Brussels, 02 July 2012
State aid: Commission temporarily approves a second recapitalisation in favour of NLB and opens in-depth investigation on the restructuring plan of the bank
The European Commission has temporarily approved, under EU State aid rules, an additional capital injection of €382.9 million to Nova Ljubljanska Banka Group (NLB) for reasons of financial stability. At the same time, the Commission has opened an in-depth investigation into the bank's restructuring plan that was submitted after the first recapitalisation (see IP/11/264). At this stage, the Commission has doubts that the plan adequately addresses the causes for NLB's distress or foresees sufficient safeguards to limit the distortions of competition created by the state support. The opening of an in-depth investigation gives interested third parties the opportunity to comment on the measures under examination; it does not prejudge the outcome of the investigation.
Slovenia has notified plans to subscribe €320 million of contingent convertible instruments (type of hybrid instruments) and to inject €62.9 million in common equity in order to improve the capital of NLB so that the bank complies with the European Banking Authority stress test requirements. The Commission assessed the aid under its temporary rules applicable to banking recapitalisations during the crisis (see IP/08/1901) and found them appropriate, necessary and proportionate. The Commission has therefore approved them for six months, to give NLB and Slovenia time to submit an updated restructuring plan, taking due account of this additional state support.
The Commission also opened an in-depth investigation into NLB's restructuring plan which Slovenia had to submit for the bank after the Commission approved the first capital increase (see IP/11/264). Based on the information in its possession, the Commission, at this stage, has doubts whether the proposed measures will enable the bank to become viable without continued state support. Moreover, the Commission has concerns that the bank's own contribution to the costs of restructuring may be insufficient. Finally, the Commission needs to verify that the plan foresees appropriate safeguards to limit the distortions of competition brought about by the state support.
NLB is the largest Slovenian bank that holds one third of the total assets in the Slovenian banking sector. The majority shareholder in the bank is the Republic of Slovenia and the second biggest is the Belgian bank KBC.
In March 2012, the Commission already approved state support when the bank issued €250 million of ordinary shares. Although the equity was raised through a public offering, in the absence of private investors' interest, the State subscribed to the majority of the stake.
The non-confidential version of the decisions will be made available under the case numbers SA.34937 and SA.33229 in the State aid Register on the competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.