
Article 1 
The restructuring aid provided to NLB by the Republic of Slovenia, consisting of the first recapitalisation of EUR 250 million, the second recapitalisation of EUR 382,9 million, the third recapitalisation of EUR 1 558 million and the transfer of impaired assets to the BAMC with an aid element of EUR 130 million, constitutes State aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union.
The restructuring aid is compatible with the internal market, in light of the Restructuring Plan and the commitments set out in the Annex.
Article 2 
This Decision is addressed to the Republic of Slovenia.
Done at Brussels, 18 December 2013.
For the Commission
Joaquín ALMUNIA
Vice-President
ANNEX

The Republic of Slovenia (‘Slovenia’) ensures that NLB d.d. and its affiliates (‘NLB’) will implement the restructuring plan submitted on 7 January 2013 as amended on 25 February 2013 and lately in November and December 2013. In connection with this, Slovenia commits to implement in particular the measures and actions and to achieve the objectives listed below (the ‘Commitments’) which are integral part of said restructuring plan.
The Commitments shall take effect upon the date of adoption of the European Commission's (‘Commission’) decision approving the restructuring plan.
The restructuring period will end on 31 December 2017. The Commitments apply throughout the restructuring period unless the individual Commitment states otherwise.

((1)) [reduction of the balance sheet] According to the content of the restructuring plan NLB will reduce its group balance sheet total from approximately EUR 17,9 billion in 2010 to EUR [10-20] billion by 31 December 2017, with essentially no change in the overall conditions governing the balance sheet and the legal environment relevant for the balance sheet total.
((2)) [reduction of costs] NLB's operating costs amounted to EUR 368 million in 2012 at Group level. NLB will reduce its operating costs at Group level (excluded one-off extraordinary costs having non-recurrent nature, i.e. restructuring expenses) to achieve either a cost-to-income ratio below 55 % or in case the cost-to-income ratio is above [50-60] % to EUR [300-350] million by the end of 2014, EUR [300-350] million by the end of 2015, EUR [250-300] million by the end of 2016 and to EUR [250-300] million by the end of 2017.
If the annual inflation in the period 2013-2017 exceeds 2,5 % the operating cost targets will be adjusted to accommodate for the difference between inflation rate projections in the restructuring plan and actual inflation in the particular year.
((3)) [sale of participations] NLB holds, inter alia, participations in the following companies:

— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
As of 31 December 2012, participations aimed for divestment represented a total asset value of EUR [100-150] million.
((3.1)) The above participations shall be sold, or their sale shall be procured, to the extent that by 31 December 2015, the asset value of the participations shall be reduced by at least [40-50] % (i.e. to at least EUR [70-80] million) and by at least [80-90] % (i.e. to at least EUR [20-30] million) by 31 December 2016.
((3.2)) The sale of a participation is deemed to be completed once NLB has concluded a binding sale and purchase agreement for the respective participation with one or more Purchasers that is independent of and unconnected to NLB.
((3.3)) If NLB misses the asset reduction target for 2015, prompt corrective action should be implemented and notified to the Commission.
((3.4)) If NLB misses the asset reduction target for 2016, NLB d.d. shall grant the Divestiture Trustee (appointed in accordance with paragraph 19) an exclusive mandate to sell by […] the above participations or the remainder thereof.
((3.5)) In any case participations shall be sold in a manner consistent with the Commitments.
((4)) [divestment of non-core subsidiaries] NLB d.d. also holds participations in the following non-core subsidiaries:

— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
— […]
As of 31 December 2012, non-core participations represented a total asset value of EUR [950-1 000] million.
((4.1)) The above participations shall be divested (i.e. sold, liquidated or wound down), or their divestment shall be procured, to the extent that by 31 December 2015, the asset value of these participations shall be reduced by at least [40-50] % (i.e. to at least EUR [550-600] million) and by at least [80-90] % (i.e. to at least EUR [150-200] million) by 31 December 2016.
((4.2)) The divestment of a participation is deemed to be completed once the respective company has been liquidated or wound down or NLB d.d. has concluded a binding sale and purchase agreement for the respective participation with one or more Purchasers that are independent of and unconnected to NLB.
((4.3)) The commercial activity of participations that have not been divested within the deadlines set out in (i) above, e.g. due to pending lawsuits or disputes with other shareholders, will be terminated in accordance with the duration and nature of the underlying business. No new business will be executed (except forced prolongations of existing engagements). In such a case, the respective divestment is deemed to be completed if either the total assets of a particular participation have been reduced to 10 % compared to the total assets of the participation as of 31 December 2012, or the statutory formal liquidation procedure has been initiated, or the capital requirements for the subsidiaries concerned do not exceed a total of EUR 5 million on a consolidated level.
((4.4)) If NLB misses the asset reduction target for 2015, prompt corrective action should be implemented and notified to the Commission.
((4.5)) If NLB misses the asset reduction target for 2016, NLB d.d. shall grant the Divestiture Trustee (appointed in accordance with paragraph 19) an exclusive mandate to sell by […] the above participations (or the remainder thereof) to one or more Purchasers that meet the requirements set forth in paragraph 4.2 above.
((4.6)) In any case participations shall be divested in a manner consistent with the Commitments.
((5)) [sale of joint venture participations] NLB d.d. will sell all of its joint venture participations in the following companies by […]:

