Ladies and gentlemen, thank you for standing by. I'm Constantinos, your call operator. Welcome, and thank you for joining the NLB Group live webcast to present and discuss the takeover offer for Addiko Bank AG. All participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. Anyone who has a question may press their question via the live feedback box below the presentation. At this time, I would like to turn the conference over to Mr. Blaž Brodnjak, CEO, and Mr. Archibald Kremser, CFO. Mr. Brodnjak, you may now proceed.
Thank you very much. Warm welcome, everyone. Just a good month after the Investor Day, following the material event on Friday, and NLB Group has, of course, found its way to you and your hearts and heads to discuss further opportunity. We have just communicated the strategy, and we're drawing our attention to the disclaimer following up to what is, of course, a material event, and that's a fact that NLB Group has on Friday published the binding bid, the offer to all shareholders of Addiko Group. It is not, I guess, coming as a major surprise to anyone, as we have been signaling for last couple of years that NLB has been analyzing all material assets in the region and has been working actually on the analysis of Addiko assets as the potential opportunity for more than two years.
So we have been really investigating into the intelligence, and key terms of the offer are, we believe, pretty straight. So it's a pure cash offer for 100% of shares, and by that also introducing a success threshold of the offer of 75%, which is, of course, assuming statutory control, with the aim to obtain potentially, of course, exclusive control over the asset, and by that, obviously be able to exercise full strategic aspirations. The acceptance period has been set to 10 weeks, which is ending on the 16th of August, and we have been applying all standard reps and warranties for such transactions in sense of, of course, treating this as a publicly listed company at Vienna Stock Exchange.
We have published this on Friday, as set, and since then, of course, we have been working on potentially finding ways to the shareholders base, shareholder base. This is a set aiming to all shareholders, not exclusive to, of course, the ones that have potentially not yet accepted some other offers. So this is, in fact, actually acting as a competitive bid to what has been already in place as the minority bid from alternative offering party. In this respect, what we are talking about is the asset that is, of course, covering multiple markets. As we have all been aware, NLB has been playing exclusively in the territory of what was formerly known as Yugoslavia, and as leading bank from Slovenia, covering basically all former republics, apart from the Republic of Croatia.
Addiko has been headquartered in Austria, but with really operative retail banking franchise, addressing the markets where Slovenia, where NLB Group has already been present, apart from the Republic of Croatia, where NLB has not yet been banking. As such, of course, the Republic of Croatia has been a natural bridge to our other markets, and as the largest economy of the region, of course, of the utmost interest of NLB Group to, at certain point of time, of course, also be able to do banking and universal financial services distribution business also in this market. Once analyzing the Addiko structure in terms of geographies, as said, very favorable distribution, bringing obvious synergies to the business, in the markets of our presence, through in-market consolidations, but potentially also considering dual branding strategies.
It's too early to develop this thought further, but generally, what we are aiming at is, of course, also obtaining the significant talent pool. The business has been headquartered in Austria and has been developing end-to-end digital solutions, especially for consumer lending and micro lending. And in this respect, we have seen significant value, actually, in this franchise, also in terms of the know-how, experience, and digital solutions. So the holding in Austria might serve obviously as a steering club as well for the potentially, you know, dual market strategy in a sense of addressing clients with potential multiple propositions. And as such, as said, we count on this rich talent pool as a major contributor, potentially once, of course, hopefully closing the transaction to the NLB Group of talents.
In this respect, clear synergies in asset markets where we already play and of course, significant boost to potential operations of the group by adding a new geography. This is, of course, a cash lending platform, mainly when it comes to Croatia, and of course, some specific and, selective micro lending. But of course, we would want to add clearly a, corporate business as well, infrastructural finance, public finance and other services to be able to redistribute universal financial services also in Croatia. This is, for us, all incrementally significant opportunity, and by that, we believe something that is, of course, worthwhile addressing. All clearly subject of regulatory clearances, and a set acceptance of shareholders. There is, obviously a number of, a set of numbers associated with this business.
We have been always talking about our absorption capacity of approximately €4 billion of risk-weighted assets. With this €6.2 billion of assets from Addiko Group, this is more or less exactly what we have been talking about. Within the presentation of the new strategy, we have, we have been talking about organic evolution with, let's say, high single-digit growth rates in terms of CAGR, of loan volume. On the other hand, we have also been talking about, let's say, €5 billion-€6 billion of tactical M&A space, and this asset basically qualifies exactly into this level of dimension.
In this respect, this would fast forward, in principle, the implementation of the strategy, since if this was successful, let's say towards the second half of next year, this would bring the asset base of NLB Group to EUR 32 billion-EUR 33 billion very early in the process. Which means that, of course, even lower CAGRs, more or less following nominal GDP growth of the region, might suffice to reach down the EUR 50 billion asset aspiration that we communicated within the strategy.
