Slovenia Proposes Tighter Rules for Banks to Ease Plight

Slovenia may tighten supervision of banks to improve management and ease their capital plight.

The government will send lawmakers proposals for revised regulations that give the central bank greater oversight over banks, Finance Minister Janez Sustersic told reporters in Ljubljana today.

“The new legislation will create a new system to solve problems in the banking industry due to their limited access to funding and especially to meet capital requirements from the central bank and the European Banking Authority,” Sustersic said.

The proposed changes would allow Banka Slovenije, led by Governor Marko Kranjec, to block lenders from selling assets or acquiring additional ones, demand organizational restructurings, remove board members and order measures to improve the banks’ stability, Sustersic said.

Investor concern has increased over Slovenia’s ailing state-owned banks amid speculation the Adriatic nation may ask for an international rescue package to prop up the financial industry.

Nova Ljubljanska Banka d.d., Nova Kreditna Banka Maribor d.d. and Abanka Vipa, the three biggest banks by assets, are seeking fresh funding to bolster their capital after it was eroded by a surge in bad loans as Slovenia enters its second recession in three years.

The new legislation will also enable the government to manage its holdings in banks without being forced to announce a takeover, Sustersic said.

Voting Rights

“Now we have the situation that the state’s voting rights have been suspended at Nova Kreditna Banka (KBMR) Maribor even though the lender needs fresh capital,” Sustersic said. “New legislation will give us more time to sort out the ownership structure.”

The markets securities agency in Ljubljana suspended the state and its agencies’ voting rights in Nova Kreditna in September because their holding surpassed the 33 percent threshold. According to legislation, the company or the state that crosses that mark must announce a takeover bid for the remaining shares of a company.

To contact the reporter on this story: Boris Cerni in Ljubljana at bcerni@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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