At yesterday´s regular meeting of the Nova KBM Supervisory Board, the first in 2014, its members were informed of the actions taken to strengthen the capital base of Nova KBM, and of the results of the stress tests carried out last December. In the opinion of the Supervisory Board, the Management Board, in cooperation with the relevant departments, has implemented, with the necessary due diligence, all the measures imposed on Nova KBM by the Bank of Slovenia. The Supervisory Board further noted that all the activities related to the restructuring of the Bank and the Nova KBM Group are proceeding according to the plan. In addition, the supervisors discussed the key assumptions of the 2014 business policy and financial plan, which is currently being developed and according to which an operating profit is expected to be reported for 2014, and were informed of Mr. Igor Hustič´s resignation as a candidate for the Bank´s Management Board. In accordance with the restructuring programme, approved by the European Commission in December, the Management Board and senior management of Nova KBM are making every effort to transform both the Bank and the Nova KBM Group into more efficient financial institutions, and to return them to profitability.
Following an €870 million capital injection by the Ministry of Finance of the Republic of Slovenia, both the Bank and the Nova KBM Group entered the year 2014 with strong capital position, determined to continue their transformation into profitable financial institutions with high moral and ethical standards, thus justifying the confidence placed in them by their customers and investors. As announced previously, and as suggested by the results of the asset quality review, the Bank expects to report a net loss for 2013, principally due to high impairment losses and provisions set aside by the Bank during last year as a result of a further deterioration in its loan portfolio. However, it has to be stressed that the Bank has posted a profit before impairment losses and provisions for several consecutive quarters. For 2014, based on current performance analysis, the Bank expects to deliver a profit after accounting for provisioning expenses, provided no substantial weakening in economic conditions takes place.
The restructuring programme is based on the guidelines of the European Commission, according to which both the Bank and the Nova KBM Group are requested to streamline their operations, divest their assets, and downsize their balance sheets. As stipulated in the restructuring programme, Nova KBM will focus its resources on its principal activity, and will improve the management structure and its risk management model, in order to ensure profitability in the future. The restructuring programme also envisages the sale of the entire 100% government shareholding in the Bank.
In accordance with the action plan and in line with the agreement signed with the Bank Asset Management Company (BAMC), all the procedures related to the transfer of bad loans to BAMC are continuing as planned, and the cooperation between Nova KBM and BAMC is constructive and efficient. Notification of customers regarding the transfer of claims against them to BAMC will be completed by the end of this week. The book transfers of all the bad loans were carried out last December, while the physical transfer of these loans will be conducted gradually in five tranches, presumably by the end of April.
