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European Commission approved recapitalization of Slovenian banks

The European Commission has submitted the approval for the state aid to five Slovenian banks. NLB and NKBM shall receive the state aid which it will enable the Banks to become sustainable in the long run without substantially distorting competition. Help for the Factor bank and Probanka, which are already in planned liquidation proceedings, is permitted. Their gradual withdrawal from the market is minimizing the impact of state aid on competition. The Commission has also issued a temporary approval to help Abanka for reasons of financial stability. The decision regarding Abanka will be given when the Commission receive its restructuring plan, which must be forwarded by Slovenia to the Commission within two months.

NLB, the largest Slovenian bank with a market share of 30%, was capitalized already, in 2011 in the amount of EUR 250 million and in 2012 with EUR 383 million. Its restructuring plan has been approved by the Commission and provides a new capital of EUR 1.558 billion and the transfer of assets to Slovenian Bank Asset Management Company (BAMC) of 2.300 billion euro(nominal amount).

NKBM, the second largest Slovenian bank with a market share of 10%, was capitalized in 2012 with 100 million. Its restructuring plan envisages a cash injection of € 870 million and the transfer of assets to BAMC in the amount of 1.149 billion.

Both banks, NLB and NKBM are also obligated to focus on their core business, to improve the governance structure and their risk management.

Regarding Probanka and Factor bank, Slovenia promised that these two banks will not provide financial services to new costumers and will slowly retreated from business with existing customers. The Commission has therefore authorized the state aid of 236 million euros and 235 million euros for Probanka and 285 million euros and 400 million euros of Factor bank.

Abanka, the third largest Slovenian bank with a market share of 8%, due to deterioration of the loan portfolio and the withdrawal of the interest of private investors, got a temporary permit for a capital increase of EUR 348 million. The Commission will however make a final decision when Slovenia provides a restructuring plan for the bank. This must happen within the next two months.

Joaquin Almunia, Commissions’ Vice-President in charge of competition policies, stressed that the planned capital increase “will strengthen confidence in Slovenian banks”. Planned measures that followed the review of assets and stress test will further “ensure that Slovenia’s economy can count on a viable, healthy banking sector.”


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