Addiko Bank AG (NLBR) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Costantino, your Chorus Call operator. Welcome, and thank you for joining the NLB Group live webcast to present and discuss the takeover offer for Addiko Bank AG. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Blaz 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 events on Friday. 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 Bank. It is not, I guess, coming as a major surprise to anyone as we have been signaling for the 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 2 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 a sense of, of course, treating this as a public listed company at Vienna Stock Exchange. We have published this on Friday, as I said. And since then, of course, we have been working on potentially finding ways to the shareholder base. This is, as said, 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 a 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. And as such, of course, the Republic of Croatia has been a natural bridge to our other markets and is the largest economy of the region, of course, of the utmost interest of NLB Group at certain point of time, of course, also be able to do banking and universal financial services distribution business also in this market. So 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 saw significant -- 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 hub as well for the potentially 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, as I said, 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, infrastructure 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 [ currencies ] and asset acceptance of shareholders. There is obviously a number -- a set of numbers associated with this business. We have been always talking about our absorption capacity of EUR 4 billion approximately risk-weighted assets. With this EUR 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 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, EUR 5 billion to EUR 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 will 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, 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 8 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, real value accretion for our shareholder base. Key attractions, as I 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 in last -- throughout last month 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 I 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 3 years, more or less 3 banks in 3 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 following the flows of goods and capital and financial services of the region. Entry into Croatia is specifically relevant for us. As I 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. And by that, obviously, there have been tremendous opportunities and synergies within these 2 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 year. 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 2 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 digital solutions is something we cherish and we specifically value when it comes to Addiko as an asset. And what we also learned while discussing this with the management and meeting, of course, people from the group throughout last year 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, of course, being able to acquire and being able to integrate. I would not dwell more on the financials. I would then -- by that pass the word to Archibald to guide through the other elements of the economics and structure of the deal and then, of course, wrap up and open the floor for questions.

Thanks, Blaz. 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. They'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 various premiums over the various volume-weighted average price. Clearly, as 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 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 tender in the shares. And in that sense, it's anyone's guess, but we'd 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 this -- that can basically bring this transaction to a positive conclusion for everybody. Blaz has already mentioned the strategic rationale. Here, it's just a bit more technical in terms of market shares. Clearly, there are 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's 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 sites 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, 2 of them -- 1 of them pending still to be fair, [ generally ] was closed. But I think most important in this context are the 2 lower lines and already mentioned acquisitions and subsequent integrations of 3 banks in 3 markets in 3 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 have 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 25 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 Blaz has highlighted specifically the interest of a much more digital customer value proposition, which we believe Addiko has figured out in 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 16th of August for all relevant stakeholders, and of course, particularly the shareholders with the end of our acceptance period. And 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 too 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 Blaz. And of course, we are open for questions.

Thank you. So to sum it up, it's a pretty straightforward value proposition to existing shareholders of Addiko and of course, also shareholders of NLB Group because, on the other hand, this is we believe value-accretive for us, for our shareholders. On the other hand, this is bringing significant prospects and opportunities also for the talent 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 I said, it's expiring on August 16. And clearly, this is a 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 I said, this is what we can communicate as of today. So for -- by that, by saying that, we will open floor for questions or comments. Thank you.

[Operator Instructions] 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, AlphaPay and [ Diplomat Pay ]. How do you see your offer versus these other potential investors.

Thank you. We can't possibly comment our offers and our strategies. What we are doing here is, as I said, fully transparent offer for 100% with cash and with a 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 structure. If you ask me whether it is inferior or superior, it's hard -- 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? And in this respect, we believe it is an attractive deal.

Second question, and I quote, "what influence will the unresolved issue of NLB's entry into the Croatian market have on your offer?"

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 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 Vienna. The only one from the region actually listed in London with a 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 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 framework of the offer?"

Sorry, the?

Financial framework.

Well, I think we have outlined very clearly the offer price, our acceptance threshold. 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 to 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 the 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 monitory terms that's EUR 390 million. So if this was part of the question, there 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?"

