The transaction which is scheduled to be concluded later this year could reduce the RWAs of NLB on consolidated level by up to EUR 252.13m (2% of consolidated RWAs).
NLB published an announcement on the LJSE stating that they are in discussions with Multilateral Investment Guarantee Agency (MIGA) on entering into a contract of guarantee that will allow for a capital optimization relating to Komercijalna banka Beograd.
MIGA guarantee is expected to provide regulatory capital relief to NLB on a consolidated level by reducing the amount of RWAs. The tenor of the guarantee is expected to be up to 7 years.
The transaction which is scheduled to be concluded later this year could reduce the RWAs of NLB on consolidated level by up to EUR 252.13m. To put things into a perspective, this accounts for 2% of the consolidated RWAs as of 31 March 2021. The aforementioned would imply an increase of CAR by 0.3 p.p. to 16.4% (as of end Q1 2021).
The RWA capacity that is freed up is expected to be used by NLB to support the operations of KB in Serbia, and consequently support NLB’s overall business strategy in the host country.
As a reminder, we should expect the inclusion of negative goodwill of EUR 137.9m to the regulatory capital by Q3 2021 (subject to approval by ECB), which would further boost the CAR to 17.5% (with the inclusion of the above mentioned as well).