With total assets of EUR 1.8bn at the end of 2020, Sberbank had a market share of approx. 4% of the banking assets in Slovenia. At the same time, Sberbank in Croatia had HRK 11.1bn of assets in Croatia, owning approx. 2% of the banking assets in Croatia.
NLB published an announcement on the LJSE stating that NLB is acquiring Sberbank Slovenia. Yesterday, the Bank of Slovenia issued a decision, in accordance with Article 116 of the Resolution and Winding-Up of Banks Act, to issue a resolution tool in respect of the sale of 100% shares issued by Sberbank banks. With total assets of EUR 1.8bn at the end of 2020, Sberbank had a market share of approx. 4% of the banking assets in Slovenia. This would indicate that the NLB’s market share would increase to roughly 30% in Slovenia. Sberbank’s customer loans amounted to EUR 1.2bn at the end of 2020. The transaction will complement NLB’s existing franchise in Slovenia, particularly in the corporate and SME segment which accounted for app. 55% of Sberbank’s net customer loans at the end of 2020.
At the same time, Single Resolution Board (SRB) has decided to transfer all shares of the group’s Croatian subsidiary Sberbank (615,623 in total) to Hrvatska Poštanska Banka (HPB). This means that Sberbank in Croatia will continue normal operations moving forward, albeit under HPB Group. As a reminder, Sberbank owns 2.2% of total assets in the Croatian banking system, making it the 8th largest bank in Croatia. At the same time, before this transaction, HPB owned 5.56% of total assets in the Croatian banking system, making it the 6th largest bank in the country. After the transaction, HPB will own 7.77% of the total assets, still maintaining its 6th place, just below Raiffeisen bank with 8.3% of total assets in Croatia. It should also be noted that HPB’s is owned in majority by the Croatian state.
When looking at Sberbank Slovenia’s transaction, it will add approximately EUR 1.0bn of risk weighted assets to NLB Group’s existing EUR 12.7bn of RWA at the end of 2021. This implies an RWA density of roughly 56%, which is slightly lower than NLB’s RWA density which as of the end of 2021 stood at 58.7%. NLB Group will at all times keep exceeding its Overall Capital Requirement and Pillar 2 Guidance (from 1 March 2022 onwards at 15.10% on a consolidated basis). Meanwhile, at the end of 2021, the Group’s CAR stood at 17.8%. We note that the pricing of the transaction was not yet announced, but it would be reasonable to assume that the acquisition was concluded at a significant discount, i.e. we would not be surprised to see negative goodwill from this transaction.
As a reminder, following the Russian invasion of Ukraine, the EU and the US adopted a sanctions package that has also had a quick and significant effect on the operations of Sberbank. Due to rapid liquidity deterioration, the ECB, announced on 28 February, that Sberbank Europe, a subsidiary of Sberbank, is failing or likely to fail. This assessment included both the Slovenian and Croatian branches of Sberbank. To read more about this, click here.