So in specific markets, of course, there's a bit different positions of Addiko Group, but generally a specialized, retail lender, consumer lender, which is exactly going in line with what we have been talking about already some eight years ago, and then throughout the last period, that we want to become also an expert in more or less developing a consumer lending platform. And here, more or less, we are talking about such platform already existing, so a nice contribution and complementary more or less add-on to the business operations.
The economics of the business are still not yet, of course, at the level that would necessarily justify cost of capital, but we believe that through the synergies and focus, of course, we can bring this business there, and by that, obviously justify not only the acquisition, but of course, a real value accretion for our shareholder base. Key attractions, as said, the offer is addressing all shareholders with cash proposition, which means we are aiming at 100% of shares. We are offering cash. The price has been following, of course, the latest market movements throughout the last months, and is offering obviously a significant premium to this.
And if you look at simply more or less the last year, actually, this is a real premium to what you have been seeing in the market. We, as said, are aiming at full control. We believe we have been a credible counterparty, systemic business, regulated in the European Monetary Union, supervised by the European Central Bank directly, headquartered in European Monetary Union country. Proven to be able to not only acquire, but meaningfully integrate, in the last three years, more or less three banks in three countries, adding asset management business, adding leasing recently. And by that, showing simply the strength and the discipline at delivering the synergies and value accretion promised while bidding, right?
So with this acquisition, NLB would, in principle, further cement one of the leading positions, aiming towards the leading position of the region as potentially becoming the only banking group covering all of the markets of former Yugoslavia. No one else has been doing this so far. And by that, of course, becoming a natural choice provider of, be it trade finance services, be it simply flowing, following the flows of goods and capital, and financial services of the region. Entry into Croatia is specifically relevant for us. As said, this is not only the bridge to other countries, this is the largest GDP country of the region, and by that, of course, after the adoption of euro and applying the Schengen regime, simply Slovenia becoming an expanded home market for Croatian economy and the other way around.
By that, obviously, there have been tremendous opportunities and synergies between these two countries, all, of course, belonging to the European Monetary Union. Our capital and liquidity strength has been obvious. We have been, of course, showing this throughout last years. As said, we have been consciously keeping certain buffers in capital, exactly in order to be able to address such opportunities, should they come our way. They have been a bit accelerated, obviously, now by some other bids, and that's why, of course, as said, we have been ready and could actually react within more or less a matter of a month or two, to be able to provide a binding bid for the whole asset.
As said, the specific incremental complementary universe of consumer lending and end-to-end digitized solutions is something we cherish and we specifically value when it comes to Addiko as the asset. And what we also learned while discussing this with the management and, you know, meeting, of course, people from the group throughout last years, is that there is a significant value in the talent pool. So we see really a lot of shared values on one side, on the other side, really know-how and experience that could be actually transferred also to the NLB Group as best practice sharing, and by that, really, as said, incrementally benefiting significantly. I was mentioning our track record in terms of, in terms of, of course, being able to acquire, being able to integrate.
I would not dwell more on, on the financials. I would then by that, pass the word to Archibald to guide you through the other elements of the economics and structure of the deal, and then, of course, wrap up and open floor for questions.
Thanks, Blaž. Welcome from my side as well. A lot has been said, in fact, most has been said, so I'll not spend too much time. There'll be sufficient, also, possibility for Q&A. Clearly, this offer is meant to be attractive, and we believe it's very attractive for all categories of shareholders. And you see the charts and the various premiums over the various volume-weighted average price. Clearly, also a premium to other competing offer. And so in our sense, that's a very fair deal, and value accretive, I think, for everybody. So that's a, that's an absolute win-win situation, and we're very happy to being able and having been able to publish this offer in that way.
We have spoken already that, probably that's, I dare to say, a very rare opportunity for all shareholders to basically tendering the shares. And in that sense, it's anyone's guess, but we dare to say it's a quite unique opportunity. And NLB clearly is qualified and credible counterparty to this transaction. As a listed, ECB-regulated business, with the track record we have mentioned already, I think, we bring everything to the table that can basically bring this transaction to a positive conclusion for everybody. Blaž has already mentioned the strategic rationale. Here it's just a bit more technically in terms of market shares.
Clearly, there is slight upward moves in pretty much all markets that are important to us, and of course, specifically interesting for us also entering Croatia, as it mentioned here. We have, I think, sufficiently explained in the past that we are credible in M&A. We know how to price, and we know how to integrate in a way that works for all sides, from regulators, shareholders, employees, pretty much all stakeholders, customers, crucially important. And here you see the list of transactions that we believe have underpinned that point. Two of them are. One of them pending still, to be fair. Generally was closed.
