Being temporary, the solution means that the state debt and deficit will not increase even if the state pays up the bonds, while providing time to find private investors, according to Finance Minister Janez Šušteršič.

Yet the opposition raised concerns that the changes, which were carried by 49 votes to 26, would allow Belgian KBC, the second largest shareholder, to gain control of NLB through the back door.

The motion will enable banks to issue contingent convertible bonds (CoCo bonds) by lifting general limitations on recapitalisation and introducing the possibility to raise share capital through debt for the purpose of restructuring.

Such bonds may be issued by a bank that is in need of extra capital and has Core Tier 1 ratio of at least 7%. The bond buyers will secure the necessary funds for the bank, but their contribution will automatically be converted into stock if Core Tier 1 falls below 7%.

"This automatism is the reason the regulator recognizes these bonds as if the bank had direct first-rate capital secured," Šušteršič said in presenting the motion to parliament, referring to the 30 June deadline set by the European Banking Authority (EBA) and Slovenia's central bank for NLB to raise Core Tier 1 to 9%.

The recapitalisation of NLB is not feasible by that date, but the minister indicated that a private investor for the bank could be found by the end of the year, which was why the government proposed to apply the mechanism of CoCo bonds.

However, despite the suggestion that the state will subscribe for the bonds, the opposition Positive Slovenia (PS) argued that the government was after changing NLB's ownership structure and was trying to get a "blank cheque" to sell Slovenia's biggest bank.

PS MP Alenka Bratušek said that her party might have supported the motion had it not turned out that the government had no answer to the questions who and at what price would buy the bonds, or how this would affect the budget deficit.

Her conclusion was that the bonds would be bought up by KBC, which would convert them into equity right away, as a result of which the state shareholding in the bank would decrease.

The concern was echoed by the opposition Social Democrats (SD), who warned that the condition for the conversion of bonds would be met considering the loss assessments and expected fall in the bank's capital adequacy.

KBC would in this way increase its share from the current 25% to 55%, MP Matevž Frangež warned, adding that the Social Democrats were not against foreign capital, but that KBC was not a healthy bank and would use NLB's capital to solve problems at home.

These concerns were dismissed by Andrej Šircelj of the ruling Democrats (SDS), who said that issuing CoCo bonds did not mean any sale of state banks per se. Since the changes enable recapitalisation of banks, Šircelj expects them to stimulate banks to boost financing of companies and improve their performance.

The legislative changes were also backed by other coalition parties.