
Article 1 
The replacement of the commitments submitted by Slovenia under Decisions SA.33229 (2012/C) (ex 2011/N) and SA.33229 (2017/N-2) with the commitments notified by Slovenia as set out in the Annex to this Decision is compatible with the internal market within the meaning of Article 107(3)(b) TFEU.
Article 2 
The compensation mechanism, in order to compensate NLB from the legal consequences related to the ongoing litigation in Croatia does not entail State aid within the meaning of Article 107(1) TFEU.
Article 3 
This Decision is addressed to the Republic of Slovenia.
Done at Brussels, 10 August 2018.
For the Commission
Margrethe VESTAGER
Member of the Commission
ANNEX
(14) 

 by at least 50 % plus one share by 31 December 2018. In the case of favourable market conditions, Slovenia does not exclude a scenario of selling a larger share than 50 % plus one share up to the whole 75 % minus one share.
 If Slovenia does not enter into (a) binding sale and purchase agreement(s) for the sale of its shareholding in NLB d.d. in accordance with this point 14(a) by 31 December 2018, Slovenia shall grant to the Divestiture Trustee (appointed in accordance with paragraph 19 of the 2013 commitments) an exclusive mandate to reduce the Slovenia's shareholding in NLB d.d. to the Blocking Minority for the […]. Should the Divestiture Trustee be awarded the mandate to reduce the Slovenia's shareholding in NLB d.d. to the Blocking Minority in accordance with this point 14(a), all commitments defined in 14.1 and 14.2, except the commitment 14.1.4 and 14.2.6, will cease to apply from 31 December 2018 onward. The same applies if Slovenia reduces its shareholding in NLB d.d. to the Blocking Minority by 31 December 2018.
 the remaining share exceeding the Blocking Minority by 31 December 2019.
 If Slovenia does not enter into (a) binding sale and purchase agreement(s) for the sale of its shareholding in NLB d.d. in accordance with this point 14(b) by 31 December 2019, Slovenia shall grant to the Divestiture Trustee (appointed in accordance with paragraph 19 of the 2013 commitments) an exclusive mandate to reduce the Slovenia's shareholding in NLB d.d. to the Blocking Minority for the […].
 Slovenia will reduce its shareholding in NLB d.d. in accordance with the above points in a transparent, open and competitive process based on the provisions of the Ordinance on state-owned assets management strategy to (an) investor(s) that (is) are independent from and unconnected to the Republic of Slovenia.
 When performing its duties under 14(a) or 14(b) the Divestiture Trustee shall act in accordance with the preceding paragraph and with due skill, care and diligence.
 In case that Slovenia does not reduce its shareholding in NLB d.d. to the Blocking Minority until the end of 2018, NLB d.d. will divest its insurance subsidiary NLB Vita by […].
 Should Slovenia have sold at least 50 % plus one share of its shareholding in NLB d.d. by 31 December 2018, at the latest, the commitments 14.1 will apply and be complied with until 31 December 2019. The commitments 14.2, except the commitment 14.2.1 and 14.2.6, will apply and be complied with until Slovenia reduces its shareholding in NLB d.d. to the Blocking Minority. The commitment 14.2.1 will apply and be complied with until the major part (at least 50 % + 1 share) of the state's shareholding is divested and from […] until Slovenia reduces its shareholding in NLB d.d. to the Blocking Minority.

(14.1) 

(14.1.1) allocate all of the seats and voting rights on the supervisory board and its committees to independent experts, i.e. persons who:

