Key performance indicators of Probanka, d.d.

The financial statements and notes thereto of Probanka, d.d. for the year ended 31 December 2010 were prepared in accordance with International Financial Reporting Standards as endorsed by the European Union. The independent auditor issued an unqualified opinion on them on 22 April 2011.




thousand EUR







Total assets



Total deposits from non-banks



  • legal persons



  • government deposits



  • households



Total loans to non-banks



  • legal persons



  • households



Held-to-maturity investments



Total equity



Allowances for financial assets at amortised cost



Off-balance sheet items



Deposit from households (annual average)



Loans to households (annual average)






Net interest



Net non-interest income



Administrative costs






Impairments and provisions



Profit/loss before tax



Income tax






Number of employees (at year-end)






Total number of shareholders



Number of shareholders (ordinary shares)



Total number of shares (ordinary and preference)



Share nominal value (EUR)



Share book value (EUR)






Fitch Ratings






thousand EUR







a) bank's equity



  • regulatory capital



  • capital adequacy (%)



b) asset quality (%)



  • impairments of financial assets at amortised cost and provisions for off-balance sheet commitments/classified items



  • impairments/gross assets



c) profitability (%)



  • interest margin



  • margin of financial intermediation



  • ROAA



  • ROAE before tax



  • ROAE after tax



d) operating costs (%)



  • operating costs/average assets



e) liquidity (%)



  • average liquid assets/average short-term deposits from non-banks



  • average liquid assets/average assets





Dear shareholders, business partners, clients and colleagues,

The financial and economic conditions that we thought in 2008 represented a turning point continued also in 2009 when GDP fell by 8.1% before it grew by 1.2% in 2010. The achieved economic growth, however, was far from a full recovery of Slovenia’s real and financial sector. Moderate optimism shown by the western economies was not shared by Slovenia, as the crisis of the construction sector and the difficulties of financial holding companies further hurt a significant portion of the country’s real and financial sector. A noticeable lack of global investment capital affected also Slovenia’s capital market, where capitalisation of shares decreased by 17.3%. The unemployment rate continued to increase and was 11.8% by year-end.

The difficulties in the real sector were reflected also on Slovenia’s public finances which posted a deficit of almost EUR 1.9 billion or 5.2% of GDP. Net foreign debt increased by EU 444 million to stand at EUR 11.3 billion as at year-end, which represented 31% of GDP. Private sector foreign debt increased the most, by EUR 207 million, mainly due to an increase in foreign direct and portfolio investments. Borrowing by banks in foreign interbank markets, on the other hand, continued to decrease. The economic sentiment indicator started to improve already in 2009, but nevertheless remained at a low level in 2010, the same as the confidence indicator, which suggests that economic recovery will likely require quite some time and effort.


Position of the Probanka Financial Group in the banking sector

The year 2010 was one of the most demanding for the Probanka Financial Group, both in terms of its market and financial position. The factors that most affected our performance in 2010 were the following:

  • low growth of GDP and of the volume of transactions in the banking sector, as the financial and economic crisis continued during 2010;
  • Slovenia’s illiquid capital market;
  • difficulties of large business systems that affected many dependent smaller companies;
  • past leveraged buyouts of companies now resulting in over-indebtedness of these companies with reduced ability to service debt obligations; and
  • continued decrease in market in internal value of companies’ equity.

The volume of transactions of the Probanka Financial Group in 2010 was EUR 1,846 million. Total assets stood at EUR 1.294 million as at year-end, up 1.6% from a year ago, compared to a drop of 2.5% seen by the banking sector as a whole. With a 2.57-percent market share, the Bank maintained its position and ranked 12th among banks in Slovenia. It grew its share of household deposits, which increased by EUR 40 million or 20% to EUR 240 as at year-end. As much as 64% of household deposits were long-term. Government deposits, on the other hand, decreased from EUR 189 million to EUR 113 million. Lending to non-banks remained at the previous year’s level (EUR 844 million) and represented 65% of total assets. Probanka builds its client relationships on confidentiality and professionalism.

The financial result achieved by the Bank in 2010 reflects the continuing economic and financial crisis in Slovenia, with no signs of a general recovery of the economy. This affected companies’ payment ability, and the domestic capital market, which was not working as shares in certain larger companies were not sold to investors, as well as the real estate market that saw falling transaction volumes and prices. All this further impaired bank investment portfolios and their indicators of asset quality.

In 2010, Probanka earned net financial and operating income of EUR 33.0 million, up 3% from 2009. Net interest income increased by 38% to EUR 20.3 million, while net non-interest income decreased by 27% to EUR 12.7 million, which was due to smaller gains from financial transactions. Operating costs were managed closely and represented 1.3% of average assets (the banking sector’s average was 1.5%), so that gross profit before impairments and provisions was EUR 16.3 million, an increase of 2% from 2009. Given that negative trends (such as lower real estate prices, lower securities prices, lower companies’ payment ability) continued in 2011, the Bank recognised impairments and provisions for its investment portfolio of EUR 18.9 million. After reducing gross profit for impairments and provisions, the Bank posted a loss of EUR 1.7 million both at non-consolidated and consolidated level. Cumulative impairments and provisions increased to EUR 60.2 million, covering 5.13% of the Bank’s risk-weighted assets (banking system’s average: 4.81%).

Accumulated profit as at year-end 2010 was EUR 11.1 million, and remained a component of its equity. The Bank’s equity decreased from EUR 112.3 million to EUR 108.3 million, while regulatory capital increased from EUR 140.9 million to EUR 147.8 million. Capital adequacy ratio was 11.11%. To further strengthen its Tier 1 capital ratio (to exceed 8%) and capital adequacy ratio in accordance with Basel III, the Bank intends to increase its share capital in 2011 by issuing new shares.


Forward-looking strategy of the Probanka Financial Group

We at Probanka amended our development strategy in 2010 in view of the changed expectations as regards financial and economic developments, and in view of the changed regulatory requirements pursuant to Basel III. In the future, we will remain active in three operating segments: banking, management of client assets and of investments funds, and leasing. We will cover seven geographical segments in Slovenia with 13 branch offices and a leasing company in Croatia. Our competitive advantages will be our individual approach to clients and high-quality financial services provided by skilled, continuously learning and motivated employees. We will continue to develop products and services reflecting client needs, as well as to maintain superior technical support, rationalising our organisation and developing our two market channels (smart and friendly branch offices on the one hand and simple-to-use e-banking on the other). Our main target segments will remain small and medium enterprises and individuals who expect their relationship manager to be able to offer them a comprehensive range of financial services.

We have defined our financial targets so that we can revitalise long-term shareholder value, that is to say increase our equity and on this basis the volume of interest-bearing transactions; conservatively manage our investment portfolio and all types of risks; and increase our costs effectiveness. Our risk profile dictates that we reduce the risks associated with large exposures and equity securities. Equity will be increased first by newly paid-in capital and subsequently from profits earned by the Bank, so that the Bank’s original own funds always exceed 8% of its risk assets. This will also ensure the Bank’s long-term safety and stability of operations.



Statement by the supervisory board of Probanka, d.d.

1. Composition and working methods

In 2010, the Supervisory Board of Probanka, d.d. (hereinafter “Supervisory Board”) had five members: Dr. Roman Glaser as Chairman, Metod Zaplotnik as Deputy Chairman, and Milivoj Dolar, Radovan Stonič and Stanislav Špindler as Members. The Supervisory Board worked in accordance with applicable regulations (statutory, implementing and other acts), the Articles of Association of Probanka, d.d., as well as professional standards and ethical values.

The Supervisory Board met at regular sessions, which were set out in the annual framework schedule, and exceptionally at correspondence sessions, all convened in accordance with the Rules of Procedure of the Supervisory Board. Correspondence sessions were convened when it was in the interest of the Bank that a decision be adopted before a regular session could be convened.

At all sessions the quorum was met, and they were also attended by the Bank’s Management Board and experts from various departments responsible for the preparation and presentation of in-depth session materials.

2. Cooperation with the management board

Throughout the year, the Bank’s Management Board saw to it that the Supervisory Board had all the documentation required to perform its supervisory function and to decide on agenda items at its sessions. The Bank’s Management Board also provided all the information required by the Supervisory Board to monitor the Bank’s performance, as well as any additional materials required to make decisions regarding the Bank’s operations and financial position.

3. Cooperation with the audit committee

The Audit Committee of Probanka, d.d. is an expert body of the Supervisory Board, appointed based on Article 75 of the Banking Act. The Audit Committee met five times in 2010 to provide expert assistance to the Supervisory Board with session materials and draft decisions. It also provided expert advice to the Supervisory Board on more demanding matters.

The Supervisory Board, before making any decisions, considered the opinions, positions and proposals of the Audit Committee.

4. Supervision by the bank of Slovenia

Slovenia’s central bank, Bank of Slovenia, is responsible for bank supervision.

The Supervisory Board was acquainted with the entire inspection-related documentation received from the Bank of Slovenia, as well as with other important information regarding the central bank’s activities and findings.

5. Sessions

In 2010, the Supervisory Board met at five regular and one correspondence session.

The most important matters submitted to it by the Management Board for consideration were the interim and annual reports of the Bank and its Group, including the relevant unaudited and audited financial reports with the Management Board’s proposal on profit appropriation, the interim and annual reports of the Internal Audit Department, and the reports on risk management and internal controls.

The Supervisory Board considered the annual report of the Bank for 2010 with the independent auditor’s report, and approved the Management Board’s proposal on profit appropriation. The Supervisory Board issued an opinion on the annual report of the Internal Audit Department, proposed the auditor of the Bank’s financial statements, and considered the draft agenda with draft resolutions for the Shareholders’ Meeting.

The Supervisory Board considered particularly carefully the second edition of the document “Risk assumption and management strategy of the Probanka Financial Group”, and approved the relevant risk profile objectives.

At the end of 2010, the Supervisory Board considered certain amendments to the “Strategy of the Probanka Financial Group for the period 2010-2014”, and approved all of them as it found that they reflected the current economic and financial developments and therefore contributed to the stability of the Bank's operations. At its last session held at year-end, the Supervisory Board also considered and approved the 2010 business plan of the Probanka Financial Group, as well as the 2010 work schedule of the Internal Audit Department. The Supervisory Board also considered and approved various interim reports on the Bank’s operations, risk management and internal controls.

6. Annual report 2010 with independent auditor’s opinion

The Supervisory Board considered and approved the annual report of the Bank for 2010 with the independent auditor’s opinion, and established that it was prepared and submitted in a timely fashion; that it was prepared in accordance with laws and International Financial Reporting Standards; and that it contained all data and information required to decide on its approval. The Supervisory Board also considered and agreed with the independent auditor’s report on the Bank’s financial statements. Based on all this, the Supervisory Board approved the annual report of the Bank for 2010.

7. Statement by the members

We as Supervisory Board members are of the opinion that we exercised our supervisory functions in 2010 autonomously, independently and professionally, taking account of the Bank’s objectives in our decision-making. We declare that our business, personal or other relationships with the Bank did not affect our professional, objective and honest personal judgements made in the capacity of Supervisory Board members.




1. Development strategy

The 2010-2014 development strategy of the Probanka Financial Group was adopted by the Bank’s Supervisory Board. It covers not only the Probanka Financial Group as a whole, but also Probanka, d.d. and its subsidiaries separately.

At the Probanka Financial Group, we follow a strategy aimed at strengthening our market and financial position in the Slovenian market. Comprehensively developing commercial and investment banking services, we are able to cover those niches in the domestic market that allow us to offer financial services with higher added value. For our clients, this means that they can find a complete financial solution all in one place. The communities where we operate also benefit from our presence thanks to this business model.

Our strategic objectives are the following:

  • to increase the value of the Bank and thus long-term value for our shareholders and all other stakeholders;
  • to offer the highest-quality services and to build relationships that exceed the expectations of even our most demanding clients; and
  • to have a business model that makes us useful in the communities where we operate.

We implement our strategy through our skilled, committed and objective-oriented employees.

2. Mission

The Probanka Financial Group with its skilled, highly-motivated and committed employees, as well as with the most advanced technology, creates a business excellence environment for its clients, shareholders and employees. The communities where it operates also benefit from its presence thanks to this business model.

