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NLB to Propose Capital Adequacy Measures in a Month

Ljubljana, 31 May (STA) - The management of Slovenia's biggest bank NLB said on Tuesday it would propose to its supervisors and the central bank by the end of June the scenarios to improve the capital adequacy ratio of the NLB group, requested by Banka Slovenije.

The supervisors of the state-owned bank discussed the request from Slovenia's central bank on Thursday, amidst unofficial media reports that the bank is to embark on another EUR 250m capital rise.

The business daily Finance has recently reported that the central bank is following the Portuguese example in demanding a raise of the ratio of Core Tier 1 capital in all Slovenian banks to 9%.

At the end of 2010, the ratio in NLB stood at 6.5%, which means that a new capital injection at Slovenia's largest bank would amount to EUR 250m, according to Finance.

Asked whether the request means that NLB is in for another capital raise, Banka Slovenije told the STA on Friday that the banking act does not allow it to disclose or comment on confidential supervision information about NLB or any other bank.

The state paid up to EUR 243.3m of the EUR 250m share issue in the recently completed capital rise at NLB. The second-largest shareholder, Belgian bank KBC, bought just enough shares to retain a controlling 25% stake.

An option for boosting the capital adequacy ratio is NLB selling its 57% stake in Banka Celje at a fair price. The bank would need less fresh capital then, and the next capital rise would stand at around EUR 150m.

NLB chairman Bozo Jasovic has said recently that the bank intends to raise a total of EUR 600m this year through sales and divestment and by reducing risk-weighted assets. He added that the bank is looking to avoid an additional capital injection.

The daily Delo meanwhile reports today, citing unnamed pundits, that a new capital injections at NLB is the most likely option.

The latest rumours have it that KBC, despite its commitment to withdraw from the Slovenian market in the mid term, will take part in the potential capital injection to boost its ownership stake. The banking group told the STA "it cannot comment on hypothetical questions".

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