— […]
— […]
— […]
— […]
— […]
— […]
((5.1)) The sale of the above joint venture participations is deemed to be completed once: (i) NLB has concluded a binding agreement for the respective participation with one or more Purchasers that are independent of and unconnected to NLB. (ii) the ownership of the joint ventures had been reduced to […] %.
((5.2)) If NLB has not concluded binding sale and purchase agreements concerning each of the above participations or reduced its ownership to […] % by […], NLB d.d. shall grant the Divestiture Trustee (appointed in accordance with paragraph 19) an exclusive mandate to sell by […] the participations (or the remainder thereof) to one or more Purchasers that meet the requirements set forth in in paragraph 5.1 above.
((5.3)) In any case participations shall be sold in a manner consistent with the Commitments.
((6)) [sale of participations in banks] NLB d.d. will sell its participations in […] by […].The sale of a participation is deemed to be completed once NLB d.d. has concluded a binding sale and purchase agreement for the respective participation with one or more Purchasers that meet the following requirements: (i) be independent of and unconnected to NLB (ii) have the financial resources, proven expertise and incentive to maintain and develop the acquired business and/or companies as a viable and active competitive force (iii) do not create prima facie competition concerns or give rise to a risk that the implementation of the Commitments will be delayed, and must, in particular, reasonably be expected to obtain all necessary approvals from the relevant regulatory authorities for the acquisition of the concerned business. If NLB d.d. has not concluded binding sale and purchase agreements concerning its participations in […] by […], NLB d.d. shall grant the Divestiture Trustee (appointed in accordance with paragraph 19) an exclusive mandate to sell by […] these participations (or the remainder thereof) to one or more Purchasers that meet the requirements set forth above in this paragraph 6 and at no minimum price.
((6.1)) NLB d.d. will also fully divest its participation in […] by […]. If the participation of NLB d.d in […] is not fully divested by […], NLB d.d. will propose on its own initiative, fully support, vote in favour and execute any measure, decision or shareholders' resolution necessary to put […] in run-off starting from […] until extinction of its loan portfolio (3 years maximum). In any case, NLB d.d. will propose on its own initiative, fully support, vote in favour and execute any measure, decision or shareholders' resolution necessary to have […] refraining from any new lending origination by […].
((7)) [reduction of credit business and closure of […]] NLB d.d. will reduce its market presence in the following ways:

((a)) closure […] by […];
((b)) reduction of credit business in Slovenia with:

(b.1) financial holdings [SIC codes 64.200, 64.300, 64.920, 64.990, 70.100, 70.200, 70.220]; the risk-weighted assets (‘RWAs’) of this portfolio amounted to EUR [500-550] million as of 31 December 2012. NLB d.d. will ensure that the RWAs of this portfolio will be reduced according to the following schedule:

End-2013 End- 2014 End-2015 End-2016 Mid- 2017 End-2017
[…] […] […] […] […] […]
(b.2) corporate clients from the transport sector with an exposure over 1 million [SIC codes 49.392, 49.410, 50.200, 51.100, 52.290]; the RWAs of this portfolio amounted to EUR [100-150] million as of 31 December 2012. NLB d.d. will ensure that the RWAs of this portfolio will be reduced according to the following schedule.

