Brussels, 12/12/2013 (Agence Europe) - On Thursday 12 December, the European Commission said that Slovenia would not need any financial aid for its banks. The results of the Slovenian bank stress tests were revealed the same day, noting capital requirements of €4.8 billion to be filled.
“Today it is clear that Slovenia can proceed with the repair of its financial sector without turning to her European partners for financial assistance”, said Economic and Monetary Affairs Commissioner Olli Rehn.
In a press release, the Slovenian government announced the country's big three banks, NLB, NKBM and Abanka, would be receiving a total of €2.1 billion in cash, €905 million in bonds and €441 in losses written off through raids on junior investors. The other five Slovenian banks, UniCredit Banka Slovenija, Banka Celje, Hypo Alpe-Adria Bank, Raiffeisen banka and Gorenjska banka, have until June 2014 to raise cash on the money markets to the tune of €1.6 billion in total. If they fail to achieve this, then the government will inject capital under the EU state aid rules. The government says it has €1 billion of bonds in the waiting for Wednesday and €3.6 billion in capital reserves are also available.
Although Slovenia will not be covered by the troika of lenders (European Commission, European Central Bank and International Monetary Fund) because it doesn't need any money from the European stability mechanism, Rehn stuck with his recommendations. Considering the country's plans for its banks to be convincing and credible, he called on Slovenia to push on with the economic reform agenda, particularly improving the business environment and pursuing the privatisation programme. He said the Commission would be closely monitoring the situation. The head of the Eurogroup, Jeroen Dijsselbloem, reacted to the news, commenting: “Stronger banks and an improved business environment will lay the foundation for the economic recovery”. Rehn joined him in welcoming the action taken by the government.
The Slovenian government has reiterated its plans to sell off its stake in Abanka and NKBM and reduce its stake in NLB by more than a quarter.
The restructuring plan now needs to be approved by the European Commission. The government's forecasts say that the plan will take the country's public debt to 75.6% of GDP. (EL/transl.fl)