Constantly expanding its range of financial products and services that meet the highest standards, the Probanka Financial Group satisfies its clients’ needs and wishes. Our clients can count on receiving the highest-quality banking and complementary services that exceed their expectations.



3. Vision

Our vision is to be a medium-sized universal bank, recognisable in Slovenia for personal and private banking. This implies the highest quality of products and services, as well as of client relationships.



4. Values

Employees of the Probanka Financial Group accomplish the above mission by consistently respecting the following values:

  • professionalism and competency,
  • trust and discretion,
  • knowledge and innovativeness,
  • personal integrity and ethics.


5. Business network

Through its product, service and organisational structure, the Probanka Financial Group provides a complete range of financial services that meet the existing and potential client needs, be it in corporate finance or in private asset management. With our business units, i.e. 7 branches and 13 branch offices, we are present in all the regional centres in Slovenia. Outside Slovenia, we provide leasing services in Croatia through our subsidiary in Rijeka. Electronic banking (Prosplet for corporate and individual clients) is the modern way of banking, which allows clients not only to access our services in a transparent, simple and tailor-made fashion, but also to save time and money while being sure of the complete security of their transactions.





6. Ownership structure

As at year-end 2010, the Bank itself held a 7.63-percent share in Perutnina Ptuj d.d. and a 7.14-percent share in Pivovarna Laško, d.d. 

Ten largest shareholders of Probanka, d.d. as at 31 December 2010:




 Voting rights (%)

 Share capital (%)

Medaljon d.d.



Perutnina Ptuj d.d.



Avtotehna d.d.



Trimo, d.d.



Gorenje, d.d.



Pivovarna Laško, d.d.



Juteks, d.d.



Sgp Kograd-Igem Dravograd d.d.



Iskra Telekom Holding, d.d., Kranj



Iskratel, d.o.o., Kranj



Source: Share register of Probanka, d.d.


As at year-end 2010, the Bank itself held a 7.63-percent share in Perutnina Ptuj d.d. and a 7.14-percent share in Pivovarna Laško, d.d.

7. Development milestones



  • Resolution on the founding of Probanka, d.d. is adopted on 31 January.


  • The Bank joins SWIFT.
  • Two branch offices are opened in Maribor, which substantially increases and improves retail banking.


  • The Bank’s share capital is increased by DEM 30 million.
  • Business network is expanded with the establishment of branches in Ljubljana, Koper and Slovenj Gradec, and the opening of a branch office in Zagorje.
  • A subsidiary leasing company is founded in Maribor.
  • The Bank obtains authorisation for stock exchange trading.
  • The Bank's bearer shares are listed on the Ljubljana Stock Exchange.
  • Probanka Alfa, a balanced fund, is launched.


  • The Bank joins Eurocard-MasterCard.
  • An investment fund management company is founded.
  • Management of Alfa, a balanced fund, is transferred to Probanka družba za upravljanje d.o.o.


  • Offices at Gosposka 23 in Maribor are renovated.


  • New offices in Slovenj Gradec are opened.
  • The retail banking product of the Ljubljana branch is expanded.
  • A real estate subsidiary is founded in Maribor.


  • Business network is expanded with the establishment of branches in Kranj and Celje, and the opening of branch offices in Ravne na Koroškem and Murska Sobota.
  • The Bank’s IT system is upgraded and development of electronic banking accelerated.


  • New offices in Koper are opened for retail banking.
  • Electronic banking is introduced.


  • New offices in Celje are opened.
  • IT support for cross-border payments is modernised.
  • Compliance is achieved with the amended Banking Act and Securities Market Act.


  • The 10th birthday of the Bank is celebrated.
  • Offices in Kranj are renovated and their retail banking product is expanded.
  • New offices in Murska Sobota are opened.
  • The Bank’s BA/MAESTRO card becomes international.
  • Delta, a pension fund, is launched.


  • Local currency payments are transferred to the Bank’s environment.
  • The Bank’s share capital is increased by EUR 5.4 million.
  • The Bank obtains authorisation of the Bank of Slovenia for providing finance leasing services.
  • Delta, a pension fund, meets legal requirements for the commencement of operations.


  • The Bank’s share capital is increased by EUR 7.5 million.
  • The 7th series of subordinated bonds in the amount of EUR 12 million is issued.
  • A syndicated loan is obtained in the amount of EUR 10 million.
  • Electronic banking and website are revamped.


  • Swedish retailer H&M enters the Slovenian market opening a store in the renovated shopping and business centre in the downtown Maribor owned by the Probanka Financial Group.
  • Beta, a stock fund, is launched.
  • Office building of the Probanka Financial Group is renovated.
  • The Bank’s share capital is increased by EUR 6.2 million.


  • For the first time, Probanka Financial Group exceeds EUR 1 billion in terms of income generated and assets managed. 
  • The Bank’s share capital is increased by EUR 5 million.
  • Business network is expanded abroad (to Croatia) with the establishment of Probanka Leasing Rijeka d.o.o.
  • Development strategy of the Probanka Financial Group for the period 2006-2010 is adopted.
  • A business continuity test is conducted.


  • The Bank’s share capital is increased by EUR 9.2 million.
  • Business network is expanded with the establishment of a branch in Novo mesto.
  • A branch office is opened in the Pobrežje district (Maribor).
  • Euro is successfully introduced and internal business processes simultaneously modernised.
  • The Bank makes the transition to International Financial Reporting Standards.
  • Novi trgi, a stock fund, is launched.
  • The investment company Zlata Moneta 1 is transformed to Probanka Globalni naložbeni sklad (a global investment fund).


  • The Bank’s share capital is increased by EUR 11.7 million.
  • Subordinated bonds in the amount of EUR 25 million are issued.
  • The Bank starts preparations for the new capital requirements directive BASEL II.
  • The Bank joins SEPA.


  • The Bank’s share capital is increased by EUR 26.5 million.
  • Ordinary shares in the amount of EUR 30 million are issued.
  • A syndicated loan is obtained in the amount of EUR 27.0 million.
  • The Bank makes the transition from the Bankart to the Activa card system.
  • New mutual funds are launched within Probanka upravljanje premoženja d.o.o.
  • A new retail branch office and new offices are opened in Novo mesto.


  • A new branch office is opened in Ruše.
  • Fitch Ratings awards the Bank a BB long-term international credit rating.
  • Subordinated bonds in the amount of EUR 15 million are issued.
  • A new Finance Centre is opened in Ljubljana.
  • Activa/MasterCard Revolving, an internationally accepted credit card, is introduced.
  • Development strategy of the Probanka Financial Group for the period 2010-2014 is adopted.
  • Share capital of the subsidiary Probanka Leasing is increased by EUR 2.2 million.
  • The Bank wins the Best Electronic Bank title awarded by Kapital, a business magazine.


  • Branch office at Gosposka 23 in Maribor is renovated.
  • Website and intranet are completely revamped.
  • The Bank’s Activa/MasterCard payment card becomes “3D Secure” for online shopping, verified by MasterCard SecureCode.
  • SEPA’s universal payment order is introduced.
  • The “ECB1” project is successfully completed.
  • Subordinated bonds in the amount of EUR 10 million are issued.
  • Fitch Ratings awards the Bank a BB long-term international credit rating, the same as a year ago.
  • Electronic banking and website are revamped (e-invoices are introduced).
  • The Bank is found to be the most convenient among 20 banks and savings banks in Slovenia, in a comparison of 16 banking services made by Moje finance, a business magazine.
  • Development strategy of the Probanka Financial Group for the period 2010-2014 is amended.


8. Objectives in 2011


Financial aspect


Probanka financial group

Due to the continuing economic crisis that has significantly changed the macroeconomic circumstances affecting also the operations of the Bank and its subsidiaries, the 2010-2014 development strategy was amended in December 2010. The amendments related to the quantitative (financial) objectives of the Probanka Financial Group, while its qualitative objectives remained unchanged. The amended strategy provides for a 3%-5% annual growth in the volume of transactions, an increase in share capital through the issue of new shares, a 10%-15% annual growth in gross profit before impairments and provisions, a capital adequacy ratio of over 10% and a Tier 1 capital ratio of over 8%.

As regards the year 2011 alone, the Probanka Financial Group plans to maintain the current volume of transactions, to increase its share capital by issuing new shares, and to achieve profitability again.



In 2011, the Bank has the following objectives:

  • to support small and medium enterprises in the financing of their current assets, in particular if required for exports;
  • to support small and medium enterprises investing in development projects increasing their competitiveness and internationalisation, as well as those investing in their environment and innovation ability;
  • to increase the volume of retail transactions;
  • to gradually sell a portion of its assets held in the form of securities and real estate;
  • to be profitable again; and
  • to increase share capital by issuing new shares in order for the Tier 1 capital ratio to be over 8%.

In 2011, the Bank expects the following challenges:

  • to actively manage its investments in view of financial and operational risks;
  • to change the structure of the assets side of the balance sheet in favour of investments that are less capital-demanding;
  • to ensure appropriate sources of finance by various maturities;
  • to manage the risk of its clients becoming illiquid; and
  • to earn fee and commission income from transactions that are not capital-demanding (asset management, intermediary transactions, etc.)

Probanka upravljanje

In 2011, Probanka upravljanje, a fund management company, has the following objectives:

  • to increase the net value of assets under management; and
  • to adjust its investment policies in view of the current risks.

Probanka Leasing and PROleasing

In 2011, the two leasing companies have the following objectives:

  • in Slovenia, Probanka Leasing will maintain the current volume of transactions and increase gross profit by 18%; while
  • in Croatia, PROleasing will increase the volume of transactions and gross profit by 18% and 20% respectively.

Probanka Nepremičnine

Probanka Nepremičnine, a real estate company, complements the range of activities pursued by the Probanka Financial Group, and intends to maintain the current volume of transactions in 2011.


Client operations

Objectives for 2011:

  • to increase the share of Slovenia's financial market, in particular of its retail segment;
  • to further upgrade electronic marketing channels (e-banking),
  • to base new product development also on client value added and investor risk profile, and
  • to develop good professional relationships with clients/investors by regularly monitoring their satisfaction.

Our target client is the one who uses the entire range of products and services offered by the Probanka Financial Group and whose expectations are thereby exceeded. For this reason, the target client is more than satisfied, he is loyal to the Group throughout his life.


Internal business processes

Objectives for 2011:

  • to be an efficiently organised system with excellent inter-organisational cooperation,
  • to conduct operations in a rational and excellent manner in relation to all parties concerned,
  • to achieve the strategic objective of offering the highest-quality products and services throughout the life-cycle of the product/service and client relationship, and
  • to efficiently manage all business processes.


Intelectual capital development

Objectives for 2011:

  • to train the employees to become problem solvers and creative and innovative members of the Probanka Financial Group, able to understand and implement its philosophy,
  • to be, as the strategic objective requires, a continuously learning organisation composed of committed, motivated, professional, competent, capable, loyal and well-organised employees, and
  • to develop key employees and teams who understand the Probanka Financial Group’s philosophy.

1. Organisational structure of Probanka Financial Group

Probanka Financial Group has an internal organisational structure that ensures its flexibility and responsiveness. It also ensures that the Group, regardless of its size, carries out all the fundamental tasks of a financial institution.




Probanka, d.d. is a 100-percent owner of all its subsidiaries.



2. Management of Probanka, d.d.


Governing bodies in 2010

  • Shareholders' Meeting
  • Supervisory Board
  • Management Board

Supervisory Board

  • Dr. Roman Glaser, Chairman
  • Metod Zaplotnik, Deputy Chairman
  • Milivoj Dolar,Member
  • Radovan Stonič, Member
  • Stanislav Špindler, Member

Management Board

  • Mag. Romana Pajenk, President
  • Milana Lah, članica Member
  • Vito Verstovšek, član Member

Management board members on supervisory boards of non-associated companies

  • Mag. Romana Pajenk: Trimo, d.d., Trebnje
  • Milana Lah: Ljubljanska borza, d.d. (Ljubljana Stock Exchange)
  • Vito Verstovšek: Turboinštitut d.d., Ljubljana-Šentvid

Audit committee

  • Metod Zaplotnik, President
  • Silvester Zaman, Member
  • Radovan Stonič,Member 

Other committees

  • Assets and Liabilities Committee (ALCO)
  • Liquidity Committee
  • Credit Committee
  • Committee for Investments in Securities



3. Management of Probanka, d.d. divisions


Product Development and Operations Support Division:

Financial Markets Division:

Risk Management, Controlling and Reporting Division:


Business Support Activities Division:

IT and Business Organisation Division:




4. Vodenje poslovnih enot Probanke, d.d.


Maribor Branch: :

Ljubljana Branch: :

Poslovna enota Koper:


Koroška Branch: :

Kranj Branch: :

Poslovna enota Celje:


Novo mesto Branch:



5. Management of subsidiaries


Probanka upravljanje premoženja


Probanka Leasing d.o.o.:


Probanka Nepremičnine d.o.o.:

 PROleasing d.o.o.





