Slovenia is seeking private investors to boost capital at its banks, including Nova Ljubljanska Banka d.d., and hopes to avoid turning to international lenders for a “last resort” bailout, Finance Minister Janez Sustersic said.
“We are working to avoid a bailout for Slovenian banks as this would be a bad signal at the moment -- it’s a solution of last resort,” Sustersic told reporters in Luxembourg today on the side lines of the meeting of euro region finance ministers. “If possible -- and I think it is possible -- we would get private investors for that, partially now and the rest by the end of the year so that such aid won’t be necessary.”
Nova Ljubljanska Banka d.d., Slovenia’s biggest financial services company, needs 500 million euros ($627 million) to improve its capital ratio by the end of the month and would need “much more” cash to start lending to companies and support economic growth, Sustersic said earlier this month.
The worsening debt crisis in Europe and the shrinking Slovenian economy are affecting business at the country’s banks which rely on the European Central Bank for liquidity because of limited access to wholesale funding. Lenders in the former Yugoslav nation borrowed 2 billion euros from the ECB’s long- term refinancing operation with NLB getting a 1.2 billion-euro loan.
NLB investors will discuss the capital increase at a shareholders meeting June 27 with the proposal to prop up the bank with the sale of contingent convertible bonds to improve the core Tier 1 capital ratio. The government wants to cut its NLB holding to 25 percent plus one share, which may happen by the end of the year, and is trying to avoid injecting state funds into the bank, according to Sustersic.
KBC Groep NV (KBC) of Belgium is the second largest shareholder in NLB after the Slovenian government, which holds an indirect majority. Nova Kreditna Banka Maribor d.d. invited companies to carry out due diligence at Slovenia’s second biggest lender by assets to see how much capital it needs. Abanka Vipa d.d. is seeking to raise 50 million euros in a share sale.
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