 are neither currently employed nor have been employed 24 months prior to their appointment by the Slovenian Sovereign Holding, state authority, public agency, public fund, public-law institution or public-law economic institution, whose founder is the Republic of Slovenia,
 are neither currently employed nor have been employed 24 months prior to their appointment by any other public entity, which is indirect user of the budget or by any entity, in which the Republic of Slovenia, the Slovenian Sovereign Holding or Kapitalska družba pokojninskega in invalidskega zavarovanja d.d. has a dominant influence over its operations as defined in the Companies Act (Official Gazette of the Republic of Slovenia No 65/09 — official consolidated text and subsequent amendments),
 do not currently hold nor have held 24 months prior to their appointment a leadership or managing function within a Slovenian political party.
(14.1.2) ensure that each state-owned bank shall remain a separate economic unit with independent powers of decision according to paragraph 9.10 of the 2013 commitments,
(14.1.3) ensure that Slovenian State-owned companies will by no means be treated more favorably than non-state-owned companies (non-discrimination) according to paragraph 11 of the 2013 commitments,
(14.1.4) ensure that NLB will not acquire any stake in any undertaking according to paragraph 12.4 of the 2013 commitments.

(14.2) 

(14.2.1) [Risk management and credit policies] NLB will overhaul its risk management process and in particular NLB d.d. and its core banking affiliates will:

(14.2.1.1) 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 […] 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.
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 […].
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 14.2.1.6.
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.
(14.2.1.2) 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;
(14.2.1.3) 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 […] 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;
(14.2.1.4) ensure that all credit officers approving credits to SME and corporate clients have attended an internal training familiarizing them with the credit rating process and established pricing methodologies;
(14.2.1.5) ensure to have a fully internal ratings based system of client rating process, approved by the Bank of Slovenia;
(14.2.1.6) should the Monitoring Trustee reveal a failure on behalf of NLB to comply with any of the Commitments under this paragraph 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 14.2.1.1, 14.2.1.2 and 14.2.1.3 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 […] of deals is affected by such breach.
(14.2.2) the [Reduction of Costs] commitment from paragraph 2 of the 2013 commitments, with the amendment that operating costs at Group level (excluded one-off extraordinary costs having non-recurrent nature, i.e. restructuring expenses) may amount to a maximum of EUR […] on an annual basis,
(14.2.3) the [Divestment of non-core subsidiaries] commitment from paragraph (4) of the 2013 commitments, with the amendment that NLB d.d. will not re-enter business and activities which it had to divest,
(14.2.4) the [Bans of advertising and aggressive commercial strategies] commitment from paragraph 12.1 of the 2013 commitments,
(14.2.5) the [Capital repayment Mechanism and dividend ban] commitment from paragraph 12.2 of the 2013 commitments, with the amendment that based on the audited year end accounts NLB d.d. will pay to its shareholders for each fiscal year in form of dividend disbursement at least the amount of the net income) for such fiscal year (and may, for the avoidance of doubt, each time pay out to its shareholders in form of dividend disbursement all distributable profit including but not limited to retained profit for the previous fiscal years), subject to the limitations of applicable European and Slovenian regulations and provided that the applicable minimum capital requirement on the consolidated level (increased by any applicable combined buffer requirement and capital guidance) remains exceeded by a capital buffer of at least 100 basis points,
(14.2.6) the [Monitoring Trustee] commitment from paragraph 18 of the 2013 commitments,
(14.2.7) the [Divestiture Trustee] commitment from paragraph 19 of the 2013 commitments.

(14.3) 

(14.3.1) NLB d.d. will further strengthen its liabilities' structure by issuing a Tier 2 instrument by […], except in the case of severe market disruptions, to investors who are totally independent from Slovenia.
Exemption requiring Commission's prior approval: Notwithstanding this commitment, NLB is not obliged, if obtaining the Commission's approval, to issue Tier 2 instrument in the case of severe market disruptions.
(14.3.2) NLB d.d. will close [10-20] outlets in Slovenia by […].
Notwithstanding the provisions on the validity of certain commitments as defined herein, the commitments under 14.3 will apply and be complied with as set out in 14.3.1 and 14.3.2 as applicable, both in case of scenario 14(a) and in case of scenario 14(b).

(14.4) 

 Commission decision SA.33229 (2012/C) of 18 December 2013, except the commitment from paragraph 18 and paragraph 19, and
 Commission decision SA.33229 (2017/N-2) of 11 May 2017 — Amendment of the restructuring decision of NLB,
 ceased to apply on 31 December 2017.