Yes, the deal is funded, as Archibald has 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 cold hat and calm hand, right? So we don't base our strategy on this specific acquisition. As we've 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 our strategy realization and crystallization on a specific market, i.e., Croatia or Albania or on a specific asset. So neither market, neither asset -- nor assets. So in this respect, we believe that this is simply 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 will simply focus on alternatives. As said, for 2.5 years, we have been analyzing every single asset of the region and there might be other geographies, other assets, if not this year or next year, in the upcoming years. The strategy is actually strategy for the period until the end of 2030. Until then, we believe that we will be able to find ways to obtain this EUR 5 billion to 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 16th 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 it can accept our offer. And they have time until the August 16. 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, not acquired a single share, neither at the stock exchange nor through proprietary SPAs. So NLB is actually entering this transaction with clean sheet offering 100% to everyone, not trying to [ protect ] some shares, not trying to obtain something upfront, 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 until end of -- mid of August, we will simply not wait for the outcome. We have said on many occasions that, of course, we will be actively seeking opportunity for -- 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 hoped that this transaction will be successful.

What I refer you fair -- straight to the wording that we have published at the Capital Markets Day. It's all written there. We have 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.

And it is just now a demonstration of how pragmatic it was to keep certain capital buffers, because now we are able to act upon this deal in a funded way, right? So we are in a possession of sufficient capital liquidity to be able to actually act the way we acted in a matter of more or less 1.5 months, 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 in likelihood 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 competition protection space, be it from obviously banking regulation space in all of the relevant geographies. And that's why we have also within the bid aligned the long stop date, which means that the closing -- the available period until official closing is end of June next year. So 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 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 billion to EUR 6 billion of M&A growth and let's say, 8% CAGR when it comes to the organic growth. Now we are talking about EUR 6 billion assets, more or less being acquired now, while we are already a month after the -- after presenting the strategy, yet with the fact of closing second half of next year, right? But yes, until end of '25, this would mean that we come to EUR 32 billion, EUR 33 billion of asset base, which means that in order to come to the EUR 50 billion, it would require much lower CAGR in terms of total volume. But as said, we don't base the strategy on the success of this specific acquisition. So yes, it fast forwards the whole thing. It adds to high probability of us delivering the strategy. But otherwise, we would still keep 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 them, of course, rethink of how to potentially enter Croatian market, if at all, right? So -- but 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 Slovenia will bring at the end of the day, this process is not over. We have been talking about potentially having the interest for Albanian market. Would there be finally a seller again, of a material asset there. And piece by piece, you might again come to EUR 5 billion to EUR 6 billion in 6.5 years. And by that simply crystallize what we have been talking about. Until then, we're simply focused on 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 simply following the growth of the general economy. Let's say, 2% to 3% inflation, 2% to 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 at least, let's say, 2 percentage points on top of what is a 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, just closed it. We are not really beefing up the business in Serbia when it comes to the investment fund business, right, the asset management business. We are thinking potentially of adding potentially even proprietary insurance arm within the banking group and so on. So there are many elements of the strategy that will be addressed on the go. And as said, I mean this one came a bit early, but since there was a bit, of course, we were ready to act with a competitive bid because we believe there is value in this asset. If we didn't succeed, this would by no means mean any disaster for us. We will 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.

Yes, 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 you 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 '25. And you see that we are pretty much in line with our CET1. You see at 14% ending in '25, 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, stretch case, which is why we would like to also tap into the capital market for the AT1 at a reasonable time and of course, reasonable price. There is no pressure or push to do so. But as AT1, that is 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 liability balance sheet in excess 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 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 headquarter 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 the Croatian assets. On the other side, as I mentioned before, we have during the 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 methodological setup, modeling setup, real talents that are actually -- have developed the 50% digital production 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, modelers, IT guys and so on. So in this respect, this is predominantly where we see value. And by that, we would want to keep the entity in Austria. But as I said, it's too early to say whether we want to develop a banking proposition. You might want to think of 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 setup there. What I said, a steering methodological modeling landscape, there is a significant talent pool, we believe, we can only benefit from.

Next question is a series of question 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 targets."

Well, this is not on us to judge. We would hope not after what we saw with how this business is being run and then, of course, apply our governance structure and 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 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."