But I think most important in this context are the two lower lines, and already mentioned acquisitions and subsequent integrations of three banks in three markets in three years, which, to be fair, was a stretch to the organization. But the organization has grown through that stretch, and now we are confident that we really have a platform and the capability to not just acquire, but also integrate to the benefit of everybody. I think crucially important, and I guess a lot of our investors are very much focused on our ability to fund the deal. And here we, I think, make very clear that in essence, we are funded relative to current P2G requirements.
There is, of course, the outstanding commitment of us to maintain our target levels that we have just published in our capital markets day for both CET1 to exceed 13% and Tier 1s to trend around 15%. Now, in a pro forma calculation, as you see it here, for a 2025 year-end consolidation, you see that we are pretty much in line with those targets, with a small gap on the Tier 1 space, which we preferably intend to close with AT1 instruments, should they be available and the market accessible. Otherwise, of course, we can also consume a bit of our dividend capacity, which importantly in this pro forma calculation isn't touched.
So this basically allows for every dividend ambition that we have been communicating so far, and you see the details mentioned here. So that chart shows not just the pro forma Addiko acquisition, but of course, also the pending Summit Leasing acquisition and our organic growth. So it's a full-fledged waterfall, I think, very transparent, also mentioning all assumptions in detail. And you can, of course, subsequently to this call study them more closely. But in essence, we believe we are funded and capitalized, and I think that brings a crucial quality to this particular proposition. We have, I think, mentioned sufficiently the business and the business composition.
We have had a chance to study this, of course, mostly desktop-based, but also in some limited discussions. And in that sense, we believe this business is indeed a very good fit to our own business. And Blaž has highlighted specifically the interest of a much more digital customer value proposition, which we believe Addiko has figured out in a very good way, not just in single markets, but actually as a geographic platform. The technicalities around the timing are very clear, and of course, this is fully regulated space. I'm not going to read out all the dates.
Clearly, the first crucial milestone is sixteenth of August for all relevant stakeholders, and of course, particularly the shareholders, with the end of our acceptance period. Then, of course, we also have committed to a long stop date of mid end June 2025. By that, we will have to have obtained all necessary approvals, which is, of course, quite a list, given the geographic footprint. Of course, we will reach out in very short future to, and have already to some extent, talked to the regulators and all other stakeholders relevant in this matter, and we'll do our very best to bring this closing to a fruitful conclusion. By that, we are done with this short, but we hope informative presentation.
I'll hand the word back to Blaž. And of course, we are open for questions.
Thank you. So to sum it up, it's a pretty straightforward value proposition to the existing shareholders of Addiko and, of course, also shareholders of NLB Group, because on the other hand, this is really value creative for, for us, for our shareholders. On the other hand, this is bringing significant prospects and opportunities also for the talents of Addiko and of course, shareholders of Addiko to exit at fair terms and transparent terms. So we cordially invite all shareholders to accept our offer. As said, it's expiring on August sixteenth, and clearly, this is the time frame within which we will, of course, also be talking to major shareholders. That's clear. So we hope, of course, to simply find their interest. And as said, this is what we can communicate as of today.
By that, by saying that, we would open the floor for questions or comments. Thank you.
Ladies and gentlemen, at this time, we will begin the question and answer session. You may type your question via the live feedback box below the presentation. One moment for the first question, please. The first question, and I quote: "There have been a few announcements made in relation to the shareholdings in Addiko by various parties recently. Example, Agri Europe, Alta Pay, and Diplomat Pay. How do you see your offer versus these other potential investors? Thank you.
Thank you. We can't possibly comment our offers and their strategies. What we are doing here is a set, fully transparent offer for 100% with cash and with reasonable price. And, we by that believe that this is the credible offer, and that, of course, shareholders will find their interest in accepting such an offer, and that's all I can say. So, in terms of a structure, if you ask me whether it is, you know, inferior or superior, it's hardly... I can hardly comment, but I can only say that in our offer, in principle, you get 100% acceptance, not 17 or 27% acceptance or whatever else, where there is no offer yet at all. Right, and at predictable terms, the price that is higher than at other existing publicly known offers, right?
In this respect, we believe it is an attractive deal.
Second question, and I quote: "What, what influence will the unresolved issue of NLB's entry into the Croatian market have on your offer? Thank you.
Well, we of course, are assuming that we will be actually, of course, cleared also for Croatian market, and in this respect, otherwise we would not simply, you know, provide a bid. Of course, there is always a likelihood that, political interest would prevail versus or in front of, economic interest. Assuming, of course, legacy issues that have been perceived maybe the other way in some countries than in other countries. But I can only say that NLB has been a privately owned business, listed in London and Ljubljana, the only one from the region actually listed in London, with highly diversified shareholder base. Top 10 private investors hold more than 25% of ownership.
