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state guarantees to shield investors from the bank’s potential liabilities to Croatian banks. This decision caused Finance Minister Mateja Vranicar Erman to tender her resignation in frustration, but Cerar refused to accept it.
By this time, divisions within the governing coalition were already growing. While the SMC remained broadly behind the plans to meet the European Commission’s deadline to sell off NLB, its coalition partners – DeSUS and the Social Democrats – were “increasingly reluctant to pursue unpopu- lar privatisation ahead of the general elections in mid-2018,” wrote Teneo Intelligence CEE adviser Andrius Tursa in an analyst note.
NLB was one of several major Slovenian banks nationalised via an emergency capital injection in December 2013, when the government stepped in to bail out the banking sector. This state aid was approved by the European Commission on the condition that it later re-privatise the banks.
Slovenia had committed to sell 75% of the bank by the end
of 2017. Initially the government planned to reduce its 100% stake to 25% plus one share via the IPO. However, on May 11 the European Commission endorsed a request from the Slove- nian government for a more gradual sale of the bank: a 50% stake by the end of 2017 and a further 25% by end-2018.
With the IPO no longer taking place any time soon, the Slove- nian authorities and the European Commission are consider- ing future options for the bank.
“At the moment all we can say is we are in constructive contact with the Slovenian authorities and we cannot speculate fur- ther at this stage,” a spokesperson for the European Commis- sion told bne IntelliNews. “Currently Slovenia is not in breach of any of its commitments under the state aid decision, so we need to talk about options but there no immediate problem at the moment.”
The Slovenian finance ministry is understood to be planning to explore possible compromises with the European Commis- sion. One of the possibilities is an extension of the deadline for privatisation; Italy and Portugal secured similar one-year
extensions. Both NLB and SSH declined to comment to bne IntelliNews on potential plans.
Meanwhile, Vranicar Erman has warned that following the failure of the IPO, the bank could see its Balkan subsidiar-
ies sold off – a worse outcome than the sale of the bank as a whole from the point of view of many Slovenians. "We are leaving all options open but are prioritising ensuring normal, stable operations of NLB in future and preserving NLB as a group," she said in a television interview.
Public sentiment against the sale of major state assets is strong in Slovenia, with planned privatisations like that of Telekom in 2015 and recent rumours of a sale of Luka Koper port bring- ing thousands of opponents out onto the streets. NLB, like the
“We made promises too many times in the past but nothing has come out of it”
profitable Telekom, is a particularly sensitive case, since it is one of the country’s oldest institutions, with roots dating back to 1889 when the Ljubljana city savings bank was founded.
On the other hand, the decision to scrap the privatisation has resulted in dire warnings of the impact on investor sentiment. Commenting shortly before the IPO was dropped but when problems were already apparent, Tursa noted that “Slow progress on privatisation could hurt investor confidence and threaten the stability of the cabinet”.
More recently, the chairman of the Ljubljana Stock Exchange Ales Ipavec stressed at a press conference that the failed IPO was not an isolated incident and could negatively affect fur- ther privatisations, STA reported. “It will be hard to convince investors that we really mean it this time in the event of future privatisations,” Ipavec told journalists. “We made promises too many times in the past but nothing has come out of it.”
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