UPDATE 1-Slovenia presses on with bank and airport selloffs

Thu May 22, 2014 5:46am EDT

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By Marja Novak

LJUBLJANA, May 22 (Reuters) - Slovenia pressed on with two planned privatisations on Thursday, calling for expressions of interest in number two bank Nova KBM (NKBM) and saying it expects binding bids for a controlling stake in its largest airport Aerodrom Ljubljana in July.

The government invited investors to submit bids for 100 percent of NKBM, which was bailed out by the state in December, to its advisers Lazard Freres by July 3, state investment fund SOD, which is coordinating the sale, said in a statement.

It also said it invited some investors, who sent in non-binding bids earlier this year, to file binding bids for 75.5 percent of Aerodrom by July.

The moves show the centre-left government is pushing ahead with privatisations, although Prime Minister Alenka Bratusek resigned earlier this month after losing a battle for the leadership of the Positive Slovenia party.

A parliamentary election is expected to take place in July or September.

NKBM received a state capital injection of 870 million euros ($1.2 billion) in December as part of a general overhaul of local banks, needed for Slovenia to avoid an international bailout. Some 1.22 billion euros of its bad loans have been transferred to a state-owned "bad bank".

"Slovenia recapitalised the bank in 2013, which strengthened its balance sheet and improved its asset quality," SOD said. "That enables the bank to focus on ... doing business with citizens and small- and medium-sized companies in Slovenia."

Aerodrom and NKBM, which has a deposit market share of about 14.1 percent in Slovenia, are two of 15 companies earmarked for privatisation last year with the goal to increase budget revenue and improve corporate governance.

According to local media, bad loans still represent about 24.9 percent of NKBM's total loans. The central bank has said no further transfers from NKBM to the bad bank are planned and the bank will have to deal with the remaining bad loans itself.

The bank had a net profit of 8.9 million euros in the first quarter while its balance sheet assets reached 4 billion euros at the end of March, up 2 percent on the end of 2013.

In February, the bank said it expected a net profit of 8.3 million euros in 2014 versus a net loss of 648 million in 2013.

Slovenian banks, mostly state-owned, piled up massive bad loans through years of reckless lending. The government pumped in some 3.3 billion euros of its own funds into the sector last December.

While NKBM is not listed, shares of Aerodrom eased 1.3 percent to 38.5 euros in morning trading, while the blue-chip SBI index lost 0.3 percent. Aerodrom has a stock market value of about 76 million euros. ($1 = 0.7318 Euros) (Editing by Erica Billingham and David Holmes)

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