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 we'll have enough time then obviously, of between 16th of August until obtaining all of 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 niche player in terms of deposit gathering and cash lending platform under different brand, fully digital value proposition, for example, in some markets fully consolidate. In aggregate terms, we believe that with some -- full consolidations and 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, how you run the business in specific markets.

Next question, and I quote. "If by 17th 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 16th of August is valid, and we will cross any of these bridges once we get there, in principal, we believe it's a fair offer, it's transparent, and it's 100%.

And 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 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, by far, the most successful distributor of universal financial services because we see it on the bank -- the client accounts. And the clear value is, of course, with salary recipients where you then can discuss with clients, obviously, what to do in terms of long-term sales. And in this respect, without having a banking channel, it is totally different business. So asset management without what is actually, the gist of the -- your competitive advantage, and this is your vertically integrated business model with branch network and/or video chat supported contact centers and so on is simply, totally inferior in terms of how you can pursue the value of such a business, right? We distribute more than 70%, [ 7-0 percent ] of all life insurance policies in Slovenia distributed to the banking channel. But that's because of the banking channel. We actually built the business of classical life insurance in Slovenia from 0% to 20% with Vita, but that's purely because we were actually selling this through the bank channel. So with all the bank channel, the ancillary services actually have much less churn, much less churn 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. Without Croatia, it is for us a different value proposition. So in this respect, as I 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 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 without them, there is no deal. And if someone assesses that the alternative bidders are more appropriate to enter a certain market. Fine, it's their prerogative and their 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 being able to speak [indiscernible] dialect of 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 regulators refusal to clear this transaction represents 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 regulators. If they move faster, it would be faster, and we have introduced the long stop date, which is the 30th of June 2025. So this would be the latest, because even if -- until then, there are no regulatory clearances, the deal would also 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 dividend still despite obtaining a material asset. 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 payout. And if you look at the current market environment, it's actually very susceptive to AT1s, pricing of 7%-ish or so. This is reasonable to pay for capital. This is a capital instrument. And of course, at the same time, MREL instrument. So it has a 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's priced into the purchase price. All of these needs.

And we have proven we can issue, of course, senior preferred and Tier 2 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.

And 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 the 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 still 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 welcomed to Croatia. Of course, we would want to, of course, show also courtesy. We love Zagreb. I spend a lot of time in Croatia. There are 122,000 Slovens owning second homes in Croatia. So this is highly connected region. And in this respect, we would love to have an opportunity to host the investors in Zagreb or as said Rovinj or Dubrovnik.

Next question, and I quote. "Are Addiko's customer services and operations safe despite the takeover bid?"

There is no change of whatever 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 compromise on anything of that. This is, as I said, 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 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, and 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 essence, what is the desired and what is the most probable time line?"

Well, as I said, depending on closing, we would actually assume control, right? So first, we have to get to the 75%. If there was a 75% success threshold achieved, there will be automatic 3-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 that was a dual brand strategy, and there was, of course, digital-only proposition on one side and classical universal financial services provider on the other, this requires a different set of measures than, of course, full integration of 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 '26, some maybe a bit later, some that 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 talent in both banks, specifically in Addiko as said, we see a lot of know-how experience, especially in consumer lending activities. Even if we went for digital only value proposition on the site of the second brand, we at this point of time are seeking for a lot of talent in our branch network, so people from branch network of Addiko would 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 NLBs?"

I just -- I said 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, as I said, not yet have taken decision, but that there might be actually a second brand, digital-only value proposition for our clients, kind of deposit gathering and cash lending platform. And this would secure jobs and independence and continuous operations, own brand, own business 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 has been 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 a full integration just in 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 3 banks in 3 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, a 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 more or less a standardized deposit gathering and cash lending. So even in case of full integration, actually, clients would benefit from 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 your 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 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 16th 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 16th of August, we will establish that we have reached a 75% threshold and there will be automatic 3-month extension. And then, of course, until the late June next year, there is closing and then there is a good and prosperous future for also talents of Addiko and NLB Group.

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining. Have a good afternoon.