Top 25 own actually more than 50% of ownership, and 9% of this ownership is actually in the hands of Croatian pension funds, which means Croatian people, future, you know, pensioners of the Republic of Croatia, who we appreciate very much, and of course, we appreciate also their trust in the business. So we believe it is in the interest of these people, it's in the interest of regional economy, it is in the interest of Croatian companies and Slovenian companies and regional companies, for NLB to be able to, of course, also support them with services in Croatia. And we hope and believe that at the end, this should be a prevailing argument, not politics.
Next question, and I quote: "What are the financial frameworks of the offer? Thank you.
Sorry, the?
Financial framework.
Well, I think we have outlined very clearly the offer price, our acceptance thresholds. I think it's important to underline again, this is unlimited, but not less than 75% of outstanding shares. So, this is important. We aim for control and not for partial control, because not just that this bid has to be credible for investors, it also has to be credible for us and the regulator eventually. So we believe that's fair and square, and as outlined, it's we also have the capacity to digest it. Of course, that's all subject to regulators to have their final say. We don't preempt that, but as mentioned before, we are in the midst of initiating these talks and very much look forward to that conversation.
In monetary terms, that's EUR 390 million. So if this was part of the question, EUR 390 million for 100% of shares, which somehow corresponds to approximately half of book value.
Next question, and I quote: "Does NLB have enough funds to cover the transaction? Thank you.
Yes, the deal is funded, as Archibald explained, both in terms of capital and liquidity.
Next question, and I quote: "What are your plans if your bid is not successful?
Well, there is no fallback to this. So we have entered this transaction with calm hat, cold hat, and calm hand, right? So we don't base our strategy on this specific acquisition. As we explained at the Investor Day, we have a strong organic path on one side. On the other side, we are in a position and equipped with resources, capital, and liquidity to be able to address eventual acquisition opportunities, M&A opportunities. This one has just come potentially our way. We are not depending in terms of, you know, our strategy, realization, and crystallization on a specific market, i.e., Croatia or Albania, or on a specific asset. So neither market, neither asset, and nor asset. So in this respect, we believe that this is simply, you know, a good opportunity for us to fast-forward the implementation of the strategy.
If it didn't happen, this would by no means be a tragedy or a disaster. We would simply focus on alternatives. As said, for two and a half years, we have been analyzing every single asset of the region, and there may be, might be other geographies, other assets, you know, if not this year or next year, in the upcoming years. The strategy is actually, you know, a strategy for the period until the end of 2030, and until then, we believe, you know, that we will be able to find ways to, you know, obtain this EUR 5 billion-EUR 6 billion actually through the acquisitions.
Next question is a series of questions, and I quote, "until when do other parties already participating in the process or not, have to submit bidding offers?
Well, our offer is valid, so acceptance period is actually in place until the sixteenth of August. So until then, they can accept our offer. As we explained, it is a competitive offer to the only other published offer. So in this respect, even if they have accepted the alternative offer already, they can still accept ours, right? So they can withhold more or less the acceptance of the alternative offer and can accept our offer, and they have time until August sixteen. We are not aware of other official published offers. We are just reading that there have been other SPAs signed and so on, but that's all we have known so far. NLB has by now not acquired a single share, neither at the stock exchange nor through proprietary SPAs.
NLB is actually entering this transaction with, you know, clean sheet, offering 100% to everyone, not trying to park some shares, not trying to obtain something upfront, you know, treating all shareholders equally and fairly.
What can shareholders expect if takeover is not successful in regards to excess capital?
Well, this is, this remains to be seen, because, you know, until end of, mid of August, we will simply now wait for the outcome. We have said, on many occasions that, of course, we will be actively seeking opportunity for, you know, alternative opportunities as well. If no material ones would actually come our way, then pretty soon, of course, we could always upsize the dividend. But it's too early, from today's perspective, to actually talk about this, as we have hopes that this transaction will be successful.
But I refer you fairly straight to the wording that we have published at the Capital Markets Day. It's all written there. We have, you know, target capital levels that we try to achieve. And of course, those capital levels always allow for a bit of tactical M&A, and we have also communicated a dividend strategy. So none of this is touched by what is published now. Just that, of course, this now very much focuses our minds because it's the thing at hand.
It is just now a demonstration of how pragmatic it was to keep certain capital buffers, because, you know, now we are able to act upon this deal in a funded way, right? So we are in a possession of sufficient capital and liquidity to be able to actually act the way we acted in a matter of more or less a month and a half, you know, producing a binding bid.
What's the likelihood of the regulator approving the takeover, and what are the main hurdles you need to overcome?
We can't operate with likelihoods here and probabilities, so we believe it should be, of course, cleared. And there is... It is, as Archibald explained, a complex process because there are multiple regulatory bodies and supervisory bodies that have to be addressed, be it from the, you know, competition protection space, be it from, obviously, banking regulation space, in all of the, you know, relevant geographies. And that's why we have also, within the bid, aligned the long stop date, which means that, you know, the, the closing of the available, period until official closing is end of June next year. So we, we believe that until then, which is more or less almost a year since publishing the bid, should be sufficient time frame to obtain all of these approvals.
