December 30, 2020
With today’s completion of the acquisition of an 83.23% ordinary shareholding in Komercijalna Banka a.d. Beograd (KB), NLB has achieved a final milestone in this important transaction to further execute our strategy of becoming the leading financial institution focused on and headquartered in our home, the SEE region.
The transaction received all of the necessary regulatory approvals, including approvals from the European Central Bank and the National Bank of Serbia. The final purchase price (accounting for interest since 1 January 2020) amounted to EUR 394,7 million in accordance with the provisions of the share purchase agreement (‘SPA’) entered into with the Republic of Serbia on 26 February 2020.
Serbia has long been a strategically important market for the NLB Group in the context of the strategy to be the leading international bank headquartered in and focused on the SEE region. Whilst in all countries of Group’s operations NLB has a top three market position, in Serbia (the largest market by population) it was, until today, sub-scale.
As a result of the transaction, NLB will become the third largest banking group in Serbia with the acquisition of KB increasing NLB’s market share from approximately 2% by total assets to over 12% as at 30 September 2020. The business operations of the NLB Group in Serbia will be (besides the Slovenian market) the largest and most important one, adding more than 800,000 active retail customers and the largest distribution network in the country of 203 branches to NLB’s existing operations. Through KB’s subsidiary banks in BIH and Montenegro, the transaction will further strengthen our strong existing position in those two markets.
The acquisition of KB will increase loans to customers of NLB Group by almost EUR 1.8 billion and deposits by approximately EUR 3.3 billion. KB achieved approximately EUR 170 million in net banking revenues in year 2019. In the first half of year 2020, marked by the COVID-19 pandemic, KB continued its stable business performance, as it successfully generated almost 80 million EUR in net banking revenues. NLB is acquiring a stable franchise that will help increase shareholders’ value through EPS accretion driven by the existing operation and envisioned strong future growth. Capital ratios for the enlarged NLB Group after the acquisition will remain above regulatory requirements and above management TCR target (15.75%), allowing for the resumption of dividend payments.
NLB and KB banks in all countries where both banks are present will continue working as separate banks until the legal mergers have been affected. NLB will be focused on managing the integration processes as seamlessly as possible, to ensure a smooth transition and retain operational efficiency, keeping our focus on NLB’s and KB’s clients and their needs, employees, and all other stakeholders.
In the short term, there will be no changes to clients’ regular business operations. All our services will continue to work smoothly, all deposits, loans, and accounts will remain under the same conditions. Since we see considerable potential to strengthen the range of products and services that Komercijalna Banka offers, drawing on NLB’s own expertise and capabilities, as well as synergies with the NLB Group’s operations across the region, the services of the combined bank will be enhanced and their quality even better. In the coming weeks, an extensive welcome package including a combined ATM network free of charge in the whole NLB Group will be available to clients of both our banks, as well as to everyone who wishes to become a part of our family. Further on, development of the Retail segment will remain our strategic ambition, and we will focus on rapidly and intensively building best-in-class client service and experience. In addition, we will continue strengthening relationships with our corporate clients, to whom we will offer improved services, such as a regional platform for trade financing, factoring, leasing, and other services. We will make sure, that with us, together, at their side, our clients are ready for whatever may come.