It also downgraded Slovenia's short-term rating to F2 from F1 and affirmed the country ceiling at AAA.

The downgrade reflects "a further deterioration in the condition of Slovenia's
banking sector", coupled with the delay in the implementation of a clear plan for its recapitalisation.

The state's funding conditions have also deteriorated, and could make it difficult for the government to finance fiscal and bank recapitalisation requirements.

Fitch estimates that a further EUR3.5bn in fresh capital will be needed in order for the banking sector to achieve prudent provisioning for non-performing loans.

It believes the government as majority owner of the two largest banks will have to inject EUR 2.8bn (8% of GDP) into the banking sector.