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Financing BAMC activities

 

Given the nature of its operations, BAMC is mostly debt financed, similarly as other distressed asset management companies in Europe. BAMC’s debt is guaranteed by the Republic of Slovenia, while equity represents a minor share of financing, being intended as a liquidity reserve and for formal capital soundness from the very beginning.

BAMC was established in March 2013 with a paid-in capital of €25 thousand by the Government of the Republic of Slovenia. In the same month the Republic of Slovenia also paid in €3,6 million shares.

In December 2013, prior to asset transfers, BAMC received a capital increase of €200 million through transfer of government bonds from the Ministry of Finance, increasing its share capital to €203,6 million.

In May 2016 the Government increased BAMC’s equity for €4,6 million with a transfer of claims.

Bond issuing

To pay for the non-performing assets (NPAs) transferred from banks, BAMC agreed with the Ministry of Finance and the Treasury, that it would issue medium-term, negotiable and state-guaranteed bonds. They were to be designed so as to be eligible for acceptance by European Central Bank (ECB) as collateral in the Euro system. These bonds would replace banks' non-performing assets in their balance sheets. As performing assets they could be discounted with ECB for liquidity, which would give banks the capacity to pursue new business opportunities and thus support new economic growth.

In December 2013, BAMC issued two tranches of state-guaranteed bonds to pay the banks for their NPA transfers: DUT01 €505,8 million bond with a maturity of 2 years at an annual interest of 3,75% and DUT02 €505,8 million bond with a maturity of 3 years at an annual interest of 4,5%. The annual cost of the state guarantee was set at 125 basis points. The bonds were placed in their entirety with the two banks as payment. The new bonds were listed on the Ljubljana Stock Exchange.

In October and December 2014 BAMC issued two more state-guaranteed bonds to pay for the additional NPAs transferred from the banks: DUT03 €424,6 million bond with a maturity of 2 years at an annual interest of 1,5% and DUT04 €127,0 million bond with a maturity of 2 years at an annual interest of 1,37%. The annual cost of the state guarantee was again set at 125 basis points and the bonds were placed in their entirety with the two banks as payment. The bonds were listed on the Ljubljana Stock Exchange.

In December 2015, BAMC fully repaid the matured DUT01 bond in the amount of €502,5 million plus interest from all four bond issues. The nominal value of DUT01 bond was €505,8 million. Prior to bond repayment, a refinancing 2-year loan in the amount of €200 million was taken at a domestic commercial bank.

In April 2016, BAMC repaid €150 million out of €369 million of obligations towards the Ministry of Finance, which it merged in the Probanka and Factor banka merger process.