awarding these bonuses in 2010.

Verifying and approving the 2009 Annual Report

On 7 April 2010, the NLB Management Board submitted the 2009 Annual Report with audited financial statements of NLB and consolidated financial statements of the NLB Group, including the auditor’s opinions, to the Supervisory Board. According to the auditor, the financial statements and the appertaining notes truly and authentically reflect the Bank’s and the NLB Group’s financial standing as of 31 December 2009 and meet the international financial reporting standards. Based on his review of the business report, the auditor establishes that the content of the information provided in the business section of the annual report agrees with the Bank’s and the NLB Group’s financial statements.

The Supervisory Board had no comments on the report provided by the auditing company PricewaterhouseCoopers d.o.o., Ljubljana. After carefully verifying the audited annual report for the 2009 financial year, the Supervisory Board had no comments on the report and adopted it unanimously.

Evaluating the Supervisory Board’s work

While discussing the annual report, the Supervisory Board also evaluated its own work. During this discussion, it was established that in the past period the active involvement of the Supervisory Board members was exceptionally large, which is also understandable given the difficult operating conditions, the changes to the Bank’s strategic policy, and the staff-related changes in the Bank’s management.

All of the Supervisory Board members actively participated in Board operations and Board committee operations by regularly attending the meetings and participating in discussions, and preparing written proposals or comments on the matters discussed.

An effective system of preliminary detailed discussion of individual matters at the meetings of specialized committees for individual areas has also become a well-established practice of the new Supervisory Board; the power to adopt decisions remains exclusive to the Supervisory Board.

Possible improvements to the Supervisory Board’s work discussed include even better coordination of operations of individual specialized committees, and additional training of the Supervisory Board members according to their responsibilities within the Bank’s bodies.

Conclusion

In the past year, exacerbated business conditions influenced NLB’s operations and results. Taking into account the significantly changed circumstances, NLB adopted a proactive approach to implementing short-term measures and activities, and defining a long-term strategic policy as part of the new strategy, which will enable it to effectively face upcoming challenges.

On this occasion, the Supervisory Board would like to thank the Management Board and all of the employees for their contribution and efforts made in these difficult conditions. Great challenges also await us in the future, and with our combined strength, motivation, and commitment we will be able to face them successfully and meet the goals set.

Supervisory Board of NLB


Marko Simoneti,
Chairman of the Supervisory Board

NLB Group
Annual Report 2009