In accordance with the provisions of the Act Defining the Measures of the Republic of Slovenia to Strengthen Bank Stability (ZUKSB), Družba za upravljanje terjatev bank, d. d. ("BAMC") published its unaudited half-year report for the year 2016.
BAMC's operations in the first half-year period of 2016 was predominantly characterized by the merger of Factor banka and Probanka into BAMC and the related reorganization, process- and cost-optimization activities, allowing BAMC to lay solid foundations for successful future operations.
In the first half-year period of 2016, BAMC has either reached or surpassed most of its strategic goals. Despite carrying out the demanding merger process, BAMC generated cash flows from asset management operations in the amount of 124.3 million EUR, which corresponds to 6.2% of the value of acquired and merged assets. BAMC thus surpassed the half-year target set by the Act Defining the Measures of the Republic of Slovenia to Strengthen Bank Stability (ZUKSB), and by August 2016 it had already surpassed the 10% annual target.
The high volume of cash flows generated has allowed BAMC to repay its financial obligations at an increased rate during the first half-year period. In April, BAMC made an early repayment of debt to the Ministry of Finance which was transferred as part of the merger of Factor banka and Probanka, in the amount of 150 million EUR (followed by a further repayment of 120 million EUR in August).
While BAMC had a net loss of 5.6 million EUR in the first half-year period of 2016, this loss stems from the accounting effects which BAMC recognized in the merger of Factor banka and Probanka, originating from the fair value revaluation of assets upon the merger. If these effects were to be excluded, BAMC would generate a net profit of 3.6 million EUR, which would correspond to 8% ROE.
As a result of the merger's financial effects, BAMC's equity decreased by 72.3 million EUR, which is less than the 76 million EUR which was the amount of the approved, but not yet used, state aid intended to cover the potential future losses of the two banks in the orderly winding-down process.
The merger of Factor banka and Probanka to BAMC was a major procedural and organizational challenge for BAMC, as well. Through diligent preparations for the merger and successful implementation of post-merger activities, BAMC was able to increase the efficiency of business processes and optimize costs. The by the half-year mark, the company's headcount had been reduced by 17% compared to the number of employees on the merge date. In the wake of the reorganization process, which was finalized on 1 July 2016, the number of employees is still decreasing. Furthermore, a highly complex process integration exercise was successfully finalized, including measures to decrease the costs of outsourcing.
This has made BAMC a stronger organization, allowing it to implement statutory and other goals asked by the Government of the Republic of Slovenia.
BAMC's unaudited Half-Year Report for the Year 2016 will also be available on the company website, www.dutb.eu, for a period of 5 years following the date of publication.
BAMC’s unaudited Half-Year Report for the Year 2016