End-2013 End- 2014 End-2015 End-2016 Mid- 2017 End-2017
[…] […] […] […] […] […]
(b.3) corporate clients from the construction sector with an exposure over 5 million [SIC codes 41.100, 41.200, 42.110, 42.220, 68.100]; the RWAs of this portfolio amounted to EUR [900-950] million as of 31 December 2012. NLB d.d. will ensure that the RWAs of this portfolio will be reduced according to the following schedule:

End-2013 End- 2014 End-2015 End-2016 Mid- 2017 End-2017
[…] […] […] […] […] […]
((7.1)) If in any of these three sectors the provided RWA's reduction targets are missed by more than [10-20] %, NLB d.d. shall refrain from undertaking any new credit activities in Slovenia in the relevant sector until the respective RWA's reduction target is achieved. In addition, NLB shall promptly submit to the Commission a contingency plan showing its ability to achieve by 31 December 2017 the relevant RWA's reduction target(s).
((8)) [business with foreign clients] NLB d.d. shall refrain from undertaking any new credit activities with corporate clients incorporated outside Slovenia and are not members of the groups whose headquarter or final beneficiary is in Slovenia. NLB d.d. will limit its activities with such clients to the orderly execution and management of credit contracts. For the sake of clarification, trade and export financing for Slovenian companies in relation to foreign countries and treasury operations with foreign banks are not subject to this limitation.
((9)) [corporate governance] Slovenia undertakes to implement in NLB up-to-date corporate governance structures in accordance with the EU Capital Requirements Directive and Slovenian domestic legislation. The related necessary changes to NLB d.d. bylaws and internal rules have to be implemented in three months after the adoption of the decision of the Commission on the restructuring plan of NLB. In particular:
((9.1)) Slovenia undertakes to observe:

((a)) the corporate governance rules according to paragraphs from 9.2 to 9.9.
((b)) the framework and segregation of duties set by Slovenian corporate and banking/regulatory legislation for shareholders, management and supervisory board of financial institutions; and
((c)) the Commission's Guidance on Corporate Governance and Relationship Framework for Banks in which the State has a Stake;
((9.2)) the management board of NLB d.d. will have the sole powers and responsibilities for managing the day-to-day business of NLB independently and in the sole interest of the bank. Neither the supervisory board nor the shareholders' assembly or any representatives of shareholders may issue any instructions to the management board or interfere otherwise with the day-to-day management of the bank;
((9.3)) apart from supervising and monitoring by the Supervisory Board, no other corporate body or unit shall issue instructions to the Management Board; in particular, there shall be no direct or indirect instruction by any shareholder or by the State to the Management Board. This shall also apply to the Assembly General Meeting, whose decision taking competence shall be limited to the catalogue of decisions as foreseen by the law and in the statutes. Furthermore, individuals who use their influence on a company to induce members of the Management Board to act in a manner which causes damage to the company or its shareholders must reimburse the company for the resulting damage.
((9.4)) the arm's length principle shall apply to the relationship between the bank and its shareholders, in particular Slovenia;
((9.5)) all members of the supervisory board shall pass the ‘fit and proper test’, i.e. they shall be reliable and avail of the necessary professional skills to properly assess and monitor NLB's business. Slovenia will not intervene in the appointment of supervisory board members and executives over and above its own nominees and its shareholder rights under ordinary Slovenian corporate law;
((9.6)) two thirds of the seats and voting rights on the supervisory board and its committees shall be allocated to independent experts, i.e. persons who are neither currently employed nor have been employed 24 months prior to their appointment by the Slovenian government and who do not currently hold nor have held 24 months prior to their appointment a leadership or managing function within a Slovenian political party;
((9.7)) NLB will ensure an effective, independent and objective internal audit function. For this purpose, the internal audit function will report and be answerable only to the Management Board and Supervisory board's Audit Committee, where at least one member has recent and relevant financial experience. Further, the findings and recommendations by the internal audit function shall receive proper attention and be discussed in the Audit Committee/Management Board, followed by an appropriate action plan to address identified problems. Decision not to act on findings by the internal audit function shall be well substantiated and, upon request, reported to the Monitoring Trustee
((9.8)) NLB will follow a prudent, sound business policy geared towards sustainability while implementing the planned measures. NLB will further review its internal incentive schemes and remuneration policy and take steps to ensure that they do not encourage unreasonable risk-taking, that they are geared towards long-term and sustainable goals, and are transparent. The remuneration of board members and leading employees of the bank shall particularly take into account the relevant person's contribution to the bank's economic position and the necessity of market-oriented salary levels so as to be able to employ particularly suitable individuals who can achieve a sustainable business development. NLB's remuneration policies and practices will be compliant with the EBA Guidelines on Remuneration Policies and Practices published on the 10 December 2010. The variable annual remuneration will be limited as follows:

((a)) management board: five monthly salaries;
((b)) employees performing special work employed in the front office function: five monthly salaries;
((c)) employees performing special work employed in other functions: three monthly salaries
The payment of at least 50 % of the variable remuneration will be deferred over the period of three years.
((9.9)) Notwithstanding the commitment of paragraph 9.8 above, in any case, for the whole restructuring period, the total remuneration to any board member and employee performing special work will be restricted to an appropriate level. The total remuneration of any such individual will not exceed 15 times the national average salary in Slovenia or 10 times the average salary of NLB d.d. The restrictions referred to above will continue to apply until the end of the restructuring period.
((9.9.1)) After informing the Monitoring Trustee, the NLB may adjust the above maximum limit for the annual remuneration in line with Slovenian inflation.
((9.9.2)) To the extent legally possible, NLB shall remunerate members of its bodies and committees, employees and essential agents in line with the following principles:

(b.1) the relevant person's contribution to NLB economic position, especially in the context of previous business policies and risk management; and
(b.2) the necessity of a market-oriented salary, so as to be able to employ particularly suitable persons who can achieve sustainable growth.
((9.10)) Slovenia will ensure that each state-owned bank shall remain a separate economic unit with independent powers of decision within the meaning of the EC Merger Regulation and the Jurisdictional Notice. In particular, Slovenia ensures that:

((a)) any confidential, commercially sensitive or personal information provided to government bodies and marked as such will be treated accordingly and not circulated to other banks and undertakings in which the state has a stake;
((b)) the government will manage and maintain its stake in the bank separately from the management of its interests in any other bank in which the state has a stake;
((c)) the exercise of any rights held by the state and the management of the state's interests in any banks shall be on a commercial basis and shall not prevent, restrict, distort or significantly lessen nor impede effective competition. Any disposal of the state's shareholding must be conducted in a transparent, open and competitive process.
((10)) [risk management and credit policies] NLB will overhaul its risk management process and in particular NLB d.d.. and its core banking affiliates will:
((10.1)) price every new loan (considering as new loan any new business not related to an existing transactions) by using an appropriate internal pricing tool (such as the currently used ‘Kreditni Kalkulator’ and its future version) or (in the case of mass market retail and SME exposures) using appropriate internal pricing guidelines. Pricing for new loans will be considered adequate if the new loan contributes to achieve a positive Return on Equity before tax (‘RoE’) of at least […] % in 2014, […] % in 2015, […] % in 2016 and […] % 2017 on either the individual loan or on each client relationship. The calculation of the ROE of a client relationship can include interest income, fees as well as other combined products of the same client. The calculation of RoE on client level and pricing according to minimum RoE has to be implemented by 30 June 2014 on standalone level and by 31 December 2014 for all core banking affiliates