6. Organisational structure of Probanka, d.d.



7. Statement of compliance with the Corporate Governance Code

7.1. Statement of compliance with the corporate governance code

(points 1 and 2 of Article 70(5) of the Companies Act)

The Corporate Governance Code (hereinafter “Code”) was jointly drawn up and adopted by the Ljubljana Stock Exchange, the Slovenian Directors’ Association and the Managers’ Association of Slovenia on 8 December 2009. The Code is published on the websites of the Ljubljana Stock Exchange ( and of other signatories.

Probanka, d.d. is a bank organised in accordance with the applicable Slovenian legislation, in particular the Banking Act (ZBan-1) and the regulations based thereon, and the Companies Act (ZGD-1). Probanka, d.d. has a two-tier system with Management and Supervisory Boards. Management and governance of Probanka, d.d. are compliant with the provisions of the Code, with the deviations explained below.

Corporate governance framework

1. The key objective of a joint-stock company engaged in a revenue-generating business is to maximise the company's value. This, as well as the company's other objectives pursued in the course of its business, such as the long-term value creation for shareholders and the social and environmental aspects ensuring a sustainable development of its business, is stated in the company's articles of association.

Probanka, d.d. did not state its key objective as defined above in its Articles of Association. Its key objective is without doubt the one mentioned above, that is its long-term growth and value maximisation of its share capital. This is a typical objective pursued by companies in market economies, for which reason the Bank did not explicitly state it in the Articles of Association.

Relations with shareholders

4.2. The company encourages all significant shareholders, institutional investors and the state in particular, to publicly disclose their investment policy with respect to the stake they hold in the company concerned, i.e. their voting policy, the type and frequency of their engagement in the company’s governance, and the dynamics of their communication with the respective company’s managerial or supervisory bodies. The company is considered to have called its shareholders to make such a disclosure pursuant to this Principle if the convocation of the meeting includes the respective invitation.

Probanka, d.d. leaves its governance and the respective communication to its shareholders, for which reason its convocations of Shareholders’ Meetings do not include an invitation to its shareholders to publicly disclose their investment policy with respect to the stake they hold in it. The Bank’s significant shareholders as at year-end 2010 did not comprise the state or institutional investors.

5.7. If the general meeting is to decide on the management remuneration policy, it should adopt it at the proposal of the supervisory board and align it substantively with the current market situation and the situation in the company. The management remuneration policy should substantively follow the provisions of the Code, and should define:

  • the amount of non-variable remuneration to members of the management board,
  • the possibility of variable remuneration for a member of the management board,
  • criteria used for determining types of variable remuneration,
  • any potential restrictions with respect to variable remuneration,
  • the annual dynamics of setting the criteria for variable remuneration,
  • specification of remuneration given as shares, stock options and other types of financial instruments, along with any restrictions of such remuneration,
  • the annual assessment of the criteria being fulfilled and of the supervisory board activities in this area.

Salary policy in Probanka, d.d. is defined by its Supervisory Board.

Supervisory Board

6.2. In the proposed new composition of the supervisory board at least a half of the members are independent. Members that act and adopt decisions independently are taken to be independent supervisory board members. A supervisory board member is always taken to be dependent if he has close business ties with the company, its management or significant shareholders. In the event of changed circumstances that affect the member’s meeting the criteria of independence, such a member immediately informs the supervisory board. The obligation to appoint independent members applies both to shareholders as well as works councils.

The Supervisory Board of Probanka, d.d. was elected before the above independence Principle was adopted, for which reason it could not have been taken account of.

8.4. To distribute materials and convene meetings, the supervisory board makes use of information technology. If the size of the supervisory board or geographical dispersion of the members justifies this, the supervisory board uses information technology also for holding meetings and voting on proposed resolutions. The company ensures efficient information security of the electronic communication with the members of the supervisory board.

Ensuring efficient information security is costly, for which reason the Supervisory Board of Probanka, d.d., which is composed of only five members, does not use information technology for holding meetings and voting.

8.7. The supervisory board rules of procedure stipulate the board's communicating with the public with respect to the decisions adopted at its meetings. In exceptional cases, the board adopts a resolution making the passed resolutions either public or confidential, and defining the manner of the board's communicating with the public. Such communication is done by the president of the supervisory board, save as otherwise required by a supervisory board resolution or exceptional circumstances.

Communicating with the public is laid down in the internal acts of Probanka, d.d., for which reason such provisions in the Rules of Procedure of the Supervisory Board would be superfluous.

13.1.Aside from an audit committee, the supervisory board also sets up a remuneration committee and nomination committee. Depending on the size of a supervisory board and the complexity of the work, the tasks of the remuneration committee and the nomination committee, as laid down in Appendix B of the Code, may be undertaken by the same committee. Committees are set up as soon as possible after the constitutive meeting of the supervisory board and early enough to be able to diligently undertake their tasks.

The Supervisory Board of Probanka, d.d. appointed the Audit Committee but decided that setting up of other committees would not be reasonable given its own size.

7.2. Main characteristics of internal controls and risk management systems related to financial reporting

The Bank has an internal controls system that ensures the following:

  • accuracy, reliability and completeness of accounting records,
  • preparation of correct and true financial statements,
  • protection of persons, assets and information,
  • prevention and detection of error and fraud,
  • efficient use of sources and assets,
  • compliance with the law, and
  • compliance with internal acts and business plans.

The Bank’s risk management supports strategies and investment policies of its operating segments by minimising all identified risks. Risk policies, methodologies and approaches are set out in various internal acts.

The Bank’s Internal Audit Department improves the internal controls system by making it more efficient through its regular audits compliant with its annual work schedule and the internal rules governing its operations.


7.3. Information and explanations of companies subject to the takeovers act

(ZPre-1) (Article 70(6) of the Companies Act)

The structure of share capital including shares under the Takeovers Act not admitted to a regulated market 

market (point 1 of Article 70(6) of the Companies Act)


Share capital of Probanka, d.d. is divided into:

  • 3,399,814 ordinary no par shares representing 89.47% of share capital, and     
  • 400,000 preference no par shares without voting rights representing 10.53% of share capital.

All shares are registered shares. Ordinary shares are not listed on a regulated market.

Ordinary shares carry the following rights: 

  • the right to participate in management,
  • the right to participate in profits (the right to dividends), and
  • the right to participate in assets remaining after liquidation or bankruptcy.

Preference shares carry the same rights as ordinary shares, except for voting rights. However, their owners are paid preference dividends fixed at 3% of the share book value – before holders of ordinary shares are paid their dividends.

Restrictions on the transfer of shares

(point 2 of Article 70(6) of the Companies Act)


Shares ownership is not restricted, while shares transfer is partially restricted: preference shares are freely transferable, while ordinary shares are transferable to banks and other financial organisations only with the approval of Probanka, d.d., and more precisely of its Management Board.

Until such approval is issued, the acquirers of shares have no rights in their relationship with Probanka, d.d. Those who acquire shares through inheritance, property jointly owned with their spouses or an execution procedure obtain ownership rights to such shares already with the acquisition, while they obtain voting rights from such shares only with the Bank’s approval. If the Bank fails to issue the approval within three months of receipt of the acquirer’s request to that effect or if the Bank unjustifiably rejects such request, the approval is deemed issued.

Significant direct and indirect holdings1 holdings  in the sense of a qualifying holding under the Takeovers Act

(point 3 of Article 70(6) of the Companies Act)


As at year-end 2010, the following persons had qualifying holdings in Probanka, d.d. under the Takeovers Act:



No. of shares


Medaljon d.d.




Perutnina Ptuj d.d.




Avtotehna d.d.




Trimo, d.d.




Gorenje, d.d.




Pivovarna Laško, d.d.



Probanka, d.d. does not have indirect holders of qualifying holdings.

1A person is deemed to be an indirect holder of securities if these are held on his or her behalf by another person or if the person can assure that the rights from such securities are exercised in accordance with his or her will (point 3 of Article 70(6) of the Companies Act).


Holders of shares that carry special control rights

(point 4 of Article 70(6) of the Companies Act)


Probanka, d.d. does not have shares carrying special control rights.

Restrictions on voting rights

(point 6 of Article 70(6) of the Companies Act)


Preference shares do not carry voting rights, but they carry the right to preference dividends paid before ordinary dividends.If preference dividends are not paid at all or in full within one year and arrears are not paid within one year, preference holders obtain voting rights and keep them until such arrears are paid.

There are no other restrictions on voting rights.

Rules on appointment and replacement of the management or supervisory boards members, and on amendments to articles of association

(point 8 of Article 70(6) of the Companies Act)


The Bank’s Management Board has up to three members, the president and two members at maximum, appointed by the Supervisory Board for a period of five years at maximum. When appointing or recalling the Management Board members, the Supervisory Board tries to ensure management continuity. President of the Management Board participates in the selection of candidate Management Board members by proposing suitable candidates to the Supervisory Board.
The Bank’s Supervisory Board has five members elected for a period of four years. They are appointed and recalled by the Shareholders’ Meeting.

Any amendments to the Bank’s Articles of Association are adopted by the Shareholders’ Meeting by a three-quarter majority of share capital present.

Management’s authorisation to issue or purchase treasury shares 

(point 9 of Article 70(6) of the Companies Act)


The 22nd Shareholders’ Meeting of 2 June 2010 adopted the following resolutions:

  • a resolution on the Bank’s authorised capital, pursuant to which the Management Board is authorised to increase, by 2 June 2015 inclusive and with the Supervisory Board’s consent, the Bank’s share capital, now amounting to EUR 15,856,342.85, by EUR 7,928,171.42 in total by issuing new shares to be paid in cash, so that the Bank’s share capital may amount to a maximum of EUR 23,784,514.27;
  • a resolution on acquisition of the Bank’s treasury shares, pursuant to which the Management Board is authorised to purchase, within 18 months of the resolution date, the Bank’s treasury shares, provided the total nominal amount of the shares purchased does not exceed 10% of the Bank’s share capital, and provided the lowest and highest price for an A-class no par share is EUR 20 and EUR 45 respectively.


7.4. Information on shareholders’ meeting (operation and key powers) and rights (description and exercise)

(point 5 of Article 70(5) of the Companies Act)


Powers of the Shareholders’ Meeting

The Shareholders’ Meeting decides the following:      

  • the adoption of the annual report,   
  • the use of accumulated profit,   
  • the appointment and recall of the Supervisory Board members,
  • the issuing of discharges to the Management and Supervisory Boards members,
  • amendments to the Articles of Association,
  • measures to increase and reduce capital,
  • the dissolution and restructuring of the Bank,   
  • the appointment of an independent auditor,
  • consent to certain transactions if such consent is rejected by the Supervisory Board,   
  • the remuneration and participation in profit of the Supervisory Board members,         
  • other matters laid down in the Articles of Association in accordance with the law or laid down in the law.   

The Shareholders’ Meeting decides on the adoption of the annual report only in exceptional circumstances, if the Supervisory Board does not approve the annual report or if the Management and Supervisory Boards leave this decision to it.

The Shareholders’ Meeting decides simultaneously on the use of accumulated profit and on the issuing of discharges to the Management and Supervisory Board members.

Convocation of the Shareholders’ Meeting

  • The Shareholders’ Meeting is convened by the Management Board. 
  • It can also be convened by the Supervisory Board, in particular if the Management Board fails to convene it in a timely fashion or if necessary to ensure the Bank’s undisturbed operation.
  • The Shareholders’ Meeting must be convened in the cases laid down in the law, but at least once a year (the so-called regular meeting).

