UPDATE 1-Slovenia starts bank rescue after green light from EU
* Government approves 3.2 bln-euro capital boost
* First bad loans to be transferred Dec. 20
* EU regulator approves aid, restructuring plans for banks (Recasts with capital boost approved)
LJUBLJANA, Dec 18 (Reuters) - Slovenia began a state-financed rescue of its troubled banks on Wednesday, approving a 3.2 billion-euro capital boost for five lenders that should enable it to avoid seeking outside aid for now.
Of the total sum, 445 million will go to two banks that are already in "controlled liquidation", Probanka and Factor Banka. The rest will go to the top three lenders, NLB, NKBM and Abanka, the finance ministry said in a statement.
Slovenia drew a sigh of relief from its European Union partners last week when it said that it could save the country's sinking banks alone, by cleaning up their bad loans and injecting fresh capital. It put the total cost at 4.8 billion euros ($6.6 billion).
Earlier on Wednesday, the EU's state aid regulator approved emergency aid and restructuring plans submitted by five Slovenian banks. It approved restructuring plans for NLB and NKBM and aid for winding down Factor Banka and Probanka.
It also gave a temporary go-ahead to rescue aid for the third-biggest bank, Abanka Vipa, but said final clearance would depend on a restructuring plan to be submitted by Slovenia in the coming months.
In a related development, Slovenia's state-controlled bad bank DUTB said the transfer of the first bad loans from the two top banks would take place on Friday
"The ... transfer of non-performing loans from the two banks is set for December 20," the DUTB said in a statement on Wednesday. "Then we will know the nominal value of the first batch of loans".
DUTB said talks to settle some final details were still under way between the bank and the two biggest commercial lenders, NLB and NKBM.
The total 4.8 billion-euro bill was arrived at after a lengthy review of the eight biggest banks, including three foreign-owned, by external auditors.
As part of the rescue package, bad loans will be transferred to the DUTB, a process that should be completed by May. The banks will be paid in two- and three-year bonds that will allow them access to cash and fund new business.
Slovenia declared independence from Yugoslavia in 1991 and took a fast-track to membership of the EU in 2004 and the euro zone in 2007. But its fast-growing export-oriented economy hit a brick wall when the global financial crisis broke, and the country remains mired in recession.
($1 = 0.7283 euros) (Reporting by Zoran Radosavljevic and Almir Demirovic; Editing by Mark Trevelyan and Larry King)
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