November 12, 2012 / 9:41 AM / in 5 years

Slovenia's largest banks to issue new shares

LJUBLJANA, Nov 12 (Reuters) - Slovenia’s two largest banks, Nova Ljubljanska Banka (NLB) and Nova KBM (NKBM) , plan to issue new shares in December to boost their capital in line with European Banking Authority demands.

The Slovenian banking sector is at the heart of speculation that the country could be forced into a bailout next year, burdened by recession, rising bad loans in its banks and a budget deficit expected to reach 4.2 percent of GDP this year.

The country’s banks, which are mostly state-owned, are nursing about 6.5 billion euros ($8.3 billion) of bad debts, which amounts to 18 percent of GDP.

Unlisted NLB plans to issue 222,647 new shares at 8.35 euros per share, raising its equity to 12.77 million shares.

NKBM is to issue 50 million euros ($63.6 million) of new shares and take on a hybrid loan of 150 million euros, also in December, to raise its Core Tier 1 capital to 9 percent from 7 percent at the end of June.

The bank, which has a market capitalisation of 51 million euros, will price the new issue at 1.3 euros per share. NKBM shares eased by 0.7 percent to 1.3 euros by 0912 GMT on Monday, against a 0.63 percent fall for the blue-chip SBI index .

Both banks are state-controlled and both share issues have to be approved by shareholders in December.

It is unclear whether the government and its companies, which together own 51 percent of NKBM, will be able to vote at the shareholder meeting because Slovenia’s securities market agency ATVP scrapped their voting rights in September.

ATVP said the government and its companies were acting in concert, adding that they have to announce a takeover of the bank or reduce their joint stake to less than 50 percent to regain their voting rights. ($1 = 0.7868 euros) (Reporting By Marja Novak; Editing by David Goodman)

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