Slovenia Halts Bank Share Trade as Stress Results Loom

Slovenia’s bourse halted trading in shares of Nova Kreditna Banka Maribor d.d. and Abanka Vipa d.d. before the release of stress tests next week that will show if Slovenia can avert a bailout.

The Ljubljana stock exchange also stopped trading in some subordinated debt of Nova Kreditna and Probanka d.d., as well as of unlisted Nova Ljubljanska Banka d.d. Banka Celje d.d., and Factor Banka d.d., it said in a statement on its website today. Nova Kreditna fell 31 percent on Nov. 29 when it said its nine-month net loss narrowed to 67 million euros ($90 million) from

97.6 million euros from a year earlier. Factor Banka and Probanka are in the process of controlled liquidation.

“Not all conditions for fair, orderly and efficient trading in the above-mentioned securities are satisfied,” the bourse said. “Key information which would enable an average investor to make informed investment decisions regarding the above listed securities has not been provided.”

Investors are awaiting stress test results of the Slovenian bank system and an asset-quality review due Dec. 13 that will reveal how much Prime Minister Alenka Bratusek’s government must pay to repair them and kick start economic recovery. The Adriatic nation has about a 5 billion-euro cash buffer for banks, Bratusek has said, while Fitch Ratings estimates the rescue could cost as much as 4.6 billion euros.

Clarity Needed

The halt will last until further notice or “until there is more clarity” about the banks “because there is a lot of media speculation, and we have to treat all investors equally,” Andrej Sketa, president of the bourse’s management board, said by phone today.

“This is a precautionary measure that is based on public debates and speculation on the results of stress tests,” Slovenia’s central bank, led by Governor Bostjan Jazbec, said in an e-mailed statement today.

The yield on dollar-denominated notes maturing in 2022 was unchanged from the previous session, close to the lowest level in six months, after Slovenia sold 1.5 billion euros of debt that analysts including Abbas Ameli-Renani from Royal Bank of Scotland Group in London said reduced the risk of an outside intervention. The yield on the bonds was at 5.69 percent at 4:11 p.m. in Ljubljana, according to data compiled by Bloomberg.

“It’s still not clear whether the government would directly inject capital into banks or it would eventually go for an European Stability Mechanism bailout,” analysts at Hypo Alpe-Adria Bank in Zagreb, Croatia, including Hrvoje Stojic, said in a report today. They said trading in Slovenian bonds will be “volatile in the near term.”

Delayed Rescue

Slovenia delayed the bank rescue by six months after the European Commission ordered an outside assessment of the nation’s lending industry. The results are due Dec. 13, according to Jazbec.

The government will “immediately” boost capital at banks such as Nova Ljubljanska after the results are released, it said Nov. 27, when it raised its estimated for the bank fix at 1.4 billion euros. NLB, Nova Kreditna and Abanka dominate a lending market burdened by bad debt equal to about a fifth of Slovenia’s annual economic output.

Slovenia would be able to handle the bank rescue cost if it doesn’t exceed 2.5 billion euros, Carlos Ortiz, an economist at UniCredit Bank AG in London, said in a Nov. 5 report. Ameli-Renani from RBS estimated the sum may be about 3 billion euros.

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