Slovenia Adamant on Selling Biggest Bank, Finance Minister Says

(Bloomberg) -- Slovenia is adamant that it will sell state-owned Nova Ljubljanska Banka d.d., Finance Minister Mateja Vranicar Erman said, pledging to make good on a promise to the European Union to put the biggest bank into private hands after missing its 2017 deadline.

Known as NLB, the lender received the bulk of a 3.2 billion-euro taxpayer-funded bailout in 2013 that let Slovenia narrowly avoid a Greece-style international rescue. In line with the EU’s rules on state aid, Slovenia had committed to sell the bank in an initial public offering last year. But Prime Minister Miro Cerar’s administration stopped the process, citing a low price and risk from transferred deposits from Croatia by its predecessor that amount to as much as 400 million euros.

“The partial privatization of NLB is still the aim that we want to achieve -- there’s no doubt about that,” Vranicar Erman said in an interview in her Ljubljana office Friday. “With the New Year, we have entered a new phase, and talks with the European Commission so far have been very constructive. I expect we will find an appropriate way to ensure our interests are taken into account and also solve key issues that the EU wants to address.”

The Adriatic nation of 2.1 million has been among the slowest in eastern Europe to dispose of state-owned assets after the fall of communism, with several governments struggling to survive after putting strategic assets on the table. In November the cabinet proposed appointing a special commissioner to manage NLB as an alternative to selling its profitable units in the Balkans. The government sought a 3-year delay in the sale.

Taxpayer Burden

“I do not wish -- and this is understood by the European Commission -- that Slovenian taxpayers would have to bear this burden twice from unresolved historical issues,” Vranicar Erman said. “ We are talking about the transferred deposits of Croatian savers. ”

Slovenia and Croatia, former partners in the defunct Yugoslav Federation, have been haggling for years over about 300 million euros ($366 million) that Croatia wants Slovenia to pay in compensation for cutting off foreign savers’ access to their deposits in NLB’s predecessor following a split-up of Yugoslavia in 1990s. Most of the Croatian savers had transferred their claims to the Croatian state, which paid them in the 1990s and has since sought to reclaim the money from Slovenia.

While EU officials have urged successive governments to reduce the state’s role in the economy after decades of mismanagement, Vranicar Erman said investors in Slovenian government bonds aren’t very worried by the bank privatization delay. The finance minister said in November that talks with the EU had been "difficult."

“When investors asses the readiness of Slovenia to fulfill commitments in terms of privatization they are not looking so much on specific cases but more as a process,” she said. “An important breakthrough was the the sale of Nova Kreditna Banka Maribor and its side effects beside the price were much bigger.”

Nova KBM was sold to Apollo Global Management LLC in 2016.

©2018 Bloomberg L.P.