Participation at the Shareholders’ Meeting 

  • In order to participate and exercise their voting rights at the Shareholders’ Meeting, shareholders must inform the Bank of their participation before midnight on the fourth day before the Shareholders’ Meeting, when they must also be registered as shareholders in the central register on de-materialised securities.
  • The conditions for participation and the exercise of voting rights may be laid down in a greater detail in the invitation to the Shareholders’ Meeting.

Adoption of resolutions by the Shareholders’ Meeting

  • The Shareholders’ Meeting adopts its resolutions by the majority of votes cast, unless otherwise provided by the law or the Bank’s Articles of Association. 

Voting rights of shareholders

  • Voting rights of holders of ordinary shares are exercised in view of the number of shares held by them.



7.5. Information on the composition and operation of the Managment and supervisory Boards and their committees

(point 6 of Article 70(5) of the Companies Act)


Management Board


  • On 24 May 2010, the Bank's Supervisory Board appointed for a period of five years the following Management Board members: Mag. Romana Pajenk as President and Milana Lah and Vito Verstovšek as Members. The members represent the Bank jointly, that is always at least two of them together.


  • The Management Board runs the Bank independently and on its own responsibility. It is responsible for defining the Bank’s strategic objectives, the Bank’s risk assumption and management strategy, as well as the Bank’s risk profile-related objectives and the main guidelines of policies aimed at achieving these objectives. The responsibility for planning, organising and monitoring operations of the various operating segments of the Bank is assigned to the Management Board members with its Rules of Procedure.


  • The Management Board members decide jointly on all operating segments of the Bank, and jointly they ensure that the Bank has an internal controls system and an internal audit function in place. Decisions of the Management Board are adopted if voted for by two of its members.

Supervisory Board


Members of the Bank’s Supervisory Board Metod Zaplotnik, Stanislav Špindler, Milivoj Dolar and Roman Glaser were elected at the Shareholders’ Meeting of 7 June 2007 for the period from 1 July 2007 to 30 June 2011. Radovan Stonič was elected at the Shareholders’ Meeting of 17 June 2009 for the period from 18 June 2009 to 30 June 2011.

Conditions for membership

The following criteria are used when selecting candidate Supervisory Board members:

  • appropriate qualifications, characteristics and experience necessary for the supervision of the Bank’s operations, and other criteria from Article 72 of the Banking Act (ZBan-1),
  • conflicts of interests from Article 71 of the Banking Act and Article 273 of the Companies Act,
  • complementary knowledge, experience and skills with other members,
  • professional ethics and personal integrity, and
  • time availability.

Powers and duties

n addition to the powers conferred to it pursuant to the Companies Act, the Bank’s Supervisory Board has also the following powers:

  • to give consent to the Bank’s business policy defined by the Management Board,       
  • to give consent to the Bank’s budget defined by the Management Board,
  • to give consent to the internal controls system defined by the Management Board,
  • to give consent to the annual work schedule of the Internal Audit Department defined by the Management Board, and
  • to decide on other matters laid down in the Banking Act.


The Supervisory Board has a quorum if more than half of its members are present at its decision-making meetings.

It adopts decisions by an ordinary majority of the members present at its decision-making meetings. In the case of a tie, the chairman has the casting vote.

Members’ rights

Remuneration and attendance fees paid to the Supervisory Board members are decided by the Shareholders’ Meeting. The supervisory Board members are also entitled to the reimbursement of expenses incurred in connection with their function.

Working bodies

In accordance with Article 4 of its Rules of Procedure, the Supervisory Board appoints a three-member audit committee. Two members come from the Supervisory Board, while one is an external professional. The Audit Committee appointed by the current Supervisory Board is composed of the following members: Metod Zaplotnik and Radovan Stonič as Supervisory Board members and Silvester Zaman, a certified auditor, as external professional.

Audit Committee's tasks:

  • to supervise the integrity of the financial information prepared by the Bank,
  • to supervise the Bank’s systems of risk management, internal audit and internal controls,
  • to assess the annual report and prepare a draft decision for the Supervisory Board,
  • to participate in the definition of the more important audit areas,
  • to participate in the selection of an independent external auditor, and to prepare the contract between such auditor and the Bank,
  • to monitor the external auditor’s independence, objectivity and efficiency, and
  • to control the nature and scope of services provided by the external auditor.



8. Internal audit

The Internal Audit Department is responsible for internal auditing in the Probanka Financial Group. It reports directly to the Management Board, and is an organisationally and functionally a separate unit. This ensures its independence and objectivity.

Internal auditing is, according to an internationally accepted definition, an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations.

The Bank’s internal auditing is compliant with the Banking Act and covers the areas laid down in it. The main objective of the Internal Audit Department is to audit, completely and in appropriate intervals during the plan period, all important organisational units and business functions/processes within the whole Probanka Financial Group, thus contributing towards its excellence. It performs its assurance and consulting activity by monitoring and assessing the risk management system, by reviewing, assessing and making recommendations regarding the internal controls system, and by carrying out other audits laid down in the law, based on which the Probanka Financial Group can improve its efficiency and control/management processes.

The Internal Audit Department conducts its activity in accordance with the internal rules governing its operations, which is the most important document that helps understand its role. The rules govern the purpose, tasks and position of the Department, the rules and areas of internal auditing, the organisation of the Department, the responsibilities and powers of internal auditors, the planning of the Department’s work, the conducting of internal auditing and the reporting by the Department. The way in which the Department conducts its activity is laid down in detail in an internal guide on internal auditing.

In 2010, the Internal Audit Department carried out its audits in accordance with its annual work schedule, and reported in writing, both periodically and annually, to the Bank’s Management and Supervisory Boards and Audit Committee. In conducting its activity, the Department complied with the law and the rules of the audit profession, as well as took account of all changes that affected the Bank and its subsidiaries.

The Internal Audit Department has three employees, all holders of licences issued by the Slovenian Institute of Auditors: two are certified internal auditors and one is a certified information systems auditor. They are all independent, professional and objective. They train continuously, and keep abreast of the latest developments in internal auditing, as well as in banking.

Internal auditing is supported by the Bank’s own audit support software, which is intended for both the internal auditors and audit subjects. It provides an insight into internal audits carried out (audit reports), and into the measures taken to give effect to the recommendations/decisions made by the Department/Management Board based on these audits. The Department will continue with its systematic internal auditing of the Probanka Financial Group.

1. Slovenian economy

Early in 2010, economic activity in Slovenia picked up gradually and was throughout the year mainly driven by exports, while final consumption growth was weak. Slovenia’s GDP increased by 1.2% in 2010 or 0.5 percentage points less than in the euro area (according to preliminary estimates). Slovenia’s inflation was 2.1%, the same as in the euro area. In the second half of 2010, a commodity price shock spread from the international environment that was similar to those in 2007 and 2008. Higher global prices of commodities started to be passed through along the food chain and eventually on to domestic retail prices. The economic crisis also reduced the external imbalance and increased the fiscal imbalance.

  • Economic activity gradually increased in 2010. According to the Statistical Office of the RS, it increased by 2.1% and by 1.2% in real terms in the last quarter and in 2010 as a whole respectively. The 2010 GDP (in current prices) was EUR 36.1 billion or EUR 17.6 thousand per capita. Foreign demand remained the most important driver of economic growth, although to a lesser extent than before. In the last quarter, domestic spending picked up slightly, by 2.2%. In the same period, investment demand grew by 4.9%, as companies made additions to their inventories. In the United States, economic growth was 2.8%, while in the euro area it was 1.7%. Data show that growth continued also early in 2011. Consensus forecasts for United States and euro area GDP growth in 2011 are 1.7% and 3.2% respectively.
  • Due to the relatively weak economic activity, the growth of consumer prices was moderate. Inflation (HICP) was 2.1%, the same as in the euro area. This represents an increase of 1.2 percentage points from 2009. Prices of oil, food and other commodities in world markets increased strongly in the second half of 2010, and these costs were passed through along the food-supply chain. In the euro area, agricultural producers have already passed some of these costs on to the food-processing industry, but this has not yet been reflected in retail prices. The current commodities shock in world markets is similar to the ones in 2007 and 2008. The higher global prices are expected to be passed on to domestic retail prices, but it is still uncertain to what extent.
  • Real sector imbalance required adaptations in the labour market, mainly in the form of job cuts and less in the form of pay cuts. The number of registered unemployed increased from 97 thousand to almost 110 thousand. Unemployment rate increased by 1.5 percentage points compared to 2009, to 11.8%. Despite such high unemployment, there were positive developments in the labour market. The relatively large outflow from the unemployment register as at year-end is encouraging, in particular as more than half of unemployed persons found jobs. The number of persons who registered as unemployed in December 2010 increased by 14.4 thousand, mainly due to a significant drop in the number of persons employed in manufacturing, construction and retail sectors. In December 2010, y-o-y growth in the average gross wage per employee was 3.1%.
  • The current account of the balance of payments was in deficit also as at year-end, mainly due to the deficit of the balance of merchandise trade that increased by EUR 16 million in December 2010 to EUR 174 million, the highest monthly figure in the last two years. The deterioration of merchandise trade is mainly attributable to Slovenia’s trade with countries outside EU. The private sector had net financial inflows of EUR 95 million in 2010, which is a result of its borrowing abroad. Claims of the private sector against the rest of the world increased on the account of all items except cash and deposits and loans. Liabilities of the private sector to the rest of the world increased by EUR 207 million, mainly due to foreign direct and portfolio investments. Net external debt increased by EUR 444 million to stand at EUR 11.3 billion as at year-end.
  • The government deficit stood at EUR 1.9 billion and represented 5.2% of GDP. Deficit in the consolidated balance of public financing decreased significantly in the last months of 2010 due to receipts from the EU budget, while general government expenditures decreased in the last quarter compared to the same period in 2010, mainly due to capital expenditures and transfers. Slovenia’s receipts from the EU budget exceeded its payments to the EU budget, so that its positive net budgetary position represented 0.9% of GDP. At year-end, public deficit was mainly financed by drawing money out of bank accounts. The state budget financing programme for 2011 provides for new issues of long-term securities.
  • As regards the domestic financial market, the market capitalisation of bonds listed on the Ljubljana Stock Exchange increased by 21.7%, while the market capitalisation of shares decreased by 17.3%. The share of the market capitalisation of shares held by non-residents was 10% as at year-end. At year-end, the volume of assets in domestic mutual funds reached EUR 2.1 billion (up 10.6% from a year ago).


2. Slovenian banking system

Total assets of the banking system decreased by 2.5% to stand at EUR 50.3 billion as at year-end 2010. The decrease is mainly attributable to claims against foreign banks and deposits from non-banks due to the government’s withdrawal.

On the assets side, loans to non-banks increased by 1.2% to EUR 34.3 billion, which was less than the 2009 average. Loans to banks decreased by 15.7% to EUR 4.8 billion. Total loans decreased by 1.2% to EUR 39.1 billion. Loans to households increased by 9.8% to EUR 8.7 billion, which was significantly above the 2009 average.

On the liabilities side, indebtedness decreased towards year-end 2010, mainly due to repayment of debts to the Eurosystem and withdrawal of deposits by the government. After repayment of the last long-term (12-month) refinancing operation, total indebtedness of Slovenia’s banks with the Eurosystem decreased by EUR 479 million to EUR 581 million. Debt securities as a source of finance increased by 31% to reach EUR 4.5 billion as at year-end. Liabilities to non-banks (deposits) remained at the 2009 level of EUR 23.5 billion. Household deposits increased by 3.6% to EUR 14.3 billion. Liabilities to non-banks decreased by 4.9% to EUR 15.1 billion as at year-end.

Banking sector’s equity decreased by 3.3%. The average equity multiplier was 12, the same as in 2009.

The banking sector’s profit or loss before tax was negative at EUR 92.3 million, down 57.4% from a year ago. This drop is mainly explainable by the additional impairments and provisions made by the banks. These increased by 59.7% to EUR 798 million as at year-end. Commercial banks generated net interest income of EUR 1 billion and net non-interest income of EUR 433 million. Administrative costs amounted to EUR 679.9 million. ROAE fell from 3.85% recorded in 2009 to a negative 2.15%, while ROAA fell from 0.32% recorded in 2009 to a negative 0.18%. Interest margin was 2.02%, while the margin of financial intermediation was 2.86%.

