SMEs and corporate banking

The NLB Group provides comprehensive corporate financial services in Slovenia and abroad. Services are accessible by SMEs via the business network, while commercial centers at NLB are available to large corporate customers.

At the end of 2010, 62,292 corporate accounts, held by SMEs, micro enterprises and sole traders, were open at NLB. NLB provides demanding SMEs a comprehensive portfolio of services in 20 specialized branches established for companies and sole traders.

The value of loans to small businesses and sole traders via the NLB business network increased minimally in 2010. In business network more than 10,000 credits were approved and renewed. In credit structure the share of long-term credits increased to 61%. The credit portfolio in the large corporate segment shrank by 5% compared with the previous year. The maturity structure of the credit portfolio changed slightly in 2010. The proportion of long-term loans, which account for the majority of the credit portfolio at 69%, was up 6 percentage points, while the proportion of shortterm, accounting for 31% of the credit portfolio, was down.

NLB was active again in 2010 in the implementation of anti-crisis measures aimed at easing the credit crunch and adopted by the Slovenian government back in 2009. NLB has been actively involved in the implementation of the Slovenian government guarantee scheme for corporate and collectives since its inception. The Bank obtained guarantee quotas in the amount of EUR 86.7 million at auctions held in 2010. NLB approved governmentguaranteed loans in the amount of EUR 99.5 million in 2010 in the scope of the guarantee scheme. The government guarantee scheme for corporates and cooperatives was concluded at the end of 2010.

Growth in deposits from small businesses in 2010 was up compared with the previous year. There has a notable rise in the proportion of total deposits accounted for by long-term deposits, which has risen from 6% at the end of 2009 to 10% at the end of 2010. The balance of deposits in the large corporate segment was at the end of 2010 lower by 10% over the end of 2009. The share of long-term deposits in the structure of deposits grew steadily, rising from 8% as at the end of 2009 to 11% as at the end of 2010.

The Bank encourages the growth of international and Slovenian small businesses by cooperating with EU funds, state institutions that support the development of small businesses, chambers of trade and commerce, and municipalities. It also organizes various professional educational events for companies.

Despite the difficult economic conditions, which have been seen in the operations of SMEs and sole traders, NLB Group banks in SE Europe achieved 13% growth in lending and 5% growth in deposits. Banks placed a great deal of emphasis in 2010 on monitoring the quality of the credit portfolio and on activities aimed at reducing the number of unpaid past-due claims. Using NLB as an example, the principle custodianship is being introduced in a decentralized segment of operations that includes more than 100,000 accounts at all banks in 151 locations. Banks also secured long-term funding from international financial organizations to finance lending to small enterprises. The proportion of e-banking users is rising, and stood at 12% of all users at the end of the year. All banks rounded off their portfolios of services in 2010 by introducing card products intended for this segment. Group banks issued nearly 20,000 business cards in December 2010. The segment of small enterprises and sole trade is very important for the banks operating in SE Europe. The level of service in this segment will therefore be developed rapidly in the coming years.

The Act on Republic of Slovenia Guarantees for the of Financing Corporate Investments was adopted in the middle of 2010 as an additional measure to stimulate investment in the economy, although it has not yet been introduced in practice. On the basis of the aforementioned act, the Republic of Slovenia issues guarantees to companies in the amount of 75% of the principal of loans aimed at financing investment in development projects that facilitate growth in added value per employee and increased employment.

In 2010, NLB continued the qualitative upgrading of its comprehensive customer management system for shared NLB Group customers. In order to improve investment approval processes at the NLB Group level and the proactive approach to credit risk management, NLB provided IT support at the NLB Group level by developing new functionality in the software solution implemented in 2009. The conditions for achieving synergistic effects at the NLB Group level on all strategic markets were improved, while at the same time ensuring support for Slovenia's traditionally export-oriented economy.

The Bank also supplements its portfolio of basic products and services with additional services intended for corporates.

Financing and insuring international transactions

In accordance with the NLB Group’s strategic objective, the Bank developed and expanded its international operations, in particular on the markets where the NLB Group's banks and nonbanking companies operate, and on the markets to which its customers export their products and services. NLB also adapted its growth and business policies on foreign markets to the tougher conditions on the international financial markets and to economic trends. Despite adverse conditions, NLB succeeded in maintaining a stable international business portfolio, which totaled EUR 1.7 billion at the end of 2010.

Due to limited access to financial and capital resources, NLB focused the majority of its international lending activities on securing funding for NLB Group companies, and thus indirectly facilitated the financing of NLB Group customers.

The Bank's main tool in the direct financing of foreign strategic customers was the restructuring of existing loans, as it only approved new loans, primarily aimed at financing operating assets, in exceptional cases due to the limited financial resources and uncertain economic conditions.

NLB focused on the markets where export-oriented customers operate in the financing and insuring of export transactions. In addition to the strategic markets where the NLB Group is present, these also include the markets of the former Soviet Union, where the majority of business is conducted with Russia and, to a lesser extent, with Ukraine, Belarus, Kazakhstan, and other countries. The Bank followed the market flows in these countries in its financing of export transactions.

In the financing of larger, longer-term projects on foreign markets, NLB works with SID banka, which insures transactions against commercial and noncommercial risks. The Bank mainly cooperates with SID banka in the financing of exports to Russia and other markets of the former Soviet Union.

Cash management

Liquidity and greater efficiency in cash management are of central importance to companies. Therefore, cash management services are an important tool for the NLB Group, particularly for companies that operate internationally. The NLB Group provides a comprehensive range of solutions that customer are using in increasing numbers.

Assistance in obtaining EU grants

In order to exploit to the greatest extent possible financial opportunities in Slovenia during the period 2007-2013, NLB provides advisory services to private and public companies applying for EU grants. The Bank informs its customers of the latest public tenders, provides advisory services during the drafting of project proposals, helps develop optimal project financing and approves the relevant financial investments. By offering such a broad range of services to companies seeking EU grants, NLB assumes the role of leading financial institution in this area.

Documentary operations

The trend of growth in performance and payment guarantees continued in 2010. This segment of operations was also characterized by the adoption of the new Standard Rules for Demand Guarantees by the International Chamber of Commerce.

Letters of credit and collection transactions recorded a slight drop compared to the previous year. The use of specialized instruments (e.g. domestic letters of credit, conditional transfers, the use of fiduciary accounts, etc.) continued to grow and attract customer interest. Stagnation in the volume of international check transactions continues, confirming the prevailing global trend.

Electronic operations

With regard to electronic operations, NLB upgraded the functionality of the Proklik e-banking service with the new universal payment order and new rules regarding SEPA transactions. It also facilitated the use of SEPA mass payment and direct debit transactions and an overview of securities transactions. In 2010, six more Slovenian banks joined NLB in the e-invoicing system. Banks in the system exchange e-invoices and other electronic documents relating to e-invoicing for their customers.