Slovenia starts capital injection into ailing banks

Slovenia started on Wednesday its capital injection project to offer ailing banks state aid for recapitalization hours after it got an approval from the European Commission. Of all 3.2 billion euros (4.16 billion U.S. dollars) of state fund to shore up the banks undergoing controlled liquidation, 1.551 billion euros is assigned to Nova Ljubljanska Banka (NLB), the biggest bank in Slovenia. As for the rest, 870 million euros will go to the second largest bank -- Nova Kreditna Banka Maribor (NKBM), and 348 million euros to the third Abanka. A total of 445 million euros will be given to private banks Factor banka and Probanka. In the process of the recapitalization project, the Bank Asset Management Company, the so-called bad bank in Slovenia, have signed with NLB and NKBM contracts on the transfer of bad loans. The transfer of the first package of bad claims is expected later this week. Slovenian Finance Minister Uros Cufer announced the capital injection plan when the result of stress tests over eight major banks in the country was made public on Thursday. The eight banks, including NLB, NKBM and Abanka, are totally short of 4.78 billion euros, according to the EU-mandated stress tests.