1. Risk management

The Bank is exposed to various financial risks: credit, liquidity, market, interest rate, currency and operational risk, as well as strategic and reputation risk and the risk of loss. The aim of risk management is to ensure stable and safe operations in the long-term. For a more detailed description of risk management, see the Financial Report 2010.
1.1.    Credit risk

1.1. Credit risk

Due to the tight conditions in the real sector, as well as in the financial markets, present also in 2010, credit risk management was quite eventful in 2010. Ever since the crisis broke out in the autumn of 2008, and then throughout 2009 and 2010, the Bank focused in particular on activities aimed at reducing credit risk. Such activities involved close monitoring of clients’ characteristics with a special emphasis on their credit worthiness and performance, as well as collateral type and value, the latter both before and after risk assumption.

In 2010, the Bank maintained its strict criteria for extending the existing or granting new exposures. The Bank also adjusted the value of real estate received as collateral to show a more realistic amount available to cover its exposures.

As regards collateral in the form of real estate, the Bank had to recognise a slight drop in its value reflecting the developments in Slovenia’s real estate market. It responded by requiring the existing collateral to be increased and by requiring higher minimum collateral for new exposures.

As regards collateral in the form of securities, its value was volatile in both directions and dependant on the concrete security.

The Bank obtained additional collateral from the majority of clients whose loan-to-value ratio decreased, and thus reduced credit risk.

The Bank has been closely monitoring the value of collateral of all types, as this affects strongly its exposure to credit risk. Collateral and its value proved to be a very important factor contributing to credit risk stabilisation in uncertain economic conditions with a deteriorated payment ability of clients. All of the above significantly affected credit risk assumed by the Bank.

1.2. Market risks

Prudent risk management and limitation of losses that could occur due to financial market factors (security price/exchange rate/interest rate volatility) must be based on daily monitoring of market conditions and their effects on the Bank's exposure. The Bank has adequate measures in place that allow it to respond promptly and limit its exposure to risk factors. In 2010, the Bank was exposed mainly to price and interest rate risks, and to a lesser extent to currency risk.

Market risk management is based on a system of limits and automated reporting on limit utilisation (measured exposure to market risks is compared against the approved limits). Limits are periodically checked and validated using advanced approaches to exposure assessment, such as value at risk (VaR) for equity securities and basis point value (BPV) for debt securities. The Bank uses the prescribed methodologies for market risk measurement for a rough setting of portfolios position limits, which it then fine-tunes based on more specific criteria that reflect its risk propensity and target profits. These criteria relate to the extraordinary market situations (stress scenarios) and the acceptable stop-loss limits (for portfolios of equity and debt securities).

A further purpose of the system of limits is to provide a technical framework for a consistent risk monitoring. This includes a set of controls and measures for the case of limit approaching or breaching. The system of limits also clearly defines and separates the responsibilities and activities of the Bank’s different organisational units (investment banking, back office, risk management) as regards risk monitoring and management.

The Bank maintains a level of internal capital sufficient to cover any unexpected losses from market risks.

1.3. Interest rate risk

Interest rate risk is the risk of loss resulting from changes in market interest rates. Broadly, the interest rate risk results from interest-sensitive assets that mature and reprice at different times as interest-sensitive liabilities. Interest rate risk is monitored and managed as part of balance sheet management. At product group and trading portfolio levels, interest rate risk results from changes in interest rates in financial markets that may affect the market prices of securities.

The interest rate risk management policy includes methods for risk measurement, systems for risk reporting and monitoring, and a set of measures for risk management. Its aim is to provide for a control environment where interest rate risk is efficiently identified, monitored and managed within the acceptable limits.

The Bank uses the following models to monitor and manage interest rate risk: NOP (the effect on net interest income), VVK (the effect on capital), and BVP (basis-point-value). The levels of interest rate sensitivity are capped by means of limits.

In accordance with its risk profile, the Bank in 2010 showed aversion to interest rate risk in the most exposed areas of its business (households – assets and deposits; corporates – assets and deposits; treasury activities; investment banking). For this reason, the Bank also had a relatively low general exposure to interest rate risk resulting from items included in the trading book.

1.4. Liquidity risk

To manage liquidity risk, the Bank has in place a liquidity risk management policy which provides for regular monitoring of its liquidity position and maturity structure, and for matching of its expected and possible outflows with inflows.

The Bank has a balanced strategy of liquidity management that is based on liquidity sources. Within its liquidity management, the Bank calculates and monitors the contribution of its various operational segments to liquidity risk, taking account of both on-balance and off-balance sheet items.

To know its current liquidity position and future liquidity needs and thus its exposure to liquidity risk, the Bank calculates various ratios and uses various liquidity models. Based on these analyses, it identifies refinancing needs and thus ensures efficient liquidity management and avoids liquidity gaps.

The Bank monitors its liquidity position and asset-liability maturity matching by analysing and controlling its liabilities structure and lending activity. The Bank has in place an internal system to measure and control asset-liability maturity matching by identifying mismatches (gaps) based on actual maturities.

The Bank has in place a comprehensive system of limits to measure and monitor its exposure to liquidity risk.

Special emphasis is paid to the management of the collateral pool so that assets are available when required, taking account of the country of placement, as well as the applicable legal and other legally binding, operational and other restrictions regarding the responsibility to ensure liquidity.

The Bank maintains liquidity reserves that would allow it to settle its liabilities falling due within one month without having to change its business model, not taking account of possible inflows from non-liquidity areas. Liquidity reserves comprise highly-liquid assets in private markets that are eligible as collateral for Eurosystem operations, as well as deposits with the central bank and deposits in the interbank market. Liquidity reserves are managed also by taking account of concentration risk regarding liquidity sources.

The Bank conducts different stress test scenarios that are based on the assumption of a significant change in factors affecting adversely its liquidity. The Bank has in place also anti-crisis plans for liquidity risk management in the case of a liquidity crisis.

1.5. Other risks

Strategic risk

Strategic risk is the risk of loss arising from adverse business decisions, improper implementation of decisions and lack of responsiveness to business environment changes. This risk is a function of the compatibility of the Bank's strategic goals, the business strategies developed to achieve those goals, the resources deployed against these goals, and the quality of implementation. The Bank constantly ensures this compatibility. When developing business strategies, it considers the impact of economic, technological, competitive, regulatory and other environmental changes, and tries to make the appropriate adjustments to its strategy.

Reputation risk

Reputation risk is the risk of loss arising from negative public opinion (the public including the Bank’s clients, business partners, owners, investors and supervisors). To reduce this risk, the Bank must constantly take care of the reputation it enjoys among both among its existing and among its prospective clients, business partners and investors.

The Bank is also aware that its reputation depends mostly on what is done and said by the members of its Supervisory Board, Management Board and senior management. The Bank’s employees also have a strong influence on its reputation and must be aware of this.

The risk of loss

The risk of loss is the risk of loss arising from the Bank’s inability to constantly generate an excess of income over expenses. This risk is affected by the profitability of various exposures, income diversification by various exposures, the loan-to-value ratio, the overall liquidity and other factors. The Bank is aware that profitability is crucial not only in the present moment, but also for the Bank's future development. Continuous care for its profitability is one of the Bank’s main objectives.

1.6. ICAAP

To comply with the second pillar of Basel II, which provides a qualitative supplement to the minimum capital requirements under the first pillar of Basel II, the Bank amended its internal capital adequacy assessment and risk management methodologies. The purpose of internal capital adequacy assessment process (ICAAP) is to realistically assess and maintain capital in view of the risks to which the Bank is exposed. The Bank’s risk management culture is being constantly strengthened at all levels, in particular through improvements of the control mechanisms, which reduce in advance the possibility of unexpected losses. Stress scenarios, calculation of the correlation between risk factors, and measurement and management of all risks not included in the first pillar of Basel II requirements were also among the activities carried out last year.

1.7. Risk management in subsidiaries

The Risk Management, Controlling and Reporting Division is responsible for managing risks within the entire Probanka Financial Group. Each type of risk is managed at individual and consolidated level using a number of tools. The tools used are the same. In the risk management process at Group level, subsidiaries are responsible for preparing the data, while analyses are carried out by the Risk Management, Controlling and Reporting Division.

2. Commercial banking

Commercial banking focuses mainly on small and medium enterprises and households. The Bank also supports large enterprises in their achievement of business and development objectives.

Commercial banking, the basic banking function, is about collecting free funds and allocating them in compliance with the three fundamental banking principles: liquidity, safety and profitability.

In addition to a broad range of traditional and widely used commercial banking products (loans, overdrafts, guarantees, letters of credit, factoring, etc.), the Bank also provides finance leasing for equipment and real estate to assist its clients in starting or growing a businesses.

To clients with excess short-term and long-term funds, the Bank offers short-term and long-term deposits, savings accounts and certificates of deposits, which are flexible, commonly used and safe. With its interest rate or pricing policy, the Bank follows the developments in the local and international banking sector, which is a precondition for its long-term stability and development. The Bank supports its products in a reliable and flexible manner, and responds to client requests in real time. As regards long-term saving, clients can choose among deposit saving across various maturities and purposes, as well as certain forms of annuity saving.

Traditional marketing channels, i.e. a well spread, nationwide business network, still prevail, but electronic channels (Prosplet and ProspletPlus) are gaining importance as they help clients save time and money. Prosplet allows clients to make domestic and cross-border payments, to deposit excess funds, to review all their balances with the Bank, etc. In 2011, the Bank plans to introduce acceptance and transmission of e-invoices. The Bank expects to further increase its income from e-banking. Within all its commercial banking activities, the Bank has been upgrading its individual approach to clients, putting great emphasis on service quality and offering tailor-made services.

Commercial banking includes also business and personal account management, domestic and cross-border payments, and a wide range of card products.

2.1. Credit operations

Legal persons

In the legal persons segment, the Bank relies mostly on relationship managers, who are well-trained in monitoring and assisting both individual clients and groups of related clients offering them the entire range of banking products and services.. Relationship managers represent and ensure a direct link between the Bank and its clients: they have good knowledge of client operations and needs, and are able to provide advice on the most suitable product or service for a particular client.

To manage the risks to which it is exposed, the Bank follows a diversified investment policy. In 2010, it renewed its contract with the Slovenian Enterprise Fund to continue supporting its clients’ development ambitions. Although its focus lies with small and medium enterprises, the Bank also provides significant finance for large companies acquiring current assets or property, plant and equipment assets.

The Bank also acts as intermediary, channelling special-purpose finance from the SID Bank to final beneficiaries. In 2010, the Bank obtained significant funds for development purposes responding to various calls for proposals. As at year-end, such funds amounted to EUR 170 million.

Loans to legal persons amounted to EUR 769.3 million as at year-end and represented 91.2% of the total loans to non-banks. As regards maturity structure, long-term loans represented 50.5% of the total loans to legal persons. Long-term loans are mainly used for development and other projects, while short-term loans are mainly used for current assets.

Concentration of credit exposure by industry sectors







Financial and insurance activities






Trade, maintenance and repair of motor vehicles






Professional, scientific and technical activities



Real estate activities



Public administration and defence, compulsory social security



Transportation and storage



Water supply, sewerage, waste management and remediation activities



Agriculture, forestry and fishing










One of the most important forms of current asset financing is factoring, after the classic loan products. Factoring is suitable mainly for small and medium enterprises selling their accounts receivable to solve liquidity problems. The Bank purchases from its clients only accounts receivable that are not bad or past due. Before purchasing accounts receivable from a client, the Bank requires that its buyer, who must have an acceptable rating, confirms the existence and agrees with the purchase of its debt.

As at year-end 2010, the Bank had in its portfolio accounts receivable purchased from clients worth EUR 13.4 million, almost the same as a year ago..


Loans to households have the form of consumer loans (cash and specific-purpose loans) and housing loans. Loans to households increased compared to 2009, despite the fact that households chose to borrow less due to uncertain economic conditions. As at year-end 2010, loans to households amounted to EUR 74.5 million, up 8% from a year ago.

As regards the maturity structure of loans to households, long-term loans represented 88.8%.

Housing and long-term consumer loans qualify as long-term. Consumer loans have a maturity of up to 8 years, while housing loans have a maturity of up to 20 years. Compared to 2009, short-term loans declined, while long-term loans increased by 13%.

In addition to insurance policies, which are the most common form of security provided, other types of security are becoming increasingly important, such as real estate mortgages, land charges, and – by way of exception – pledges of acceptable securities or mutual fund investment coupons. Various types of security increase the Bank’s flexibility in responding to clients’ needs. Housing loans in particular are being more and more often secured by means of a mortgage.

