Slovenia isn’t considering a banking bailout “at the moment” after the country’s biggest bank, Nova Ljubljanska Banka d.d., received a capital increase, Finance Minister Janez Sustersic said.
“We haven’t thought about specific amounts for possible aid because we are not considering asking for assistance at the moment,” Sustersic told reporters in Ljubljana today. “Aid is one of the options to partially cover bad liabilities at the banks, but first we have to see how much of those liabilities are there.”
NLB will get a 381 million-euro ($474 million) capital boost after the two largest owners, the government and KBC Groep NV, agreed to increase the capital at the Ljubljana-based lender by buying contingent-convertible bonds and shares. Prime Minister Janez Jansa said yesterday Slovenia may need to seek a bailout in July if it fails to adopt legislation to limit public spending.
Slovenia’s banking industry has been weakened by the faltering economy, which is teetering on the brink of its second recession in three years, pushing more and more companies into bankruptcy. Lenders in the former Yugoslav nation that adopted the euro in 2007 are relying on loans from the European Central Bank for liquidity because of limited access to wholesale funding.
Sustersic said that possible assistance for Slovenian banks will be considered after assessing the amount of bad loans they hold as well as the broader economic environment.
The export-driven economy will probably shrink in the second quarter as confidence drops and austerity measures cut demand, the Slovenian central bank said June 14.
Gross domestic product rose 0.2 percent in the first quarter from the previous three months as household and government consumption offset slowing exports and a decline in Investment. GDP shrank 0.2 percent in the period, compared with a year earlier.
KBC will increase its holding in Nova Ljubljanska to 34 percent from 25 percent after the capital increase, Sustersic said. The government will hold a 52.6 percent stake after the transaction. Both owners want a third partner in the Slovenian financial institution, according to Sustersic.
“We are talking to banks in Europe, the U.S. and Asia as potential partners for NLB,” Sustersic said today without naming any specific companies.
-- Editors: James M. Gomez, Alan Crosby