LJUBLJANA (Slovenia), November 10 (SeeNews) - Slovenia has proposed to the European Commission to keep its stake in Nova Ljubljanska Banka (NLB), as instead the bank should pay a compensation for the 2013 state aid provided to it, its finance ministry said on Friday.
Slovenia's finance minister Mateja Vranicar Erman met with competition commissioner Margrethe Vestager in Brussels on Friday to seek an alternative for the sale of NLB, which was set out in a contract the Commission and Slovenia concluded in 2013, the finance ministry said in a statement.
Under the deal, Slovenia committed itself to selling 75% of NLB, the country's largest bank, within four years in return for the Commission's 2013 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.
Erman told Vestager on Friday that the alternatives were rejected by its government.
"The minister laid out the government's basic position that it is not possible to carry out the NLB sales procedure under the current circumstances," the ministry said.
The first alternative offered by the EC was to sell a minor stake in NLB by the end of 2017, before proceeding with the disposal of the remainder of its stake by no later than the end of 2018.
In exchange for reducing the stake to be sold in the first tranche, the European Commission would define additional compensatory measures, it said at the time.
The other alternative was to sell part of the state's stake in NLB (50%) by the end of 2017 with a clause that, under certain conditions, gives the seller the right to receive additional compensation.
Slovenia's government on Thursday rejected both alternatives, saying that "neither guarantees realisation of the key priority regarding the sale of NLB, i.e. the recovery of the greatest possible proportion of the funds invested by the state in its rescue".
The government instead proposed a compensatory measure on the basis of which NLB would pay an amount corresponding to 75% of the book value of NLB's banking subsidiaries into a so-called Fund of Funds.
"This would be conceived as a fund for European cohesion policy funds which are intended to provide repayable funding in the form of long-term and mezzanine loans, guarantees or capital investments to promote the growth and development of the Slovenian economy," the government explained on Thursday.
Under the terms of the proposed additional compensatory measure, Slovenia would renounce dividends for the period in which the bank is paying into the Fund of Funds.
"It is therefore a measure that would adequately address the situation that has arisen because the commitment to sell, which is a commitment of Slovenia and not of the bank, cannot be realised", the government added.
The finance ministry said that talks with the Commission will continue intensively.
Slovenia earlier refused to sell NLB because it would not be able to secure the best possible price due to lawsuits launched against NLB in Croatia over Yugoslav-era savings deposits. Namely, NLB had been 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.