The Bank launched a successful product in the segment of housing loans, the so-called Housing Package, which features both banking and insurance services.


Finance leasing

The Probanka Financial Group offers a comprehensive range of financial services, including also operating and finance leasing of movable and unmovable property. Leasing products are provided by two subsidiary companies, Probanka Leasing of Maribor, Slovenia, and PROleasing of Rijeka, Croatia, as well as at all branches of Probanka, d.d. Leasing as a special form of financing is suitable for both legal and natural persons.

Leasing portfolio of the Probanka Financial Group as at year-end 2010 amounted to EUR 67.2 million, down 8% from a year ago, when it amounted to EUR 73.7 million. Of the Group’s leasing portfolio, 47.2% pertained to Probanka Leasing, 32.2% to Probanka, and 20.6% to PROleasing Rijeka.


2.2. Guarantee and documentary operations

Letters of credit are particularly important among documentary operations. Guarantees are also important and the Bank has been successful insofar in responding promptly and flexibly to clients needing bank guarantees. The Bank issues payment and service guarantees.

Guarantee portfolio as at year-end 2010 amounted to EUR 174.9 million, up 40% from a year ago. Service guarantees accounted for the largest portion of this portfolio, 50.1% (2009: 60.9%).

A letter of credit is considered to be the most efficient and safe payment instrument in international trade, protecting both the seller and the buyer. Letter of credit portfolio as at year-end 2010 amounted to EUR 7.1 million, down 14% from a year ago.


2.3. Deposits from non-banks

Legal persons

Sight deposits, short-term and long-term deposits

Collection of deposits as primary sources of finance remained the main task of the Bank also in 2010. Its interest rate policy, which is the main instrument of as regards deposits collection, allowed the Bank to increase long-term deposits from legal persons by slightly more than 40% to stand at slightly less than EUR 195 as at year-end 2010. Short-term deposits from legal persons, on the other hand, decreased by slightly less than 32%. Government deposits also decreased by EUR 76.4 million to EUR 113 million, so that total deposits from legal persons decreased to EUR 516 million, which is explainable by the financial crisis that affected both legal persons and the government. Probanka’s share of Slovenia’s market of deposits from legal persons was 5.49% as at year-end. Compared to 2009, long-term deposits from legal persons increased by slightly more than 40%. 



Sight deposits, short-term and long-term deposits

For several years now, the Bank has followed a proactive policy as regards the retail segment, in particular as regards deposit collection. Being a recognisable player in this area proved crucial in the circumstances of a non-functioning international interbank market, when access to long-term sources of finance is limited. The Bank managed to change a significant portion of short-term deposits into longer-term deposits. An important role in deposit collection was assigned in 2010 to a supplementary market channel, it is the Bank’s website, which allows clients to place all types of deposits.

Deposits from households increased by EUR 39.7 million in nominal terms to stand at EUR 240.3 million as at year-end 2010. Long-term deposits alone increased by 47%.

Slovenia’s market of deposits from households increased, of which 8.4% is attributable to the Bank.

The share of deposits from households in the Bank’s total liabilities increased from 15.7% to 18.6% in 2010.

Deposits from households increased by 20% compared to 2009.


Payment transactions

At year-end 2010, 3,007 legal persons and 12,287 natural persons kept transaction accounts with the Bank.

The Bank processed 2,102,748 domestic transactions amounting to EUR 4.75 billion, and 100,029 cross-border transactions amounting to EUR 0.97 billion.

Payments were made through domestic and European payment systems SWIFT, STEP2, SEPA and TARGET2.

The majority of clients (more than 90%) used e-banking (Prosplet and ProspletPlus) for their payments.

Within the national SEPA programme, the Bank continued with the planned activities, mainly with the migration of standing orders from the Bankart processing centre to its own system, and with SEPA Direct Debit development and compliance. The Bank became SEPA Direct Debit compliant In November 2010 and started processing direct debits of natural and legal persons within the European Union.

In 2010, the Bank also introduced SEPA’s universal payment order used by clients to make various payment transactions (cash and non-cash) both through e-banking and the Bank’s branch network.

Payment transactions standards represent one of the preconditions for an accurate and unquestionable transfer of funds among bank accounts. The Bank adopted a new standard in 2010, ZBSXML, used for the transmission of payment orders from enterprises to banks, which is gradually replacing TKDIS that is not SEPA-compliant.

Any bank must ensure uninterrupted processing of payment orders. Banks are tested to this effect also by external regulators and institutions (Probanka by Slovenia’s central bank, Bank of Slovenia, and by the Bankart processing centre). The Bank passed all mandatory tests of business continuity conducted by Bank of Slovenia and Bankart.

Card and ATM operations 

Within its card operations, the Bank acted in accordance with the mandatory directions of the European Payment Council (EPC), which requires from banks, within its SEPA Cards Framework, EMV (chip security) development and compliance, as well as complied with national legislation and PCI safety standards. The Bank is fully compliant in all its branches with the SEPA (EMV) standard applying to payment cards and ATM and POS terminals, and will try to achieve PCI-compliance of its ATM terminals in 2011.

Compared to 2009, non-cash transactions at points of sale increased, while ATM cash withdrawals decreased. The number of non-cash transactions with Probanka’s payment cards increased by 12.3%, and their amount was EUR 25.8 million, up 16.64% from 2009.

Probanka has 21 ATMs included in Slovenia’a ATM network managed by the Bankart processing centre. They are located at all branches, as well as in larger shopping and city centres across Slovenia.

Withdrawals through Probanka’s ATMs follow the common downward trend in the number of transactions, which is explainable by an increasing client awareness of the advantages of non-cash transactions. In 2010, the Bank’s ATMs paid out EUR 28.9 million or 2.69% less than in 2009, and were used for 429,556 withdrawals (down 5.73%) and 98,796 balance inquiries (up 1.84%). The average amount paid out was EUR 67.3. In addition to withdrawals and balance inquiries, clients used ATMs also to purchase prepaid mobile cards and make deposits.

3. Treasury and financial institutions



Following the worst financial crisis in 2009, the United States and European economies started a slow and hesitant recovery in 2010.

Moderate optimism shown by the western economies was not shared by Slovenia, as the crisis of the construction sector and the difficulties of financial holding companies further hurt a significant portion of the country’s real and financial sector.

Despite the partial recovery of foreign markets, financing conditions remained tight and access to finance difficult. In the first ten months of 2010, Slovenian banks repaid, in net terms, EUR 1.2 billion owed to foreign creditors and EUR 1 billion owed to the Eurosystem. On the other hand, they increased liabilities from debt securities by EUR 1 billion, which slightly improved the maturity structure of their foreign liabilities. While the majority of banks were issuing state-guaranteed bonds in 2009, some of them started to issue non-state-guaranteed bonds in 2010.

ECB continued carrying out its regular operations with full allotment and a fixed interest rate, but stopped using longer-term (6-month and 12-month) operations.

The Ministry of Finance borrowed short-term by issuing treasury bills worth EUR 156 million and also long-term by issuing debt securities worth EUR 2.5 billion. Government deposits with Slovenian banks decreased in 2010 by EUR 0.8 billion.

When the crisis in certain European financial markets (PIIGS) got worse, Slovenia helped Greece with a loan of EUR 387 million and Ireland with a loan guarantee of EUR 250 million.

Future developments nevertheless remain uncertain. And while the difficulties faced by banks seeking refinance in international financial markets are not expected to disappear in 2011, central banks will likely continue withdrawing the measures aimed at providing additional liquidity to the banking sector.

In 2010, the tightening of lending conditions by Slovenian banks was even more severe than in the euro area on average, which is mainly explainable by Slovenia’s slow and unstable economic growth, a relatively higher indebtedness of Slovenian enterprises and insufficient long-term sources of finance.

Thanks to the unlimited state guarantee for household deposits, the banks were able to further increase interest rates in 2011 to compete for deposits. However, starting with 1 January 2011, the state guarantee is now limited under the amended Banking Act to EUR 100,000 per depositor.

Liquidity risk, measured by means of liquidity coefficients for category 1 of liquidity ladder, did not change significantly in 2010. Slovenian Banks have been able to maintain the said coefficient at a relatively high level, ever since it increased due to loans of the SID Bank based on bonds issued, government deposits and longer-term financing with the Eurosystem.

In 2010, Probanka, d.d. issued a series of 7-year subordinated bonds worth EUR 10 million, and maintained a stable structure of secondary liquidity, as well as its liquidity coefficients for categories 1 and 2 of liquidity ladder.

In 2010, the Bank complied with all regulatory requirements (minimum reserves and liquidity ratios). The Treasury Department reports daily on the Bank’s liquidity position to the Liquidity Committee composed of the Management Board, executive directors and business unit managers. The Committee adopts liquidity management measures if necessary. The Assets and Liabilities Committee (ALCO), composed of the Management Board and executive directors, considers the monthly analyses of liquidity, interest rate, market and currency risks, the asset/liability maturity structure, and any proposed changes in the Bank’s borrowing and lending interest rates.

Great attention is also paid to the regular monitoring and assessment of the financial health of partner banks and financial institutions. In 2011, the Bank carried out several liquidity stress test scenarios, and adopted appropriate anti-crisis measures on this basis. 

Interbank operations

Money market

The volume of transactions in the domestic and foreign interbank money market increased by 27% compared to 2009, which is entirely explainable by less deposits placed with the central bank. The Bank increased its money market borrowing by 15% and at the same time reduced its borrowing from the Ministry of Finance by 46%.

Liabilities to banks and financial organisations

KDespite the difficult interbank market conditions, in particular for medium-sized Slovenian banks, Probanka managed to renew and obtain in domestic and foreign financial markets several bilateral general-purpose loans in 2010. This means that the size of its loan portfolio remained practically unchanged.

The Bank also continued its very good co-operation with the SID Bank, a multilateral financial institution. It obtained EUR 45 million from this bank, intended for small and medium enterprises, and environmental and infrastructure capital investments.

As at year-end 2010, the Bank’s liabilities associated with bank loans were slightly more than EUR 200 million.

Foreign currency trading

Foreign currency margins increased by 3.6% in 2010, and the Bank generated EUR 240 thousand net on this account (paid by corporate and retail clients and banks). Income generated reflects the Bank’s careful management of its foreign currency exposure, as well as increased foreign currency transactions.

Debt security transactions

Debt securities purchased

The year 2010 saw the world’s major economies recovering slowly and returning to a moderate economic growth. The global recession ended, but the difficulties remained in the countries with public deficit, including two members of the European Monetary Union, Greece and Ireland, that were on the brink of insolvency and asked other members of the European Monetary Union and the International Monetary Fund for financial help.

The costs of government borrowing increased strongly due to the increased credit risk of many euro area countries that were repaying their due liabilities by issuing new debt securities – as a rule at higher interest rates.

The Republic of Slovenia issued two series of bonds in 2010 in the total amount of EUR 2.5 billion. One issue of EUR 1.5 billion has a 10-year maturity and an interest rate of 4.125%, while the other of EUR 1 billion has a 5-year maturity and an interest rate of 2.75%.

In 2010, the Bank adopted the third and fourth editions of its debt securities management policy, which define investment policies by debt securities portfolios and guidance criteria for all future investments in debt securities.

The portfolio of debt securities amounted to EUR 177.6 million as at year-end 2010, down 4.1 million from a year ago. Investments in bonds eligible in the ECB refinancing operations increased by EUR 26.7 million to EUR 146.5 million. As at year-end, the Bank also had Slovenian treasury bills worth EUR 20 million, which are also ECB eligible collateral.

For security and diversification reasons, the Bank invested in debt securities issued by entities from 14 countries (see the chart below). The Bank reduced its exposure to certain countries with higher credit risk (Portugal, Spain and Italy), but increased its exposure to Slovenia..


In 2010, the Bank increased its holdings of highly-rated bonds, so that bonds rated AA or higher represented as much as 35.67% of its bond portfolio as at year-end, compared to only 14.51% a year ago. At the same time, the Bank increased the overall bond portfolio return and reduced its average duration to 1.41 years.



In 2010, the Bank remained one of the primary subscribers of Slovenian treasury bills. Three-month treasury bills amounting to EUR 156 million were offered in four auctions. The Bank participated in all of them and bought in its own name and on its own behalf bills worth EUR 32.65 million.

