Additional state aid for Nova Ljubljanska Banka Group temporarily approved

The European Commission has approved public support for Nova Ljubljanska Banka Group (NLB) as temporary aid for banking recapitlization. Slovenia will subscribe €320 million of contingent convertible instruments and grant a capital injection of €382.9 million so that NLB can comply with the European Banking Authority stress test requirements. NLB and Slovenia are to submit an updated restructuring plan to the European Commission within six months.

The Commission has also opened an in-depth investigation into NLB’s first restructuring plan, submitted when Slovenia subscribed to the majority of €250 million in issued shares. The Commission harbors uncertainties that the plan can address the causes of NLB’s distress, allowing it to remain viable after state support. In addition, the Commission doubts that NLB is contributing enough to the costs of restructuring and that the measures sufficiently limit the distortions of competition resulting from the state aid.

Full content: EC Press Release

Related content: Competition Policy, Bailouts, and the Economic Crisis

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