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Slovenian court upholds payment for holders of bonds canceled in bank rescue

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Slovenian court upholds payment for holders of bonds canceled in bank rescue

A Slovenian appellate court upheld a lower court ruling ordering Abanka d.d. to repay two holders of subordinated bonds scrapped during Slovenia's €3 billion bank rescue in 2013 and 2014, Reuters reported Aug. 23.

The appellate court told the newswire that it upheld the earlier ruling because the lender failed to provide full information to clients about the possible consequences of acquiring the subordinated bonds.

Abanka repaid about €1.5 million to the two bondholders earlier in August, according to a source cited by Reuters, while a Supreme Court official said the lender had requested a review of the matter.

Slovenia's banking sector overhaul included scrapping €600 million of subordinated bonds issued by several lenders and canceling their shares held by around 100,000 investors. If courts side with other investors in similar cases, Abanka, Nova Kreditna banka Maribor d.d. and Nova Ljubljanska banka d.d., which are the country's major banks, may have to pay millions of euros to holders of the scrapped subordinated bonds, although only retail clients would be able to argue in courts they had been insufficiently informed by the banks, Reuters noted, citing analysts.

The Slovenian finance ministry said the ruling does not contest the 2013 banking sector rescue itself, but refers to a bank's failure to duly inform clients of risks associated with the bonds, the newswire noted.

Abanka and Nova KBM are currently owned by Apollo Global Management LLC, and NLB recently completed its privatization process, with the Slovenian government holding a stake of around 25% in the lender.