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Slovenia recapitalization plan

December 12, 2013

Eurozone member Slovenia has said its largest banks need billions of euros to plug holes in their balance sheets. But the government insisted no international bailout would be needed for the recapitalization process.

https://p.dw.com/p/1AXqU
Slovenian money in a glass
Image: Fotolia/Comugnero Silvana

Slovenia's eight largest lenders need 4.8 billion euros ($6.62 billion) to plug current financing holes, the results of an external audit showed on Thursday.

Central bank chief Bostjan Jazbec said the state would inject some three billion euros into three publicly owned lenders, notably Nova Ljubljanska Banka (NLB), Nova Kreditna Banka Maribor (NKBM) and Abanka Vipa. He added their toxic assets would be transferred to a state-run fund, commonly known as a bad bank for absorbing non-performing credits.

Jazbec insisted the recapitalization gap as shown by the EU-sponsored stress test was within the range the euro-area nation had said it could afford without having to resort to a bailout by international creditors.

Everything under control?

The central bank added five smaller banks would be given until mid-2014 to raise 1.6 billion euros from private capital.

Slovenian central bank chief warns against bailout

Slovenia's banking-sector problems have represented a dramatic fall from grace for the ex-Yugoslav country which for years was viewed by analysts as a haven of stability and economic prosperity.

Finance Minister Uros Cufer said on Thursday the government had prepared a 1-billion-euro sovereign bond yet to be sold, which is meant to help fund the recapitalization of the three biggest lenders.

hg/pfd (Reuters, AFP)