"The European Commission has authorised under EU state aid rules an emergency recapitalisation of up to EUR 250 million in favour of the Slovenian bank Nova Ljubljanska Banka (NLB). The Commission temporarily approved the measure for reasons of financial stability until it reaches a final decision on a restructuring plan for NLB which must be submitted within six months," the European Union's executive arm reported on its web site.
"In mid-January the Commission received a notification by the Slovenian government to increase the capital of Nova Ljubljanska Banka (NLB), the country's largest bank, by EUR250 million. NLB passed the stress tests conducted by the European Banking Authority (formerly CEBS), in mid-2010, by a small margin only, leading the Central Bank of Slovenia to decide that the bank must raise its capital levels to preserve an adequate level of Core Tier 1 capital."
A decision on a capital injection of EUR 250 million into the bank was made at a meeting of shareholders at the urging of the state as its biggest shareholder last November, but with opposition from the Belgian KBC group, which holds a 30-percent stake in the NLB.
"According to the measure notified to the Commission, NLB needs to raise EUR 250 million of equity capital, equivalent to 1.6% of its risk-weighted assets. It will try to raise money through a public offering of its shares, in two tranches. In the first tranche, existing shareholders will be offered the opportunity to subscribe to the entire EUR250 million of new shares, pro rata to their existing shareholdings. In the second tranche, any new shares not taken up by existing shareholders will be offered to the general public. The Slovenian State will participate in the emergency recapitalisation by purchasing new shares at least in proportion to its current shareholding (approximately 49%)," the European Commission reported today.