((a)) For the purpose of this calculation, the volume weighted average of all loans with a single client (since the date of this decision), other fee business or banking transactions contributing to the profitability of the relationship with the same client can be taken into account, so that a new loan might generate a lower return if it is compensated by revenues of other fee business or banking transactions. New loans will have a credit documentation demonstrating a pre-deal calculated RoE for the either the individual loan or other live exposure on single client including fee business or banking transactions. In the case of mass market retail and SME transactions, this pre-deal calculated RoE may be replaced by a verification that the transaction is in line with internal pricing guidelines and a centralized demonstration that pricing guidelines assure a return on equity of […] % in 2014, […] % in 2015, […] % in 2016 and […] % 2017.
((b)) Any deviation from the pricing resulting in a lower price level will be documented. This documentation will include robust commercial reasoning for the deviation and will be presented to the Monitoring Trustee. The total amount of deviations will not exceed the amounts defined in paragraph 10.6.
((c)) Credit deals not falling under this pricing policy regime: Transactions with related parties (i.e. Group members and employees), restructuring cases (of D, E and C clients with a delay in payments of more than 90 days) and all money market transactions.
((10.2)) adapt the credit rating process such that a financial statement analysis and a credit scoring indicating at the very least leverage and performance parameters such as return on capital, EBIT Interest Coverage, Debt/EBITDA, Debt/(Debt+Equity) etc. will be taken into account before engaging on a new credit exposure with any business client. Every customer to which NLB d.d. has an exposure exceeding EUR 1 million should be re-rated annually;
((10.3)) document all restructuring decisions i.e. all new credit deals with non-performing corporate clients with an exposure over EUR 10 000 and include in the documentation a comparison with alternative solutions such as execution of collateral and termination of the engagement, demonstrating that the solution which maximizes the net present value for the bank is chosen. Unless a RoE of at least […] % can be obtained, restructuring decisions will be such that the bank is able to terminate the engagement at least every 12 months. Where NLB d.d. does not have the exclusive right to accept, propose or approve restructuring agreements or to take restructuring decisions it shall exercise its rights according to the above principles. A list of all recent restructuring decisions will be regularly provided to the Monitoring Trustee (at least every 6 months). The documentation of any restructuring decision will be presented to the Monitoring Trustee upon request.
((10.4)) ensure that all credit officers approving credits to SME and corporate clients will have attended an internal training familiarizing them with the credit rating process and established pricing methodologies no later than 30 June 2014;
((10.5)) implement a refinement of the client rating process to a fully internal ratings based system, approved by the Bank of Slovenia, by no later than 31 December 2014
((10.6)) should the Monitoring Trustee reveal a failure on behalf of NLB to comply with any of the Commitments under this paragraph 10 NLB d.d. shall provide the Monitoring Trustee with a remedial plan indicating which actions it has taken and intends to take in order to avoid a breach in the following quarter. The plan will be submitted in time for the Monitoring Trustee to report on it in its next semi-annual report to the Commission. Should the remedial plan not deliver the expected results and objectives, NLB d.d. will limit for a term of 12 months — starting the quarter following the reporting of such breach of Commitments — the new lending volume per reporting period to 66 % of the new lending volume of the reporting period in which the Commitment was breached. This does not apply to an individual breach of a Commitment under paragraphs 10.1, 10.2 and 10.3 provided that a further investigation by the Monitoring Trustee reveals that such breach can be considered an isolated error or omission and that there is no evidence hinting that a total volume per client of more than EUR […] million of deals is affected by such breach.
((11)) [non-discrimination] Slovenian State-owned companies will by no means be treated more favourably than non-state-owned companies (non-discrimination). NLB d.d. should make available throughout the restructuring period an annual report comparing the lending conditions applied to state-owned companies and to similar private companies.
((12)) [behavioural commitments] Slovenia commits to introduce the following behavioural safeguards in respect of NLB's restructuring:
((12.1)) [bans on advertising and aggressive commercial strategies] to impose a ban on advertising related to the state support to NLB and to the state ownership in NLB (or to any competitive advantages arising in any way from the aid to NLB or the state ownership in NLB) and to prevent NLB from employing any aggressive commercial strategies which would not be pursued without state support (advertisement ban);
((12.2)) [Capital repayment Mechanism and dividend ban] Based on the audited year end accounts NLB d.d. will pay in form of dividend disbursement the following amounts to its shareholders:

((i)) For the fiscal year 2015 and 2016: the lower of (i) 50 % of the excess capital above the applicable minimum capital requirement on the consolidated level under European and Slovenian law (including pillar 1 and 2) plus a capital buffer of 100 basis points; or (ii) the net income for the relevant year;
((ii)) For the fiscal year 2017: the lower of (i) 100 % of the excess capital above the applicable minimum capital requirement on the consolidated level under European and Slovenian law (including pillars 1 and 2) plus a capital buffer of 100 basis points; or the net income for the relevant year.
((12.2.1)) Without prejudice to the competences of Bank of Slovenia as banking supervisor of NLB, the dividend disbursement shall be, totally or partially, suspended if, on the basis of a reasoned request by NLB endorsed by the Monitoring Trustee, it is considered that it would endanger the solvency position of the bank in the following years.
((12.2.2)) For the fiscal years 2013 and 2014 no dividend will be paid.
((12.2.3)) The subsidiaries of NLB d.d. are subject to a dividend ban along the same lines as outlined above for NLB d.d. Notwithstanding this ban, NLB Group companies may pay out dividends to their shareholders if NLB d.d. is — directly or indirectly — the majority shareholder and all external shareholders combined hold less than [10-20] % of shares and voting rights in the respective company.
((12.3)) [coupon ban]; to ensure that NLB will refrain during the restructuring period from making any payments on capital instruments, unless those payments stem from a legal obligation, and not to call or buy back those instruments without prior approval of the Commission. Coupons on capital instruments held by the state may be paid, unless such payments would trigger coupon payments to other investors that otherwise would not be mandatory. This commitment not to pay coupons during the restructuring period does not apply for newly issued instruments (meaning instruments issued after the final Commission's approval of the restructuring plan), provided any payment of coupons on such newly issued instruments will not create a legal obligation to make any coupon payments on NLB's securities existing at the moment of the adoption of the Commission's Restructuring Decision (coupon ban);
((12.4)) [acquisition ban] to ensure that NLB will not acquire any stake in any undertaking. This covers both undertaking which have the legal form of a company and pool of assets which form a business.
(a) Exemption requiring Commission's prior approvalNotwithstanding this prohibition, NLB may, after obtaining the Commission's approval, acquire businesses if that is in exceptional circumstances necessary to restore financial stability or to ensure effective competition;(b) Exemption not requiring Commission's prior approvalNLB may acquire stakes in undertakings provided that the purchase price is less than EUR 1,5 million (0,01 % of NLB's total assets as of Dec 2012) in each individual case and that the cumulative purchase prices paid by NLB for all such acquisitions over the whole restructuring period is less than EUR 3,75 million (0,025 % of NLB' total assets as of Dec 2012).(c) Activities not falling under the acquisition ban1) Acquisitions that take place in the ordinary course of the banking business in the management of existing claims towards ailing firms; 2) Disposals and restructuring within NLB Group, including buy-outs of minority shareholders and the buy-out of the remaining shares of NLB Vita from KBC.
((13)) [Burden sharing] Slovenia commits that before any State aid is granted the existing shareholders' equity and all outstanding subordinated debt will be written off in full.
((14)) [reduction of State's shareholding and […]] Slovenia will reduce its shareholding in NLB d.d. to […] (‘[…]’) by […]. If Slovenia has not entered into (a) binding sale and purchase agreement(s) for the sale of its shareholding in NLB d.d. exceeding the […] by […], Slovenia and NLB d.d. shall grant to the Divestiture Trustee (appointed in accordance with paragraph 19) an exclusive mandate to sell NLB d.d.'s participations in the following […], for a minimum price not lower than […] book value:

— […]
— […]
— […]
— […]
— […]
— […]
The sale process will be conducted by the Divestiture Trustee appointed in accordance with paragraph 19.
((14.1)) Should Slovenia sell its shareholding in NLB d.d. exceeding […] by […], at the latest, all commitments defined in this document will cease to apply from 31 December 2016 onward, with the exception of the commitment to restrict to an appropriate level the total remuneration to any board member and employee performing special work according to paragraph (9.9) which will apply and be complied with until 31 December 2017.
((15)) [Transfer of assets to the BAMC] The transfer value of the assets transferred to the BAMC will be equal to or below their Real Economic Value (REV) established by the Commission's experts in line with the state aid rules.
((16)) [Recapitalisation of subsidiaries] Unless Stated differently under applicable legislation

