Press conference on 9th December 2014

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The much referred to CPC report – what was really their conclusions?

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The much referred to CPC report – what was really their conclusions?

CPCs opinion is that there may be concerns regarding BAMCs- selection and use of external vendors- hiring of staff

- traceability of decision-making

Primarily concerned regarding the risk of a conflict of interest when engaging vendors and hiring of staff

The main recommendation is to create a two tier board system (!)

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CPC Report: Factual mistakes, omission of key facts and negatively biased opinions, examples:

CPC

DUTB

The commission identified signed contracts with external vendors as one of the key corruption risks.

The procedures involved in signing contracts with selected vendors had not been prescribed until recently, and the commission is not aware of any criteria or requirements

applied in the selection process.

The report finds no corruptive actions taken nor is giving any recommendation to BAMC how to improve its operations to

minimize the risks.

In legal relations with external vendors, BAMC conducts itself in accordance with the principles of cost-effective and

effective use of public funding and exercises diligence in ensuring proper enactment of contracts.

19 March till 31 August 2014, external consultants had been paid approximately 12 million EUR.

The cost of external consultants were 5,2 million.

Even with 80 employees on-board BAMC is still paying a lot of money for external vendors.

BAMC has terminated the majority of contracts with external vendors once the organization was established and the first

transfers finalized.

It is difficult to understand that after a year the system of operations of BAMC had still not been fully established.

The BAMC’s mandate changed several times in 2013, which demanded extensive support and adaptability.

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What caused the consultancy spent in 2013?

Main causes Who How much (low estimation in EUR)

April 8th Change of timeline forcing BAMC to add external resources to plan and help execute transactions in

spring instead of end of year

MoFBoSEC

550 000

May 30thChange of the role of BAMC abandoning of work to prepare bank ownership function and new financing

required MoF 600 000

June 18th DG comp stops transactions and demand to wait system wide AQR's Postponement until sept

EC 200 000

Summer & Autumn of 2013

BAMC kept out of AQR work for the assets to be acquired

BanksBoS

500 000

December 6th Change of transaction concept BoSMoF

Banks

1 250 000

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Results – What have RS got for its investment so far?

• Investment in BAMC: 203 Million • Investment in NLB, NKBM, Abanka (1551+870+348) 2769 Million

• BAMC has an organisation and a plan for how to return all the investment in BAMC with 8% interest - after covering all its salaries, external vendors and other cost

• Effective organisation of just under 80 people that has acquired assets that once were worth 4.5Bn, and that at the time of transaction was worth approx 1Bn. We paid 1.5 Bn – the difference is actually an additional contribution to the banks balance sheet.

• Action plans for each and every case (400 enforcement and 100 restructuring cases) with decisive actions taken across our portfolio

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Restructuring case progress, examples

Merkur (109M): Completed process of repeated compulsory settlement (RCS) - two new spin-off companies were established (Merkur Trade and Merkur Real Estate) and operational as of 13th November. Avtotehna (75M): Existing owners not cooperative in restructuring, compulsory settlement started and restructuring plan developed. First time creditors was enabled by court to appoint new mgmt board. Adria Airways (29M + equity): Sale-and-leaseback of two aircraft approved by EGM yesterday. Providing funds to avoid bankruptcy (4M matching mgmt improvement initiatives).

Športni center Pohorje (46M): Restructuring through a controlled and orderly bankruptcy. Hotel business separated and now leased to Therme Maribor. Zvon 1, Zvon 2 (214M): Shares of IALG successfully sold Sept 10th at 50% premium compared to closing price Dec 31st 2013. BAMC received more than EUR 4m from sale of pledged shares AHA Group (Aha Emmi, Aha Plastik, Aha Secaplast) (14M): Creditors compulsory settlement for AHA Emmi is confirmed by the court but the ex owners appealed (temporary). AHA Plastik compulsory settlement, creditors voted on D/E end of October.

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Restructuring case progress, examples

T - 2 d.o.o (131M)Legal dispute against the debtor, un-coorpative managment team, BAMC sees bankcruptcy most valuable options to pursue to enable faster more appropriate repayment of the loans which so far were not being paid

Cimos (90M) DUTB filed for compulsory settlement, which we believe will be confirmed and will insure the company successful restructuring of its debt and its business. Successfully secured liquidity required. ACH (105M) Master restructuring agreement signed under the coordination of DUTB by which we can now run controlled divesting process in the company, rather then selling the assets in bankruptcy which would provide less money back to creditors. CGP, d.d (35M) . - exposure 34.740.026. Agreement for reprogramning loans / prolonging the loans so that the company will be able to service its debt and also perform its business.

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Restructuring case progress, examples

GORIČANE, d.d. (34M) First finished preventive restructuring case in Slovenia. Agreement with all banks on reprograming the loans, succeeded to help the company to obtain guarantees for its business . MLM d.d. (34M) Long negotiations resulted in successful signed MRA - enables the company to continue production, ensures the company required capital. A well organised selling process of the company now possible. ALPINA, d.o.o (27M)Supporting a compulsory settlement which will result in change of ownership, decrease of the company’s debt and thus enable for one of the most known companies in Slovenia to survive and find a proper strategic partner PINUS TKI d.d (25M) Hard work on selling process for the last months coming to an end., successful sale will prevent certain bankrupcty and end of operations. Sistemska tehnika (12M) Approved super seniority status to Abanka and thus enabled company to obtain needed guaranties, necessary to preserve the business

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Results – What have RS got for its investment so far?

• Our exit operations have started, generated Euro 94M (close to 10%) - website for Real Estate attracting interest - claims for 80-150M in live sales discussions

• Contributed 62M to the State or State owned organisations

• In addition approx 80 cases where process were already initiated in the banks we have suspicions on 12 cases where we currently are building the documentation to given to the NPU

• We are further than NAMA was after 18 months and more cost effective

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NAMA comparison – 18 months of operations

Organisation:

DUTB NAMA

75->10075->100

Transactions:Two tranches, 29 cases, 27 Bn,

3518 loans, only property related loans, enforcements

Two banks, 424 cases, 4 Bn, 3500 loans, corporate loans incl 100 restucturing cases

Costs: 65.5M (total cost)12,5M consultants cost

15.5 M (total cost) 7.5M „consultants“ costs

Exits: -60 M

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Thank you!