Slovenia Seeks $405 Million From Croatia Over Old Bank Loans

(Bloomberg) -- Slovenia filed a 360 million-euro ($405 million) lawsuit against Croatia, saying the neighboring country prevented the predecessor of Nova Ljubljanska Banka d.d. from recouping money owed by Croatian companies after the breakup of Yugoslavia.

The suit was filed at the European Court of Human Rights in Strasbourg, France, and names Croatian oil producer INA Industrija Nafte d.d. and Privredna Banka Zagreb d.d. among companies that borrowed from lender that was originally called Ljubljanska Banka, Slovenian Justice Minister Goran Klemencic said Thursday. Slovenia accuses its former Yugoslav federal partner of “systematic and arbitrary interference” through the Croatian judicial system, where Slovenia filed more than 80 lawsuits in the past 25 years, he said.

Slovenia and Croatia have been locked in several disputes since both nations gained independence from Yugoslavia in the 1990s. Last year, the government of then-Prime Minister Zoran Milanovic exited the arbitration process that was supposed to determine their border and the governments in Ljubljana and Zagreb also traded accusations when refugees from countries including Syria and Afghanistan used the Balkan route trying to reach Germany.

“Slovenia has to have a chance to recoup old loans the bank gave to Croatian companies and some of them are still in business,” Radivoj Pregelj, a money manager at Zavarovalnica Triglav d.d.’s asset management unit, said in an e-mail. “The amount of those loans is much bigger than deposits” that Slovenia must reimburse to former Ljubljanska Banka savers, he said.

Reimbursing Depositors

The European Court will first decide if it will take up the Slovenian lawsuit. If it does so, the legal process may take several years, according to Klemencic. The Croatian government’s press office didn’t immediately answer phone calls and an e-mail seeking reaction and the finance ministry in Zagreb declined to comment.

Croatia held elections on Sunday with a surprise victory by the conservative Croatian Democratic Union. The party known as HDZ and led by Andrej Plenkovic has started coalition talks with the third-placed party Bridge in an effort to end the political deadlock that undermined the economic overhaul of the Adriatic nation.

The same court that Slovenia filed its lawsuit with ruled in 2014 that the country must repay hundreds of millions of euros to Croatian and Bosnian depositors of Nova Ljubljanska Banka’s predecessor. A year later, lawmakers in Ljubljana passed legislation that foresees the repayment of 385 million euros to such savers.

Slovenia has so far paid 61 million euros to former deposit holders from Croatia, the Finance Ministry in Ljubljana said in an e-mail. The process of paying out savers from Bosnia-Herzegovina hasn’t started yet as Slovenia hasn’t received all the necessary documentation, it said.