LJUBLJANA, July 19 (Reuters) - A state fund will have to cover possible damages against Slovenian bank Nova Ljubljanska Banka (NLB) under a law passed by parliament on Thursday, which was aimed at lifting the price of NLB ahead of its sale.
Croatian banks are suing NLB because they took over deposits held by Croatian citizens in a Croatian unit of NLB’s predecessor, the now defunct Ljubljanska Banka (LB), before Slovenia’s independence from the former Yugoslavia in 1991.
The Slovenian government plans to sell about 50 percent of NLB, Slovenia’s biggest bank, through an initial public offering by the end of this year and another 25 percent in 2019. It will keep 25 percent of the bank to have a say in key business decisions.
“This law will enable that the sale of NLB will be made according to market principles,” Finance Minister Mateja Vranicar Erman told parliament before the vote, indicating the the price of NLB would be significantly lower if the state did not cover possible damages.
Croatian lawsuits against NLB could amount to up to 430 million euros ($499 million), Slovenia’s finance ministry estimates.
The government has not said how much it expects to raise from the sale of NLB but according to local media it hopes to get about 1 billion euros for 75 percent of the bank.
Slovenia agreed to sell a majority of NLB in exchange for the European Commission’s approval of state aid to the bank in 2013.
Under the new law, the state’s Succession Fund will have to cover damages from the Croatian lawsuits.
LB closed its Croatian division after independence without repaying its Croatian depositors. That was because Slovenia claims the issue of repayments should be part of succession talks between the states of the former Yugoslavia, which include both Slovenia and Croatia. ($1 = 0.8621 euros) (Reporting By Marja Novak; Editing by Susan Fenton)