Nova Kreditna Banka Maribor d.d., Slovenia’s second-biggest lender by assets, failed to meet capital requirements along with three other banks in Europe.
The state-owned bank, based in the country’s northern city of Maribor, doesn’t meet the required capital levels, the European Banking Authority, the European Union’s top banking regulator, said on its website today.
“The bank needs at least 100 million euros ($129 million) in fresh capital as it will probably report a loss this year, similar to last year’s,” which was around 80 million euros, said Andraz Grahek, an independent financial analyst and a former fund manager at KD Funds LLC in Ljubljana. “They will probably have to sell the insurer Zavarovalnica Maribor d.d. to improve their capital ratios.”
Slovenian state-owned banks are at the center of investors’ concern that the former Yugoslav republic may be forced to seek an international bailout to prop up the financial industry. The government of Prime Minister Janez Jansa proposed legislation to create a so-called bad bank to hold bad loans from lenders such as Nova Kreditna and Nova Ljubljanska Banka d.d. and clean up their balance sheets.
In return, lenders would get government-guaranteed bonds of as much as to 4 billion euros, Finance Minister Janez Sustersic has said.
An additional 1 billion euros would be injected directly into banks, Sustersic has said.
As the results were announced, Nova Kreditna said it is working to improve its core Tier 1 capital ratio to above 9 percent and the process should be completed by year’s end, the bank said in an e-mailed statement.
“The bank’s business goes on as usual, the company is liquid and solvent,” it said in the statement.
Nova Ljubljanska has met the EBA requirement of a core Tier 1 capital ratio of over 9 percent after Slovenia’s biggest bank received 381 million euros of funds from the government and its agencies at the end of June. The Ljubljana-based lender commented in regulatory filing today.