Debt securities issued

In 2010, the Bank issued a subordinated bond with a fixed interest rate of 6.5%. The entire bond issue was EUR 10 million, and the maturity year 2017. The bond (PRB12) was listed on the Ljubljana Stock Exchange on 20 December 2010.

As at year-end 2010, the Bank had four series of subordinated bonds (PRB8, PRB9, PRB 11 and PRB12) listed on the bond market with a total nominal value of EUR 59.2 million, and one ordinary series (PRB10) with a total nominal value of EUR 30.0 million.


4. Investment banking


Equity security transactions

The portfolio of equity securities amounted to EUR 69.3 million as at year-end 2010, down 25.4% from a year ago. The portfolio of equity securities is divided into the following sub-portfolios:

  • Trading portfolio: EUR 1.2 million
    Trading portfolio consists of equity securities held for trading. The Bank actively manages this portfolio. Equity securities in trading portfolio do not represent a significant portion of issuers’ equity.
  • Project portfolio: EUR 20.0 million
    The Bank does not actively trade in equity securities in this portfolio, but has exit strategies in place to ensure positive results.
  • Strategic portfolio: EUR 26.8 million
    Strategic portfolio consists of long-term investments in equity securities not held for trading. They are held to earn dividends and, in the long-term, capital gains upon divestment.
  • Forward-sold portfolio: EUR 19.4 million
    This portfolio consists of equity securities sold under forward contracts at a price agreed in advance and on a specified future date.
  • Equity portfolio: EUR 1.9 million
    Equity portfolio consists of investments in equity of other entities, connected with the Bank’s activities. They include investments in the Central Securities Clearing Corporation (KDD), SWIFT and others.


Equity investments in subsidiaries

Subsidiary companies, which are all 100-percent owned by Probanka, d.d., complement the Bank’s range of products and services with auxiliary banking services, such as:

  • asset management (Probanka upravljanje premoženja d.o.o.);
  • leasing (Probanka Leasing d.o.o. in Slovenia and PROleasing d.o.o., Rijeka, in Croatia); and
  • real estate activities in Slovenia (Probanka Nepremičnine d.o.o.)


Probanka upravljanje premoženja d.o.o.

Probanka Leasing d.o.o.

PROleasing d.o.o.

Probanka Nepremičnine d.o.o.





















Net profit (loss)





Securities-related services

In 2010, the Bank was carrying out the following activities with the approval of the Bank of Slovenia:

  • dealing on own and clients’ account;
  • asset management for clients and pension companies; and
  • services related to IPOs, issuance of de-materialised shares, and listing on regulated markets.

In 2010, the volume of transactions on the Ljubljana Stock Exchange was EUR 985 million. Of this, the Bank accounted for EUR 22 million or 2.22%, and was ranked 14th among the Ljubljana Stock Exchange members.


Client asset management

Assets managed by the Bank comprise financial assets of well-informed investors and assets of other private investors. As at year-end 2010, clients’ assets under management stood at EUR 86.2 million, up 5% from a year ago.

Pension funds

The total amount of pension assets under management increased by 7.4% to EUR 67.65 million as at the year-end 2010.

  • The total amount of assets managed within Delta, a mutual pension fund, increased by 14.86% to EUR 8.53 million as at year-end. The fund had 4,305 policyholders. The bank topped the list of Slovenian pension fund managers with a return of 4.69%. 
  • The Bank manages assets of other pension companies worth EUR 59.12 million.

Investment fund management

The number of investors in all funds stood at 21,560 as at year-end 2010, while net asset value of all funds stood at EUR 105.2 million. Probanka upravljanje premoženja d.o.o. manages the following funds:

The umbrella Probanka Fund with the following sub-funds:

  • Probanka Alfa - balanced fund
    As at year-end 2010, this fund had assets under management worth EUR 36.0 million and earned a return of 8.64%. Of the total portfolio, foreign shares accounted for 55.45%, domestic shares for 3.49%, fixed income investments for 35.49% and cash assets for the remaining portion.
  • Probanka Beta - equity fund
    As at year-end 2010, this fund had assets under management worth EUR 23.5 million and earned a return of 16.12%. Of the total portfolio, foreign shares accounted for 93.83%, domestic shares for 3.13%,and bank deposits and money market instruments for the remaining portion.
  • Probanka Gama - bond fund
    As at year-end 2010, this fund had net assets under management worth EUR 1.6 million and earned a return of 3.92%. Of the total portfolio, government bonds accounted for 31.20%, bonds issued by financial institutions for 29.02%, corporate bonds for 20.48%, bond mutual funds for 8.25%, and cash assets and money market instruments for the remaining portion.
  • Probanka Novi trgi - emerging markets fund
    As at year-end 2010, this fund had assets under management worth EUR 7.7 million and earned a return of 23.02%. Of the total portfolio, foreign investments accounted for 89.45%, domestic investments for 2.76% and cash assets for 7.79%.
  • Probanka Sigma - absolute return fund
    As at year-end 2010, this fund had assets under management worth EUR 0.4 million and earned a negative return of 9.40%. Of the total portfolio, cash assets accounted for 86.69%, government bonds for 11.97% and stock index options for 1.34%.
  • Probanka globalni naložbeni sklad - global investment fund
    As at year-end 2010, this fund had assets under management of EUR 34.8 million and earned a return of 7.15%. Of the total portfolio, foreign shares accounted for 69.41%, domestic shares for 23.60%, bonds for 5.99% and cash assets for 1.0%.

Sector funds:

  • Probanka Agriculture - equity fund
    The fund invests in securities of issuers that predominantly operate in or have exposure to the agricultural sector. As at year-end 2010, this fund had assets under management worth EUR 0.4 million and earned a return of 28.66%.
  • Probanka Biotech - equity fund
    The fund invests in securities of issuers that predominantly operate in or have exposure to the biotechnology sector. As at year-end 2010, this fund had assets under management worth EUR 0.4 million and earned a return of 27.32%.
  • Probanka Uranium - equity fund
    The fund invests in securities of issuers that predominantly operate in or have exposure to the uranium sector. As at year-end 2010, this fund had assets under management worth EUR 0.4 million and earned a return of 24.69%.


1.  Financial position

Probanka ended the year 2010 with total assets of EUR 1,294 million or EUR 19 million (1.6%) more than a year ago. Its market share was 2.57%, the same as a year ago, and the Bank ranked 12th among banks in Slovenia.

With EUR 844 million, loans to non-banks represented the largest portion (64%) of the Bank’s assets. Compared to a year ago, they increased by EUR 8.8 million. Loans to households increased by 8%, while loans to corporates remained at the 2009 level. Long-term loans to corporates increased by16% to EUR 389 million, while long-term loans to households increased by 13% to EUR 66 million.

Loans to banks increased by 26% to EUR 88.2 million and accounted for 7% of total assets. Of the total loans to banks, short-term loans accounted for 81%.

Investments in securities with EUR 258.8 million as at year-end 2010 represented 20% of total assets. Compared to a year ago, they decreased by EUR 36.6 million or 12%.

Of the total securities, debt securities accounted for 69%. Debt securities held for trading increased by 49% to EUR 12 million, mainly on the account of foreign government bonds. Debt securities available for sale increased by 18% to EUR 113.6 million. Investments in bonds issued by banks increased by EUR 31 million, while investments in bonds issued by the Slovenian and foreign government increased by EUR 9 million and EUR 5.5 million respectively. Investments in treasury bills decreased by EUR 30 million. Financial assets held to maturity, which comprise also bonds eligible in the ECB refinancing operations, amounted to EUR 52 million or EUR 25 million less than a year ago. All portfolio bonds are listed on various stock exchanges around the world.

Investments in equity securities stood at EUR 69.3 million as at year-end 2010, down by EUR 23.6 million or 25% from a year ago.

Total assets included also financial assets: available-for-sale (13%), held-to-maturity (4%) and held for trading (3%).

Cash on hand and balances with the central bank amounted to EUR 50.8 million or 4% of the Bank’s total assets.

Property, plant and equipment assets represented 2% of total assets, the same as in 2009.


With EUR 756.2 million, deposits from non-banks represented the largest portion (59%) of the Bank’s liabilities. Deposits from corporates decreased by 9% to EUR 515.0 million, while deposits from households increased by 20% to EUR 241.2 million. Long-term deposits grew the most (up 43%) and exceeded the target figure (by 34%). Long-term deposits placed by corporates and households increased by 40% and 47% respectively.

Deposits and loans from banks with EUR 321.4 million represented 25% of the Bank’s liabilities, up 9% from a year ago. Of the total deposits and loans from banks, those from the SID Bank accounted for 53% (up 17%).

Debt securities issued with EUR 31.6 million remained at the 2009 level and accounted for 2% of the total Bank’s liabilities.

In 2010, the Bank issued a new series of subordinated bonds worth EUR 10 million, so that its subordinated debt stood at EUR 56.2 million as at year-end. Subordinated debt comprises bonds eligible for inclusion in the Bank’s regulatory capital, and in the calculation of capital adequacy. Subordinated debt represented 4% of the Bank’s total liabilities.

As at year-end 2010, the book value of the Bank’s equity was EUR 108.3 million, down from EUR 112.3 million a year ago. In 2010, no additional capital was subscribed by means of new shares issued. The decrease in the book value is explainable by the 2009 dividend payment, and net loss of EUR 1.7 million posted in 2010. Equity represented 8% of the Bank’s total liabilities. Its regulatory capital, on the other hand, increased from EUR 140.9 million to EUR 147.8 million or by 6%, while its capital adequacy ratio was 11.11.









2. Financial results

Net financial and operating income earned by the Bank in 2010 was EUR 33.1 million, up 3% from 2009. Of the total income and expenses, net interest income accounted for 61%, net fee and commission income for 21%, and net gains from financial assets held for trading for 8%. Dividend income accounted for 7% and net realised gains from financial assets held for trading for 3%.

Net interest income earned in 2010 was EUR 20.3 million, up 38% from 2009 and 15% above the planned figure. Interest income remained at the 2009 level, while interest expenses decreased by 16%. The major source of interest income was interest from loans to non-banks (90%).

Dividend income amounted to EUR 2.2 million, of which EUR 1.4 million were paid by subsidiaries.

Net fee and commission income earned was EUR 6.8 million, down 10% from 2009.

Net gains from assets held for trading and from available-for-sale assets were EUR 2.5 million (down 60%) and EUR 1.1 million (down 48%) respectively.
Administrative costs including amortisation/depreciation expense were EUR 16.8 million or 96% of the target figure. Compared to 2009 they increased by 3%.

Gross profit before impairments and provisions earned by the Bank in 2010 was EUR 16.3 million, an increase of 2% from 2009. The Bank made impairments and provisions of EUR 18.9 million, twice as much as in 2009. Impairments and provisions were made due to the worsened economic conditions and lower securities and real estate prices in Slovenia’s capital and real estate markets, which negatively affected the quality of the Bank’s loan portfolio and the value of investments in securities. Cumulative impairments and provisions covered 5.12% of the Bank’s risk-weighted assets.

Due to impairments and provisions recognised in 2010, the Bank posted a net loss of EUR 1.7 million, compared to EUR 5.5 million of net profit earned a year ago. Accumulated profit as at year-end 2010 stood at EUR 11.2 million.



Impairments and provisions

As regards credit risk, the Bank fully complies with International Financial Reporting Standards. For loan portfolio valuation and for collective impairment/provision assessment, it uses a model developed in-house, which is based on clients’ financial position or credit rating, and their ability to generate sufficient cash flows to meet liabilities. For individual impairment assessment, the Bank uses also collateral fair value.

As at year-end 2010, accumulated impairments on the Bank’s loan portfolio amounted to EUR 58.2 million. Provisions for off-balance sheet commitments amounted to EUR 2.3 million. Cumulative impairments and provisions covered 5.12% of the Bank’s risk-weighted assets.

Based on an actuarial calculation, the Bank recognised provisions of EUR 0.9 million for employee benefits (retirement and jubilee).




