Slovenia's Abanka to boost capital via share issue

ZAGREB Mon Aug 20, 2012 5:18am EDT

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ZAGREB Aug 20 (Reuters) - Slovenia's Abanka Vipa, one of three local banks whose bad loans have triggered fears the country may need international aid, will seek to raise new capital via a 50 million euro ($61.5 million) share offer.

Rising levels of bad debt at the state-backed banks and a weakening economy have driven market speculation that Slovenia may soon become the sixth euro zone state to seek a bailout.

The government has repeatedly denied this speculation. However, all three main global rating agencies this month cut the credit ratings of Slovenia, several banks and companies, citing slow progress in recapitalising the banks and in reducing the budget deficit.

Abanka, partialy owned by the state, will offer 7.1 million of new shares, at 7 euros per share on Tuesday and the subscription will run until Sept. 3. The shares will initially be offered to existing shareholders and then to the public, the bank said on Monday.

The government's macroeconomic institute said last month local banks' bad loans had reached 6 billion euros in the first quarter and were likely to rise further.

The largest bank, Nova Ljubljanska Banka (NLB), has some 1.5 billion euros of loans that will probably not be repaid.

The government raised NLB's capital by 381 million euros in July to lift its core tier 1 capital ratio to 9 percent from 6 percent, in line with European Banking Authority demands.

Finance Minister Janez Sustersic said NLB may need another capital injection of up to 500 million euros by the end of 2013.

Local media estimate that the second-largest bank, state-owned NKBM, and Abanka Vipa, might together need 150 million euros this year to cover bad loans.

NKBM started on Friday the sale of its 51 percent stake in insurer Zavarovalnica Maribor to raise capital. ($1 = 0.8132 euros) (Reporting by Zoran Radosavljevic; Editing by Erica Billingham)

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