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EC approves Slovenia's new plan for privatizing Nova Ljubljanska banka

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EC approves Slovenia's new plan for privatizing Nova Ljubljanska banka

The European Commission approved a new course of action for Slovenia's largest lender, Nova Ljubljanska banka d.d., aimed at ensuring its long-term viability.

NLB received a €2.32 billion bailout in 2013 as part of a wider rescue of the Slovenian banking sector. To comply with European state aid rules, the country's government had agreed with the EC that at least half the lender would be sold in 2017 and a further 25% in 2018. However, it postponed the sale in 2017 on price grounds and sought, but failed to receive, EC permission to delay the transaction until 2019.

Under the new measures, Slovenia will sell off 50% plus one share of NLB by the end of 2018, with an ultimate goal of selling 75% minus one share by the end of 2019. The measures lay out strict deadlines to complete the sale and outline that a trustee will take over the sales process if they are not met.

Key existing commitments were also prolonged, meaning that NLB will only grant new loans if it gets a minimum return on equity and will not re-enter any businesses it has previously sold off as part of its restructuring plan. It will also continue to be subject to an acquisition ban.

The bank is also required to close more branches in Slovenia and, unless it is fully sold off by the end of 2018, will have to sell its stake in insurance unit NLB Vita dd. It must also issue a Tier 2 bond "to further remove any viability doubts."