((a)) Recapitalisation of subsidiaries via equity injections will be subscribed at the lower of (i) 25 % discount to the share price (after adjustment for the ‘dilution effect’) immediately prior to the announcement of the capital injection, or (ii) the lowest price at which other shareholders of NLB's subsidiaries will contribute to the recapitalisation of subsidiaries. The ‘dilution effect’ can be quantified using generally accepted market techniques (for instance, the theoretical ex-rights price (TERP)). For non-listed subsidiaires, the market value of the shares should be established using an appropriate market-based valuation approach (including a peer group multiplier approach or other generally accepted valuation methodologies).
((b)) In case the capital injection takes the form of hybrids instruments, those instruments will contain alternative coupon satisfaction mechanism and the provision determining the conversion rate of the hybrid into equity capital at the 25 % discount to TERP (established analogically as in case of equity injection stipulated in (a)).
The stipulation in point 16 applies only in cases where other shareholders of NLB's subsidiaries hold more than [5-10] % and do not participate in the capital increase or subscription of hybrid instruments in the existing shareholding proportions.
((17)) [reporting] Until the end of the restructuring period, Slovenia undertakes to send to the Commission a semi-annual progress report. The report shall summarize the progress in implementing the restructuring plan and details on disposals of equity participations, liquidation of subsidiaries and reduction of RWAs. The report will be submitted every six months no later than by each 30 November for the first half of the year and each 31 May for the second half of the year.
((18)) [Monitoring Trustee] The complete and correct implementation of all Commitments and obligations set out in this catalogue will be continuously and thoroughly monitored and checked by a suitably qualified Monitoring Trustee who: i) is independent from NLB and the government of Slovenia; ii) possesses the necessary qualifications to carry out its mandate; iii) will neither have nor become exposed to a conflict of interest.
((18.1)) The Commission will have discretion to approve or reject the proposed trustees, and to approve the proposed mandate subject to any modifications it deems necessary for the trustees to fulfil their obligations.
((18.2)) The trustee(s) will assume its specified duties in order to ensure compliance with the Commitments. The Commission may give any orders or instructions to the trustee in order to ensure compliance with the conditions and obligations referred to in this Decision and the Commitments.
((18.3)) Slovenia (Ministry of Finance) commits that NLB d.d. will provide and cause to provide the Monitoring Trustee with all such cooperation, assistance, rights, powers and information as the Monitoring Trustee may reasonably require and need for the proper performing of its tasks, duties and obligations.
((18.4)) NLB d.d. and its core banking affiliates will set up an internal process to channel to the Monitoring Trustee all necessary information and documentation in order to monitor the implementation of the Commitments. NLB d.d. will give the Monitoring Trustee upon its request full and complete access to any of its books, records (including board minutes), documents, management or other personnel, facilities, sites and technical information necessary for fulfilling its duties. NLB will make available to the Monitoring Trustee one or more offices in the bank's head office and will be available for meetings on request of the Monitoring Trustee.
((18.5)) For the proper performing of its tasks, duties and obligations, the Monitoring Trustee shall be entitled to participate at the NLB d.d.'s Supervisory board meeting in line with the relevant legislation and to interview NLB d.d.'s Management and Supervisory Board members in relation to the compliance with the Commitments and to:

((a)) monitor the internal organisation of NLB, in cooperation with NLB's internal control bodies. For this purpose, the Trustee will be entitled to interview the members of the NLB d.d.'s Supervisory board and its Risk and Audit Committees. The Trustee will upon its request receive all reports emanating from internal control bodies. The trustee shall monitor (i) that recommendations related to the Commitments from permanent supervisors or periodic controllers/auditors are dully enforced and (ii) that action plans are implemented in order to correct any failure identified within the internal control framework;
((b)) monitor commercial practices of NLB d.d. and its core banking affiliates, with a focus on credit policy and deposit policy. The Trustee may interview members of all relevant credit committees, in particular those responsible for (i) the scoring/rating of customers, (ii) the granting of loans to customers (iii) the management of non-performing loans and restructured loans and (iv) the provisioning of non-performing loans and restructured loans.
((c)) monitor policy of NLB d.d. and its core banking affiliates toward the restructuring and provisioning of non-performing loan, and interview all members of the relevant committees responsible for the restructuring and the provisioning of non-performing loans. NLB shall upon its requests communicate to the Trustee any risk report communicated to the Supervisory Board, or any analysis/review aimed at assessing the credit exposure of NLB. The trustee shall perform its own analysis, on the basis of the above-mentioned reports, interviews, and, if need be, the review of individual credit files (this should be without prejudice to the banking secrecy framework). In that regard, the Trustee should be entitled to interview credit analysts and risk officers who were involved in the sample cases when deemed appropriate.
((19)) [Divestiture Trustee] The following provisions apply to the appointment of a Divestiture Trustee:

((a)) Slovenia must propose to the European Commission for approval, no later than one month before the deadlines specified in (12) a list of one or more persons whom it proposes to appoint as Divestiture Trustee;
((b)) the Divestiture Trustee must be appointed within one week of the European Commission's approval in accordance with the mandate approved by the European Commission;
((c)) Slovenia must grant comprehensive powers of attorney to the Divestiture Trustee:

((i)) to effect the disposal of State's shareholding in NLB (including the necessary powers to ensure the proper execution of all the documents required for effecting the disposal); and
((ii)) to take all actions and declarations which the Divestiture Trustee considers necessary or appropriate to achieve the disposal, including the appointment of advisors to assist with the disposal;
((d)) NLB d.d. and its affiliates must provide the Divestiture Trustee with all such cooperation, assistance and information as the Divestiture Trustee may reasonably require to perform its tasks; and
((e)) the Divestiture Trustee shall be remunerated by NLB d.d. and in a way that does not impede the independent and effective fulfilment of the Divestiture Trustee's mandate.
