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The Government of the Republic of Serbia

In the service of citizens

Nova Ljubljanska Banka buys Kontinental Banka

Belgrade, 6 July 2005

Serbian Minister of Finance Mladjan Dinkic, Bank Rehabilitation Agency Director Milorad Dzemic, and National Bank of Serbia (NBS) Governor Radovan Jelasic have signed a contract with representatives of Nova Ljubljanska Banka (NLB) on the sale of 98.4 percent of Kontinental Banka to the Slovenian bank for €49.5 million.

Dinkic told reporters following the signing ceremony that this is the second successful tender sale of state equity in Serbia’s banking sector and he added that Novi Sad-based Kontinental Banka now has a significant strategic partner, whose presence in the market will help to raise the quality and competitiveness of banking services in Serbia.

Dinkic noted that Serbia’s banking sector has seen robust growth over the past year, in which total bank assets have grown by 70 percent, or by €3 billion.

He said that this is due to the arrival of foreign banks, which has compelled domestic banks to boost competitiveness and which has also had a positive impact on the entire economy.

Dinkic stressed that in these transactions the state got very good sell-off prices compared with the share capital of the banks and he explained that in the privatisation of Jubanka earlier this year this ratio was 1:1.51 and in the sale of Kontinental it stood at 1:1.76.

Dinkic said that Kontinental, Serbia’s 19th largest bank by assets, controls two percent of the banking market and operates a network of 70 branch offices across the country.

Kontinental’s total assets are €101 million, while its book value is €28 million, said Dinkic and announced that the official takeover will take place on July 12 when NLB is due to pay the full price.

He recalled that an international tender for Kontinental was called last September and that aside from NLB, it attracted Greece’s EFG Eurobank and Piraeus Bank as well as General Electric Capital Europe Ltd from the UK.

French BNP Paribas was the adviser in the privatisation procedure.

Serbia has earned more than €200 million through the sales of Jubanka and Kontinental this year, said Dinkic and announced that talks with Austrian Erste Bank on an acquisition of Novosadska Banka should be completed in ten days.

Speaking about details of the Kontinental sale contract, Dinkic said that NLB has offered to buy out small shareholders over three months at a price no lower than the price per share in the purchase of the state equity.

The Slovenian bank also pledged to keep the average number of employees over the next three years and to pay more attention to their professional development.

NLB Board Chairman Marjan Kramar said that the bank plans to improve Kontinental’s position through increased lending activity, expansion of the range of financial services, investment banking, housing loans, and the strengthening of financial ties between Serbia and Slovenia as well as through orientation towards small and medium sized businesses and entrepreneurs.