January 26 (SeeNews) - The European Commission will launch an in-depth probe of Slovenia's violation of the commitment to sell Nova Ljubljanska Banka (NLB) by the end of 2017, local media reported.
The Commission seriously doubts the sufficiency of Slovenia's latest proposal to begin the NLB sale this year and finish it next year, news daily Delo reported on Thursday citing 'unofficial but reliable sources'.
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In December, Slovenia's government said it will ask the EC to launch the sale of NLB in 2018 with the aim to cut the state-owned stake to a maximum of 25% plus one share by the end of 2019.
Slovenia also proposed to appoint an independent administrator at NLB for the period until privatisation.
"Until the state-owned stake has been reduced to a maximum of 25% plus one share, an independent administrative trustee selected through an open international selection process will administer 100% of the stake," the government said at the time.
Slovenia's finance minister, Mateja Vranicar Erman, recently said she could not comment on media reports because "the European Commission has not yet given a formal response to our proposal amending the commitments".
"Therefore, in the ministry, we are still waiting for the official response from the European Commission, and I can not comment on the content because I do not know it," Vranicar Erman added.
In 2013, Slovenia concluded an agreement with the Commission to sell 75% of NLB, the country's largest bank, within four years in return for the Commission's decision to grant state aid to the bank in the midst of a banking crisis in the country.
The commitment was then altered and Slovenia obliged itself to cut its stake in NLB by at least 50% by the end of 2017 and to divest of a further 25% minus one share by the end of 2018.
The country did not, however, meet these requirements because it halted the sales process in June last year because of "the excessive impact on price caused by the issue of transferred foreign currency deposits in Croatia".
Namely, NLB was taken to court in Croatia over the deposits repaid to the bank's former customers in Croatia by Croatian banks, which then decided to seek compensation from the Slovenian bank in court.
Slovenian media are speculating that the Commission could now demand recovering the state aid NLB had received. The investigation is, however, hoped to deliver a solution to the standstill.
NLB has been 100% state-owned since 2013, when the Slovenian government stepped in to recapitalise it and two other lenders - NKBM and Abanka, narrowly avoiding an international bailout.