3. Information for shareholders


Bank's equity

As at year-end 2010, shareholders' equity consisted of the following items:

    thousand EUR
                      2010 2009
Subscribed capital 15,856 15,856
Share premium 76,263 76,263
Revaluation reserve (2,716) (3,951)
Reserves from profit 7,772 7,772
Retained earnings 12,832 10,859
Net profit or loss for the period (1,666) 5,485


108,341 112,284

 The book value of one share was EUR 28.5, and was calculated by dividing the Bank’s total equity by the number of shares in issue.
Accumulated profit as at year-end 2010 was EUR 11,166 thousand and was a component of equity.



 * PRBR shares are not listed on the Ljubljana Stock Exchange.

In 2010, no additional capital was subscribed.

Vpisan kapital banke je sestavljen iz:

  • 3,399,814 ordinary registered class A shares (with voting rights) in the nominal value of EUR 4.17 each (symbol: PRBR), and4,17 EUR (oznaka PRBR) in
  • 400,000 preference registered class B shares (without voting rights) in the nominal value of EUR 4.17 each (symbol: PRBP).







Number of shareholders (ordinary shares)






Number of shares






Ordinary shares (PRBR)






Preference shares (PRBP)






Total number of shares






Share nominal value (EUR)






Share book value (EUR)













Dividend per PRBR and PRBP share (EUR)






Dividend per PRBP share in 2008 (EUR)






Preference shares (PRBP) are listed in the standard market of the Ljubljana Stock Exchange.


Capital adequacy

At the end of 2010, the Bank had sufficient capital in view of its risk-weighted assets to meet capital requirements for credit, market and operational risks. Bank’s equity increased from EUR 140.9 million as at 31 December 2009 to EUR 147.8 million as at 31 December 2010. Capital adequacy ratio was 11.11%.

Its Tier 1 capital was EUR 102 million and covered 7.66% of its risk-weighted assets. In 2011, the Bank will increase its share capital by issuing new shares in order for Tier 1 capital ratio to be above 8%.


Acquisition of treasury shares

In 2010, the Bank did not acquire or sell treasury shares, and had none in its portfolio as at year-end.


Informing the investors

Important changes in the information included in the prospectus for stock exchange listing are regularly published using the electronic public announcement system of the Ljubljana Stock Exchange (SEOnet). They are also published on the Bank’s website (, where they remain available for a period of five years. After expiry of this period, they are available in the press release archive.



4. Capital investments


Investment in business premises in 2010

In 2010, the Bank renovated the ground floor of the building at Gosposka 23 in Maribor. Its oldest branch office (together with back offices covering an area of 265.70 square metres) was thus revamped and obtained also separate rooms for a management company (Provlagatelj, with entrance from Ulica X. oktobra and an area of 94.50 square metres).

The work done comprises a complete renovation of electrical installations, replacement of heating and cooling elements, internal finishing works and partial replacement of furniture. The building’s roof and street facade were also completely renovated.

Investments in IT support

In-house development of IT system continued throughout 2010. In accordance with the IT development policy, the following activities were carried out:

  • centralization of support functions at Group level;
  • introduction of the IT security standard ISO27001;
  • coverage of business processes with IT support;
  • integration and standardisation of the entire IT system;
  • assurance of business continuity; and
  • assurance of a safe and reliable functioning of all business processes.

In addition, the following projects were also completed:

  • introduction of ECB reporting from the Bank’s data warehouse;
  • PROCERT project – use of digital certificates for electronic transactions;
  • XETRA project – technological and substantial renovation of transactions with the Ljubljana Stock Exchange;
  • VIIT project (technological VIRTUALISATION) – gradual replacement of physical servers with virtual ones;
  • completion of a business continuity test;
  • renovation of technical protection systems;
  • PORTAL project – complete revamping of the Bank's website;
  • projects EFEX II and WEBTECH – implementation of a safe internet infrastructure;
  • amendments of applications in view of the adopted Consumers Credits Act;
  • adjustments to new payment services standards;
  • implementation of a comprehensive IT support to the internal acts adoption process;
  • e-invoice, phase I (legal persons); and
  • e-banking – security audit of Prosplet.

Investments in IT equipment in 2010:


thousand EUR





1. Probanka upravljanje premoženja

The volume of assets in mutual funds managed decreased by 3.2% or EUR 3.5 million.

The company earned a net profit of EUR 0.47 million in 2010, up 20.2% from 2009.




million EUR






Business volume




- net value of assets under management




- equity








- net profit




- ROAE (after tax)




- ROAA (after tax)





2. Probanka Leasing and PROleasing

Business volume of both leasing companies in Slovenia and Croatia increased by 4.7% or EUR 4.7 million in 2010 (to EUR 87.4 million), and represented 94.1% of the planned figure.

Net profit of Probanka Leasing was EUR 0.55 million, an increase of 20.9% compared to 2009 and 70.8% of the planned figure. Net profit of PROleasing was EUR 0.08 million, an increase of 28.5% compared to 2009 and 88.5% of the planned figure.




million EUR










- assets




- equity




- net profit




- ROAE (after tax)




- ROAA (after tax)








- assets




- equity




- net profit




- ROAE (after tax)




- ROAA (after tax)



3. Probanka Nepremičnine

Business volume of the real estate company was EUR 29.8 million last year, an increase of 53.8% compared to 2009 and 29.1% above the planned figure.

The company posted a loss of EUR 0.27 million in 2010. Due to the worsened financial market conditions, the real estate market was less liquid and saw a slowdown in sales, which increased real estate inventories.




million EUR






Business volume




- assets




- equity








- net profit/loss




- ROAE (after tax)




- ROAA (after tax)




Consolidated performance

The consolidated financial statements and notes thereto of the Probanka Financial Group for the year ended 31 December 2010 have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union, and have been audited. The independent auditor issued an unqualified opinion on them on 22 April 2011.



thousand EUR










Total assets



Off-balance sheet items






Total assets



Off-balance sheet items






Probanka upravljanje premoženja



Probanka Leasing



Probanka Nepremičnine









Probanka Globalni naložbeni sklad



Probanka Alfa



Probanka Beta



Probanka Gama



Probanka Novi trgi



PB Uranium Index



PB Biotech Index



PB Agriculture Index



Probanka Sigma


















Probanka upravljanje premoženja



Probanka Leasing



Probanka Nepremičnine


















Probanka upravljanje premoženja



Probanka Leasing



Probanka Nepremičnine



PROleasing Rijeka






Probanka Financial Group



Probanka, d.d.






thousand EUR







Total assets



Total deposits from non-banks



  • legal persons



  • government deposits



  • households



Total loans to non-banks



  • legal persons



  • households



Total equity



Impairments of financial assets at amortised cost



Off-balance sheet items






Net interest income



Net non-interest income



Administrative costs






Impairments and provisions



Profit before tax



Income tax



  • 3. NUMBER OF EMPLOYEES (at year-end)






  • a) equity



  • regulatory capital (thousand EUR)



  • capital adequacy (%)



  • b) asset quality (%)



  • impairments of financial assets at amortised cost and provisions for off-balance sheet commitments/classified items



  • allowances/gross assets



  • c) profitability (%)



  • interest margin



  • margin of financial intermediation



  • ROAA



  • ROAE before tax



  • ROAE after tax



  • d) operating costs (%)



  • operating costs/average assets




Employee relationships

The Probanka Financial Group is aware that employees are its source of knowledge, energy and power, as well as that it is their joint contribution that allows it to achieve its long-term objectives and strategic policies. Moreover, employees are the key factor of the Group’s success and reputation among its stakeholder. It is therefore of key importance to ensure systematic employee communications, development and contribution in order to ensure achievement of business objectives and long-term client relationships.

Supported by appropriate internal communication, employees of the Probanka Financial Group build together a culture of trust, respect, co-operation and team work, as well as of continuous learning and responsible and efficient working.Employees communicate internally at all levels, both vertically and horizontally, and are acquainted with the latest developments in the Group by means of various internal communication tools.

The most important of such tools and therefore indispensable is the intranet, which was revamped in 2010. Employees now use the intranet not only to read the latest news, but also to get help with their work: the revamped intranet is a source of various documents, internal acts, forms and other useful material. Certain groups, such as organisational units, project teams and working bodies, also set up their own sites to manage documentation, communicate and share good practices.

Other channels of internal communication include the so-called “PRO na kvadrat”, an internal information channel, as well as e-mail and personal meetings. E-mail is used to distribute information related to day-to-day work and urgent information.



As at year-end 2010, the Probanka Financial Group employed 297 persons or three less than a year ago. The slightly downward trend in the number of employees is explainable by natural turnover (retirement, expiry of temporary employment contracts), which confirms the Group’s decision to rely on its own human sources and knowledge. The Group limited external staffing to those cases when it cannot find an appropriate person for the job internally.

Probanka Financial Group employees as at year-end 2010

Of the total Group employees, 58.6% were female and 41.4% were male, which is practically the same as a year ago.


Educational structure

Knowledge is a value in itself and the driver of development and success of the Probanka Financial Group. This are not just words on the paper – as much as 6% of the employees have a post-graduate education (masters of science and doctors of philosophy). At year-end 2010, more than half (152) employees had at least a graduate or university degree. Their number is increasing, while the number of employees with a secondary degree is declining.

Probanka Financial Group employees by the highest level of education achieved as at year-end 2010.




Education and training

The Probanka Financial Group invests significant sums in its development, capacities and competitiveness, which requires skilled experts in all areas of its activities. Only with such skilled and competent employees can the Group meet the challenges of modern times and competition, provided it also ensures continuity in key positions and business areas. The future of business depends on motivated and skilled individuals who are able to respond to market requirements and add value to their services in an ever evolving environment.

Probanka Financial Group invests in the knowledge of all employees. It matches its own needs with the development needs of its high potential employees who get involved in a system of planned development, education, training and experience in various areas to prepare them for the most demanding jobs. The Group offers its employees the opportunity for continuous learning and personal development, as well as for professional and career development. This enhances its knowledge base and encourages learning and development of own strengths. 

Prošola (PROschool)

PROschool has been the trade mark of all training activities within the Probanka Financial Group for a number of years. In 2010, more than half of all training activities was organised within this internal school in 17 different programmes. All of them were tailored to meet the needs of the Group employees and organisational units, and were offered by external and internal lecturers. The programmes covered subjects such as banking, communication and sales skills, management skills and coaching. In 2010, PROschool organised the second part of the so-called professional selling and coaching academy, which was attended by more than half of all key marketing employees. It also offered the first part of the so-called “dialogics” training, attended by already the fourth group of managers who learned the language of responsibility.

Of all money invested in training, 60% went for internal training within PROschool and 14% for co-financing of continued education (twice as much as in 2009). The money spent for external training dropped by 7% to 26%. Of all money invested in training, 45% went for marketing employees and their training in sales and communication skills. All courses contributed to employee development, as they improved their skills of communication, sales advisory and management, as well as work-specific knowledge.



Employee development

Employee development is one of the key areas of the Group’s human resources policy, as its own development is planned to be mainly based on its own employees. Planned and guided employee development is one of the tools that produce skilled employees prepared to assume the most demanding jobs. Employee development is closely connected with the needs of the Group as a whole on the one side and with the needs of individuals as regards their own potential and talents on the other. It is based on planned development, appropriate training and experience in various areas.

Employee developments starts with the identification of an individual’s potential and definition of his goals, as well as of the required competencies for a given job. The Group has in place a system of competencies for various areas of its activities, based on which it can plan employee development and training. In 2010, one of the more important employee development and management tools was the annual assessment interview that involved all employees. Annual interviews are important as employees personally commit to achieve the agreed goals. In addition to goals, the manager and the employee also agree work and development priorities and expectations, and on this basis a training and personal development plan. Annual interviews also serve the purpose of assessing the employee’s pas achievements.

Employee development is ensured systematically also by means of target-oriented management, coaching and monitoring of achievements expressed both quantitatively and qualitatively, and target-oriented training.

Proideja (PROidea)

A creative environment contributes to employee development. The Probanka Financial Group employees have already contributed numerous ideas and suggestions aimed at reducing costs and simplifying work processes. PROidea represents systematic collection, assessment and remuneration of improvement ideas and suggestions. which encourages employees to be creative, This encourages creativity, the same as a positive work environment that is the responsibility of managers. In 2010, employees submitted more than 100 useful ideas and suggestions, which were classified and assessed using various criteria defined in advance. At year-end, two employees were rewarded for their outstanding creative achievements and awarded the title of “PROcreator”.