The next question, and I quote: "Have you included Addiko Bank in numbers into your latest and very ambitious long-term guidance presented recently at Capital Markets Day?
Well, as said, we have communicated at the Investor Day that we've got an ambition of, let's say, EUR 5-6 billion of M&A growth and, let's say, you know, 8% CAGR when it comes to the organic growth. Now, we are talking about EUR 6 billion assets, more or less, being, you know, acquired now, already a month after presenting the strategy, yet with the fact of closing second half of next year, right? But yes, until end of 2025, this would mean that we come to 32-33 billion of asset base, which means that in order to come to the 50 billion, it would require much lower CAGR in terms of total volume. But as said, we don't base the strategy, you know, on success of this specific acquisition. So, you know, yes, it fast-forwards the whole thing.
It adds, you know, to high probability of us delivering the strategy. But otherwise, you know, we would still keep, you know, seeking for comparable opportunities. Of course, there might not be such with multiple market operations, with, of course, holding in Vienna, which allows actually even obtaining an asset in Croatia, potentially legally, and so on. And it would require then, of course, rethink of how to potentially enter Croatian market, you know, if at all, right? So, but at the end, on the other side, there will be an in-market consolidation happening still in the markets of the region. So of course, we would be further highly interested in potential acquisitions in Federation of Bosnia and Herzegovina, predominantly Serbia, clearly.
Let's see what, you know, Slovenia will bring at the end of the day. This process is not over, you know. We have been talking about potentially having the interest for Albanian market, you know. Would there be finally a seller again, you know, of a material asset there? And now piece by piece, you might again come to EUR 5 billion-EUR 6 billion in 6.5 years, and by that simply now crystallize what we have been talking about. Until then, we simply focus on, you know, organic growth. We have been growing significantly as per the guidance, mid-single digit last year, mid-single digit this year. Next year, we believe that, you know, simply following the growth of the general economy, let's say 2%-3% inflation, 2%-3% real growth on average in aggregate terms, right?
You should be growing 6%, and then you see how shallow these markets still are in terms of household debt to GDP and total debt to GDP. You would hope that there would be a convergence and, you know, at least, let's say, two percentage points on top of what is nominal growth of GDP anyhow. You should be able to deliver the organic as well, right? Focus on the asset management is clear. So as said, we bought the business in North Macedonia and just closed it. We are now really beefing up the business in Serbia when it comes to the investment fund business, right, the asset management business. We are thinking of potentially of adding potentially even proprietary insurance, you know, arm within the banking group and so on.
There are many elements of the strategy that will be addressed on the go. I mean, this one came a bit early, but, you know, since there was a bid, of course, we were ready to act with a competitive bid because we believe there is value in this asset. If it didn't, you know, if we didn't succeed, this would by no means, you know, mean any disaster for us. We would simply move on and focus on alternatives.
Just to be clear, of course, at Capital Markets Day, we were still at the generic level in terms of our M&A ambitions. Otherwise, of course, we would have had to talk about it. So that was by no means the case, just for the record.
Yeah, absolutely.
Next question, and I quote: "What would be your maximum digestible impact on the NLB Group's CET1 from the consolidation of Addiko, assuming 100%?
So we have, I think, laid out the capital stack. You'll see that we would pretty much eat into our buffers as they are. We actually provided here the complete picture, so not just Addiko pro forma, because that would only tell you half of the story. But everything happening up until end of 2025, and you see that we are pretty much in line with our CET1. You see here at 14%, ending in 2025, and just short of our Tier 1 target of 15%, right? And so in that sense, as we write here, we would like to close this little gap with AT1s. And to remind you that this still assumes quite the dividend levels we had in mind originally.
So in that sense, it's of course, from a capital point of view, a stretch case, which is why we would like to also tap into the capital market for AT1 at a reasonable time and of course, reasonable price. There is no pressure or push to do so, but as AT1, you know, that exactly the bucket that we, in essence, always earmarked for that kind of situation, when we have a bit of a bigger M&A to digest. And we have, of course, since we are listed, multiplied our efforts to be able to access capital markets. We have built a liability balance sheet in excess of, or of around EUR 1.5 billion across the whole capital stack.
So we put a lot of effort to gain this access, and in that sense, now would be the moment to really test it. If we succeed, great. If not, it's a little bit of, compromising on, on parts of the dividends, but not to a very material extent, and I think very much in line with our ambition to, create shareholder value.
Next question, and I quote: "What are your plans at this stage for Addiko's headquarters and its local banking license in Austria?
