October 26, 2017 / 3:30 PM / a month ago

EU rejects Slovenia's proposal to delay NLB sale by three years

LJUBLJANA, Oct 26 (Reuters) - The European Commission rejected on Thursday Slovenia’s proposal to delay the sale of the country’s largest bank Nova Ljubljanska Banka (NLB) by up to three years, Slovenia’s finance ministry said.

Slovenia had agreed to sell at least 50 percent of the state-owned bank this year, and another 25 percent a year later, as a condition of the Commission’s approval of state aid to NLB amid a banking crisis in 2013, but now wants to delay a sale to get a better price.

Slovenian Finance Minister Mateja Vranicar Erman and EU Competition Commissioner Margrethe Vestager met on Thursday to discuss the matter and the Commission insisted Slovenia should pursue a sale of the bank.

“The sale of 75 percent of Slovenia’s stake in NLB is an important commitment to ensure the bank’s long-term viability,” European Commission spokesman Ricardo Cardoso said.

In June Slovenia abandoned a planned initial public offering to sell a 50 percent stake in the bank, saying the suggested price, which valued the whole bank at a minimum of 1.1 billion euros ($1.3 billion), was too low.

Both sides said on Thursday that talks would continue and Slovenia’s finance ministry said the discussions would include a possibility to sell a small part of NLB to selected buyers before an initial public offering.

The ministry said it also expects the discussions would include Slovenia’s proposal to impose a penalty on NLB but keep the bank in state hands.

The euro zone member has been reluctant to sell its major banks in the past, saying state ownership of important banks was in the national interest.

The government still controls about 44 percent of the banking sector, which came close to collapse in 2013 under the weight of bad loans, pushing Slovenia to the brink of requiring an international bailout.

That was averted by the government pouring more than 3 billion euros into local banks, including NLB, to rescue them. ($1 = 0.8540 euros) (Reporting By Marja Novak; Editing by Susan Fenton)

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