The decision together with applicable combined buffer requirement leads to overall capital requirement of 14.25% (-0.5 p.p.).
NLB published a document on the Ljubljana Stock Exchange announcing that they have received new decision establishing prudential requirement from ECB, which is applicable from 1 January 2020. The mentioned requirement leads to total SREP capital requirement (TSCR) of 10.75%, that includes minimum own funds of 8% (P1R) and own funds requirement of 2.75% (P2R) to be held in excess of minimum own funds requirement on consolidated level.
Following the Supervisory Review and Evaluation Process (SREP), the ECB has formally notified NLB of its decision to decrease: the pillar 2 requirement (P2R) from 3.25% to 2.75% CET1.
This decision together with applicable combined buffer requirement leads to overall capital requirement of 14.25% (- 0.5 p.p.)
Note that as of H1, NLB’s CAR stood at 16.5%, which includes the EUR 45m domestic bond issuance in May. However we expect it to increase in the 9M report since in the meantime, a bilateral transaction of EUR 45m followed in September. Also, the company issued EUR 120m of Tier 2 notes at interest rate of 3.65% p.a. To read more about it, click here. This was done in order to maintain a comfortable capital adequacy ratio and optimize the capital structure and by this ensure basis for either organic growth or growth via acquisitions, which would allow the company to pay the lucrative dividend.
Note that NLB will be publishing their 9M report today, which we will be covering in our Company Note.