Belgian KBC increases stake in Slovenia’s top bank

Belgian banking and insurance group KBC has agreed to increase to 33.9-percent its stake in Slovenia’s biggest bank NLB, Slovenian Finance Minister Janez Sustersic said on Thursday.

“KBC will invest 61 million euros ($75.8 million) in Nova Ljubljanska Banka and increase its stake to 33.9 percent from the 25 percent it currently holds,” Sustersic told journalists.

He added that the state, which currently owns 55.6 percent of the bank, will buy 320 million euros worth of contingent convertible bonds (CoCo bonds) to help NLB lift its capital ratio to nine percent from its current six percent, in line with European Banking Authority requirements.

The state’s investment is “essentially a temporary loan to NLB that will expire in June 2013,” Sustersic said.

The CoCo bonds may be converted into equity in the event that the bank’s capital Core Tier 1 adequacy falls below seven percent, he added.

“At the same time, we will continue our efforts — coordinated with KBC — to find by the end of the year new private investors in NLB,” Sustersic said.

NLB’s shareholders agreed on Wednesday on a 381-million-euro capital increase by issuing CoCo and other bonds.

“KBC has indicated it does not want to become NLB’s majority owner but would prefer to look with the government for a financial investor or a group from the banking sector,” Sustersic told journalists.

NLB, which has been burdened by non-performing loans, reported net losses in 2011 of 239 million euros after suffering a loss of 202 million euros a year earlier.