Once the results of the bank stress tests and asset quality review are released, it is expected that subsequent procedures will unravel within just a few days. The steps will depend on the current status of banks.
The release of the results will be followed immediately by the requisite approvals from the European Commission; when the central bank decided on 6 September to liquidate Probanka and Factor banka, the Commission provisionally approved the state aid the same day.
This will pave the way for recapitalisation and, if necessary, transfer of non-performing loans to the Bank Assets Management Company (BAMC), the bad bank.
The scenario for state-owned banks
In the majority state-owned NLB, NKBM and Abanka Vipa, the three largest banks in the country, the central bank will provisionally assume the role of the supervisory board until the capital injection is completed.
The money - EUR 4.7bn has been set aside - will come from state deposits currently held by the banks, the recent bond issue, and about EUR 200m in budget funds that will be re-allocated from existing line items.
Once the three banks are recapitalised - and effectively re-nationalised - they will start the transfer of non-performing loans to the BAMC.
The BAMC will take over assets in exchange for bonds backed up by up to EUR 4bn in state guarantees.
The bad bank is slated to operate through 2017, during which time it will sell the assets. Any unsold assets will be transferred to the emerging Slovenia Sovereign Holding in 2018.
The scenario for the other banks
In addition to the big three, the Slovenian banks Banka Celje and Gorenjska banka as well as foreign-owned Raiffeisen, Hypo Alpe-Adria and Unicredit have taken part in the stress tests and asset quality review.
Depending on the results, the central bank may order these banks to beef up their capital, presumably within six months.
For the foreign-owned banks the situation is clear-cut.
Raiffeisen already plans a EUR 40m capital hike, to be confirmed by shareholders on 23 December, and it has said it would scale down its Slovenian operations anyway.
Hypo Alpe-Adria and Unicredit have strong foreign owners, and the former at least is not expected to report huge problems, according to recent statements by the bank's officials.
The domestic banks are more problematic: Banka Celje is majority owned by NLB, and Gorenjska banka has cross-ownership deals with Abanka.
They can transfer non-performing loans to the bad bank if needed, but it is widely believed they will not survive as independent banks, since they are too small and Slovenia is "overbanked" already.
According to unnamed analysts recently quoted by the newspaper Delo, they could be acquired by one of the foreign banks already operating in Slovenia, most likely France's Societe Generale and Italian Intesa San Paolo.
Source:The Slovenia Times
