Nova Kreditna Banka Maribor failed to meet the capital requirements set by European banking regulators while its larger rival Nova Ljubljanska Banka (NLB) passed the examination after the government injected fresh capital into Slovenias biggest lender, Bloomberg reported.

The state-owned banks are the centre of concerns about the financial health of the country, which is in danger of having to ask for an EU/IMF bailout as its banks crumble under the weight of non-performing loans and the economy falls back into recession. Slovenia's banks had 6.4 billion euros of bad loans at the end of July, up 55 percent on the same period last year.

Nova Kreditna, based in Maribor, fell short of a core Tier 1 capital ratio of 9 percent while NLB in Ljubljana met the requirement of the European Banking Authority, the lenders said in separate statements late yesterday. NLB received 381 million euros of state funding in June.

A last minute capital injection by the government saved NLB, though Nova Kreditna was left to fail, Andraz Grahek, an independent financial adviser and a former fund manager at KD Funds LLC in Ljubljana, said. As both state-owned lenders need additional capital, this could be an opportunity for the government to find a suitable banking group partner for one of the banks, probably Nova Kreditna (KBMR), to provide capital and essentially take it over.

Source: bne