LJUBLJANA (Slovenia), December 1 (SeeNews) - The Slovenian government said it has begun drafting an official request for renegotiation of the commitment to sell a stake in Nova Ljubljanska Banka (NLB), with the aim to seek a three-year deferral of the sale from the European Commission.
The request will be based on the proposal to appoint an administrative liaison officer at NLB, who would manage the state’s participating interest in the bank until that interest is reduced to no more than 25% plus one share, the government said on Thursday following its regular session.
The officer would be appointed by March 31, 2018 on the basis of an international public tender and pursuant to the prior approval of the European Commission.
"This would address the main purpose of the commitment to sell, which in the opinion of the European Commission is to permanently and irrevocably prevent the state from exerting influence as an owner on the bank’s daily operations and thus to eliminate the risk of a return to the harmful business practices which in the Commission’s opinion led to the need for a capital increase", the government explained.
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.
In late October, Slovenia sought to postpone the sale of the bank by three years, but the European Commission rejected this proposal, instead offering two alternatives, neither of which the government accepted.
In November, the government proposed to the European Commission to keep its stake in NLB, while the bank will pay compensation for the state aid provided to it.
The government noted on the basis of this compensatory measure NLB would pay an amount corresponding to 75% of the book value of NLB's banking subsidiaries into a so-called Fund of Funds, which would be used to finance projects of small and medium-sized companies.
It said on Thursday, it is still willing to have NLB pay compensation to the state.
Under its proposal to appoint a administrative liaison officer, the government is suggesting he/she assume some of the competencies of Slovenia's sovereign holding company SDH and carry out certain duties on behalf and for Slovenia in line with the annual management plan, such as e.g. participation in NLB general meetings and the exercising of voting rights, oversight of the exercising of other shareholder’s or partner’s rights, the promotion of good corporate governance systems at NLB, etc.
"The government believes that the proposal adequately addresses the European Commission’s concerns regarding the bank’s corporate governance and its ties to the state", it said.
"The proposal for an alternative measure also pursues the government’s objective of preserving NLB as a strong regional bank and of avoiding the carrying out of the privatisation in a manner which would not represent the optimal reimbursement of taxpayers’ money due to the impact of the issue of transferred foreign currency deposits."
The government earlier refused to sell NLB, saying it would not be able to secure the best possible price due to lawsuits launched against the bank in Croatia over Yugoslav-era savings deposits. 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.
This situation would drag down the price of the bank, the Slovenian government has argued.
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.