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Slovenia to ask EC for 1-yr deferral of NLB sale - report

Author Maja Garaca
Slovenia to ask EC for 1-yr deferral of NLB sale - report NLB Banka Beograd headquarters in Belgrade Source: www.nlb.rs

LJUBLJANA (Slovenia), December 15 (SeeNews) - Slovenia will lodge an official request with the European Commission to postpone the sale of a stake in Nova Ljubljanska Banka (NLB) by one year, instead of the three-year deferral the government announced it will seek earlier this month, local media reported.

Slovenia will now ask the Commission for permission to launch the sale in late 2018 and complete it in 2019, news agency STA reported, quoting the prime minister, Miro Cerar.

The request is expected to be lodged next week.

Earlier this month, the government said it has approved a three-year deferral, but admitted it is aware that it is facing tough negotiations.

It said at the time it will propose 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 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, the government 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.

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.

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.

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