Well, the holding is here to stay, for various reasons. Obviously, we can't assume direct ownership in Croatia, so in any case, we need an indirect ownership to be able to actually hold a Croatian asset. On the other side, as I mentioned before, we have, during the, you know, discussions, realized that there is a very significant talent pool sitting in this entity. It's still too early to say whether we would, of course, need a banking operation there, but we would for sure may want to consider a steering mechanism or, you know, methodology, methodological setup, modeling setup, really talents that are actually have developed the 50% digital production, you know, throughout the region. That's a massive success, and in this respect, we do count on this talent pool.
We believe that NLB can learn a lot from this talent pool. Everyone is seeking for these talents, you know, modelers, IT guys, and so on. So in this respect, this is, you know, predominantly where we see value... and by that, we would want to keep the entity in Austria. But as said, it's too early to say whether, you know, we want to develop a banking proposition. You might want to think of, you know, is there something for diaspora from the region, right? We have not yet figured out whether there would be some value proposition that they would really cherish and would justify actually a banking operation in Austria with operational retail set up there. But as said, a steering methodological modeling landscape, you know, there is a significant talent pool we believe we can only benefit from.
Next question is a series of questions, and I quote: "Dear Mr. Brodnjak, dear Mr. Kremser, thank you for the webcast. Do you expect the regulator to increase capital requirement for the NLB Group, considering the difference in risk profile of the potential acquisition target?
Well, this is not on us to judge. We would hope not, after what we saw with, you know, how this business is being run, and then, of course, apply our governance structure and, you know, our more or less criteria of how we underwrite and manage risks. And of course, you need to apply look-through mechanisms in this respect, in terms of policies, approaches, decision-making process, and so on. We believe that there would, there would not be a justified reason, but of course, that's not on us to judge.
Could you give a ballpark estimate for that increase?
Well, I did respond. I can't judge whether there would be an increase.
Next question, and I quote: "Just to clarify on the provided pro forma capital ratio estimate, post-acquisition, does it assume the purchase of 100% of Addiko? Thank you.
That's indeed a scenario for 75, but 100% is not so different as for 75. Basically, you absorb the minorities and consolidate them into your capital.
Next question, and I quote: "Can you quantify, perhaps with a range of expected synergies from the transaction and likely merger costs?
Well, it's too early to be very concrete, so we will be working on this throughout summer. And then if we would have enough time, then obviously or between 16th of August and until obtaining all the permits to close the deal. And as said, we are maybe we could be potentially playing with an idea to maybe keep in specific markets, even dual brand strategy, and having a very own niche player in sense of deposit gathering and cash lending platform on the different brand, fully digital value proposition, for example. In some markets, fully consolidate. In aggregate terms, we believe that with some full consolidations, for some partial consolidations, right, we would, of course, crystallize also significant synergies, but it is, at this point of time, too early. Negative goodwill calculations are pretty straightforward.
The actual synergies, of course, really then depend on what you do, finally with, of course, as said, you know, how you run the business in specific markets.
Next question, and I quote: "If by seventeenth of August, less shares than the thresholds are tendered, do you plan to raise the offer price or drop the 75% condition?
Well, we can't comment that, obviously, at this point of time. Currently, the offer is as it is. Until the sixteenth of August, it's valid, and, you know, we will cross any of these bridges once we get there. In principle, we believe it's a fair—it's a fair offer, it's transparent, and it's for 100%.
To emphasize, the 75% are really important, so.
75% are here to stay.
Next question, and I quote, it's a series of questions: "What are your thoughts about the asset management segment in Croatia? Would it be interesting to you to enter the market in case you can't enter the banking segment in Croatia?
Well, Croatia is, for us, obviously, a highly interested, a market of high interest, from various points of view, obviously. So as said, we have signed the SPA for leasing, and hopefully, we would, we would obtain the final approvals in a couple of weeks, and by that, we can start doing business this way. And then, of course, the, if we then came with the bank, this would actually be a catalyst for the full range. We don't actually see a real reason to enter purely asset management business without the bank channel. We have proven that we have been, you know, by, by far, the most successful distributor of universal financial services because we sit on the bank, the client accounts.
The clear value is, of course, with salary recipients, where you then can discuss with client, obviously, what to do in terms of long-term savings. In this respect, without having a banking channel, it is totally different, you know, business. Asset management, without what is actually the gist of the, you know, your competitive advantage, and this is your vertically integrated business model with branch network and/or, you know, a video chat-supported contact centers and so on, is simply totally inferior in terms of how you can perceive the value of such a business, right? We distribute more than 77.0% of all life insurance policies in Slovenia, distributed through the banking channel, you know, but that's because of the banking channel.
You know, we, we actually built the business of classical life insurance in Slovenia from zero to 20% with Vita, but that's purely because we were you know, we were actually selling this through the bank channel. So without the bank channel, the ancillary services actually, you know, have much less charm, much less charm for us.
