Apollo Strives for Slovenia Bank Dominance Via Nova KBM Purchase

  • Private equity firm sees four groups leading financial sector
  • Apollo expects industry to consolidate within 5-7 years

Apollo Global Management LLC said it plans to use its purchase of Nova Kreditna Banka Maribor d.d. to build a regional "champion" that will compete with three other main banking groups in a streamlined industry.

Apollo, which completed the 250 million-euros ($284 million) takeover on Thursday, wants to merge Nova KBM with Postna Banka Slovenije d.d. and Raiffeisen Bank International AG’s local unit. It will probably take five to seven years before the banking industry shrinks to its right size, according to Gernot Lohr, a senior partner at the New York-based private equity company.

“We want Nova KBM to become a national and a regional champion in a period of five years,” Lohr said in Maribor. “A 25 percent market share will ensure the bank is a profitable business.”

Slovenia spent more than 3 billion euros of taxpayers’ money at the end of 2013 when it rescued its mostly state-owned banks, including Nova Kreditna Banka Maribor and the largest lender Nova Ljubljanska Banka d.d. The administration of Prime Minister Miro Cerar is eager to recoup some of that money by selling banks and other companies. Nova Ljubljanska is also slated for sale in an initial public offering or to a strategic partner.

Lohr didn’t specify which groups would remain as Nova KBM’s main competitors after the industry consolidation. Some of the biggest players besides NLB and Nova KBM now include Abanka and UniCredit SpA’s local unit. Lohr also declined to say if Apollo is interested in purchasing Russia’s Sberbank local unit.

Nova KBM’s sale is a positive signal to foreign investors that the asset-sale push in Slovenia will go on unabated, Marko Jazbec, the chief of Slovenian Sovereign Holding that is managing state assets, said at the same event.

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