Slovenia to ask EC to complete NLB sale by end-2019 - govt

Under its latest plan, Slovenia will propose to begin the sale in 2018 with the aim to reduce the state's stake to a maximum of 25% plus one share by the end of 2019, the government said in a statement late on Thursday.

Slovenia will also propose 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.

Under the terms of Slovenia's proposal, the administrative trustee will not be authorised to undertake any activities in connection with the sale of NLB shares.

"Regarding any additional compensatory measures, in its talks with the European Commission Slovenia will follow above all the goal of long-term sustainable operations of the bank, which was also the main reason for the commitments to sell, and the maintenance of its regional character," the government said.

Under its current commitments, Slovenia is required to cut its stake in NLB by at least 50% by the end of 2017 and to divest itself of a further 25% minus one share by the end of 2018.

The country will not, however, meet these requirements by the end of the year because it halted the sales process in June 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.

Since June, the government has proposed several deferrals to the European Commission, which the Commission has rejected.

Earlier this month, the government said it has approved a three-year deferral, but admitted it is aware that it is facing tough negotiations. A few days later, the country's prime minister said the proposal has been altered to a one-year deferral.

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.