... Next question, again, it's a series of questions, and I quote: "Can you please elaborate how attractive would this takeover be for NLB if it will not be possible for NLB to enter Croatian market this way? Example, if Croatian regulator does not approve this transaction in regards to Addiko Bank, Croatia.
Well, this is one of the closing conditions, so without an approval of Croatian regulator, there is no deal. It's as simple as that. 40% of the balance sheet of this business is basically Croatia, and without Croatia, it is, you know, for us, a different value proposition. So in this respect, as said, it is at the end in the hands of regulators, both in terms of how many shares will actually be transactable at all, given the fact that there have been, of course, alternative, you know, developments that we don't necessarily fully understand or have full clarity about. And then, of course, it is in the hands of regulators when and to what extent we would obtain the necessary approvals. And, you know, without them, there is no deal.
You know, and if, you know, someone assesses that the alternative bidders are more appropriate to enter certain market, fine, it's their prerogative and their, you know, sovereign decision. We can't judge. We believe that it is in the interest of the Croatian economy, public sector, and citizens, for us, as a regional systemic institution with exclusive strategic focus on this region, you know, being able to speak Ijekavski dialect of, you know, the language, versus maybe some other competitors. And in this respect, that's of course, at the end, in the hands of regulators. In this respect, I guess it would be even the European Central Bank, but of course, the Croatian National Bank's opinion matters a lot.
Does the Croatian regulator's refusal to clear this transaction represent a deal breaker for NLB?
Of course, this is what I said. It would, of course, eliminate this transaction.
Next question, and I quote: "If the shareholder accepts the offer, when he can expect cash, and what are possible scenarios along the way?
Well, as per closing, and then it's of course, again, in the hands of the regulators. If they move faster, it will be faster. You know, we have introduced a long stop date, which is the thirtieth of June, twenty twenty-five. So this would be the latest. No, because even if until then there are no regulatory clearances, the deal would also, you know, fade away.
Next question, and I quote: "Isn't AT1 too expensive way to cover MREL requirements? Would it be preferable to pay less dividends and to increase retained earnings?
We should not mix things here, right? AT1 is a capital instrument as well. It's not only MREL, so this would actually allow for us to pay full dividends still, you know, despite obtaining a material asset.
Exactly.
So that's the main purpose of AT1 is, in this context, not MREL. In this context, it's actually providing capital in order not to have to eat into the dividend. We are not playing with this assumption as of now, but this would secure that we would not have to compromise on dividend payouts. And if you look at the current market environment, it's actually very susceptible to AT1s, you know, you know, pricings of 7% or so. This is reasonable to pay for capital. This is a capital instrument and of course, at the same time, MREL instrument, so, you know, it has different level of quality.
So should there be an MREL gap incrementally, which, if anything, is not very material, we would cover it with the customary instruments. And of course, all of these considerations are priced into our basically willingness to bid, so that, that's priced into the purchase price. All of these needs.
We have proven we can issue, of course, senior preferred and Tier 2s with significant oversubscriptions, but in this case, AT1 is covering for, of course, Tier 1 capital, and in this respect, that's as said, a dividend enabler.
I mean, just to underline, we are really very focused on shareholder value creation. Of course, for existing NLB shareholders, it's all about capital returns and growth. I think this is a growth opportunity, as was outlined, that squarely fits into our strategic ambitions. And as we also outlined here, it's in our view, a sensible use of existing buffers, and so kind of ticks a lot of boxes. And as we also mentioned, I think for existing Addiko shareholders, it's a very, very attractive and extremely rare exit opportunity at a pretty significant premium to where this stock has traded not so long ago. So I think it really ticks a lot of boxes in terms of shareholder value creation for both sides. As we said, it's a win-win.
This offer is a win-win.
Next question, and I quote: "Let's think pink. If this deal goes through, would the 2026 investor day be in Zagreb or Vienna?
Might be in Rovinj. I don't know. Croatian coast is beautiful. It's too early, obviously, but of course, if we were welcome to Croatia, of course, we would want to, of course, show us a courtesy. We love Zagreb. I spend a lot of time in Croatia. There are 122,000 Slovenes owning second homes in Croatia, so this is, you know, heavily connected region. And in this respect, you know, we would love to have an opportunity to host investors in Zagreb or, as said, Rovinj or Dubrovnik even.
Next question, and I quote: "Are Addiko's customer services and operations safe despite the takeover bid?
There is no change of whatever, you know, quality or stability or nature of services of Addiko. Addiko is an independent business. We don't have any control over the business until closing, basically, and we have been, and the management of Addiko, extra careful in order not to, you know, compromise on anything of that. This is a set first, listed business, second, heavily regulated, both businesses. We are also a listed business, so we are extremely careful. There have been absolutely no implications, no connections, you know, with NLB and Addiko. So whatever Addiko does and keeps doing, this is what affects clients. Whatever NLB does, doesn't affect clients of Addiko.
