October 25, 2017 / 4:18 PM / a year ago

Slovenia may offer to pay penalty to EU to avoid NLB sale -sources

LJUBLJANA, Oct 25 (Reuters) - Slovenia may offer to pay a penalty to the European Commission to avoid having to sell off a stake in state-owned Nova Ljubljanska Banka (NLB), sources close to the matter said on Wednesday.

Slovenia had agreed to sell a 50 percent stake in NLB, the country’s largest bank, this year in exchange for the Commission’s approval of the bank’s rescue in 2013 in which the government gave the bank 1.55 billion euros in state aid.

But in June the government cancelled a planned sale of 50 percent of the bank, saying the suggested price, which valued the whole bank at a minimum of 1.1 billion euros, was too low.

Slovenia’s finance minister Mateja Vranicar Erman is due to meet European Competition Commissioner Margrethe Vestager on Oct. 26 to discuss delaying the sale. The government hopes it could delay the sale by three years.

The sources said Slovenia might propose that NLB pays a penalty of some 365 million euros to try to gain the Commission’s approval for the bank to stay in state hands indefinitely.

Slovenian finance ministry declined to comment. The European Commission’s spokesman also declined to comment but said the Commission was “in constructive contact with the Slovenian authorities.”

Sources said the Commission might ask Slovenia to sell NLB’s businesses in the Balkans if the sale of a 50 percent stake in the bank does not go ahead.

Slovenia has been reluctant to sell off its major banks and the government still controls about 44 percent of the banking sector. It plans to sell the second largest bank, Abanka, by the middle of 2019.

The third largest bank Nova KBM was sold to US investment firm Apollo Global Management and the EBRD (European Bank for Reconstruction and Development) in 2015. Both, NKBM and Abanka, also received state help four years ago when the country managed to only narrowly avoid an international bailout. ($1 = 0.8466 euros) (Reporting By Marja Novak. Editing by Jane Merriman)

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