I mean, if anything, it should give Addiko's customers assurance that NLB were interested, and for sure, if we were to close, that's for Addiko customers, broadly speaking, good news, right? Because they are then covered by our regulatory capital and liquidity umbrella. So that's all we can say to that. We would look forward to work with Addiko's customers, of course.
Next question, and I quote: "If the acquisition will go through, when do you assume Addiko assimilation will be completed, in a sense, what is the desired and what most probable timeline?
Well, as said, depending on closing, we would actually assume control, right? So first, we have to get to the 75%. If there was 75% success threshold achieved, there would be automatic three-month extension. But in any case, we need regulatory approvals with long stop date of end of June next year. As of then, obviously, we could already trigger, in parallel, multiple integrations and/or of course, multiple adjustments of business models in specific countries. If there was no integration and there was a dual brand strategy, and there was, of course, digital-only proposition on one side, and, you know, classical universal financial services provider on the other, this requires different set of measures than, of course, full integration of, you know, core banking systems and all the satellites and so on, and client base and so on.
So but we have proven that we can integrate meaningfully, let's say, in up to 18 months, right, from the beginning of the process. So let's say we start these processes, July next year, we would hope to complete everything, let's say, within latest 2 years. So some banks potentially integrated towards the end of 2026, some may be a bit later, some would not be integrated, maybe in 12 months, already flying the new way, right? What we believe is that there is going to be a lot of opportunities for talents in both banks, you know. And specifically in Addiko, as said, we see a lot of know-how experience, especially in consumer lending activities.
Even if we were, if we went for digital-only value proposition, on, on the side of the, the second brand, we at this time, this point of time, are seeking for a lot of talents in our branch network. So people from branch network of, you know, Addiko would put, you know, to a significant extent, find opportunities in the branch network of NLB. So there are many overlapping possibilities in this respect.
Next question, and I quote: "What will happen to Addiko Bank Slovenia? Is it expected to be consolidated to NLB, or will keep the existing business model strategy that is very different than NLB's?
I just said 2, 2 or 3 times that we are considering in specific markets, Slovenia included, that there might not be an integration and that there might be. It's a set, not yet a taken decision, but that there might be actually a second brand, digital-only value proposition for our clients. A kind of deposit gathering and cash lending platform. And this would secure, you know, jobs and independence and continuous, you know, operations, own brand, own business, you know, also for potentially talents in Slovenia.
The next question, and I quote: "What will happen to customer service during the integration?
Well, during the integration, nothing will change much, right? So in principle, you freeze any new developments and so on, but you keep offering more or less what is being standardly offered. Because integration, in principle, is being done in a shadow and test environment until it goes live, right, in physical production. So client services would not be significantly impaired. And there might be, you know, a full integration just in a couple of markets and so on. So it is too early, but during the integration, there should be no real impact on client services.
I think a big part of the credibility of this bid is the fact that we have integrated three banks in three markets, more or less. There are always struggles. I wouldn't pretend that there was no problem whatsoever, but more or less, we have managed, I think, very well to integrate and onboard all these customers, without any visible impairment of services. And I think that's a big part of the credibility underpinning this offer, that we are not just out there to buy, but we are very conscious of what it takes to integrate in a good way.
On the other hand, clients that would then become part of NLB Group would also become part of, of course, the universal financial services portfolio of NLB Group, right? Favorable housing loans, where we want to be a leading bank in every of our markets, right? Now, the asset management products, the whole portfolio, the whole range of services that NLB has been offering on top of what is, you know, more or less than standardized deposit gathering and cash lending. So, you know, even in case of full integration, actually, clients would benefit from, you know, the wealthy portfolio and range of NLB services, where we try to differentiate ourselves as the leading asset manager of the region.
Ladies and gentlemen, in the interest of time, I will now turn the conference over to management for any closing comments. Thank you.
Thank you very much. Thank you for interest. Many questions, we welcome them. We understand certain, insecurities or whatever dilemmas around that. What we have provided is actually a credible, transparent, funded, equally treating shareholders, you know, on the Addiko side, and value accretive to the shareholders of NLB Group offer. We cordially invite everyone to consider it. It is actually open until the sixteenth of August. On the go, of course, we are available for any further questions that we can publicly, of course, respond to. We will keep trying, of course, also addressing some other larger shareholders. We believe it is, as Archibald said, a win-win for everyone around the table, and in this respect, a unique and rare opportunity.
And in this respect, I just hope that on the sixteenth of August, we will establish that we have reached a 75% threshold, and there will be automatic three-month extension. And then, of course, until latest June next year, there is a closing, and then there is a good and prosperous future for also talents of Addiko and NLB Group.
Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for joining. Have a good afternoon.