Addressing reporters after the signing at Mokrice Castle near Slovenia's border with Croatia, Janša said that the memorandum resolved the last remaining issue standing in the way of ratification of Croatia's EU Accession Treaty.

The countries pledge to solve the issue of transferred LB deposits pursuant to Appendix C of the 2001 agreement on succession to the former Yugoslavia, which sets forth that five successor states shall resolve the issue of guarantees for old savings deposits in talks sponsored by the Bank for International Settlements (BIS) in Basel.

The English language memorandum binds Croatia to suspend all legal proceedings against LB and its successor, Slovenia's largest bank NLB, with the authorisation of the Croatian government over the savings deposits that Croatia transferred into its public debt in 1991; no new action shall be launched.

Slovenia, on the other hand, pledges to immediately launch proceedings in parliament to ratify Croatia's EU Accession Treaty, the goal being to complete the procedure as soon as possible.

Janša expects that the Slovenian government would ratify the memorandum on Wednesday and submit to parliament this week the bill to ratify Croatia's Accession Treaty. He was confident that the treaty would be ratified by the end of the month, provided Croatia's government ratified the memorandum.

The outgoing prime minister rejected concerns that the ratification of Croatia's EU Accession Treaty could be jeopardised if PM-designate Alenka Bratušek failed to form a new government by the deadline.

The Slovenian parliament can continue its work virtually to the point when a new line-up at the National Assembly takes over, even in the case of a snap election. What is more, the outgoing cabinet won unanimous support from all deputy factions for the memorandum before today's signing.

Janša and Milanović described the memorandum at a joint news conference as an important act for a win-win solution. Milanović assured reporters that work within succession talks would resume now and that Croatia would stick to the document signed today.

In Janša's view the memorandum provides a sufficient guarantee that lawsuits against LB and NLB would not be resumed after two years in which court proceedings can be suspended under Croatian law. "The pledge will be additionally verified through ratification," he said, adding that through ratification the memorandum would become part of the country's national law.

Janša underscored the importance of Slovenia and Croatia reaching agreement without intermediaries, which he said demonstrated their maturity to be capable of solving issues between them.

Finding a solution will not be possible without the other successor states - Serbia, Bosnia-Herzegovina and Macedonia - but Slovenia and Croatia are optimistic about resolution in the framework of the succession agreement, according to Milanović, who expects the issue to be solved "in a reasonable time and for mutual benefit".

Janša too expressed the belief that the succession issue would not drag on for "two-hundred years", but would be tackled in a relatively short period of time, especially once the successor countries joined the EU when many obstacles preventing solutions now were cleared.

While Croatia pledged to suspend proceedings against LB and NLB in Croatian courts, Milanović noted that proceedings against the defunct Slovenian LB bank are also running before the European Court of Human Rights in Strasbourg, which Milanović said was unrelated to the memorandum signed today.

Milanović regretted LB's absence from the Croatian market in the past 20 years. "This was a trustworthy bank," he said, adding that his family too had their savings deposited with LB.

"Had the problems been solved, Ljubljanska banka could have been the first to get into the Croatian market and would have earned billions. That did not happen and as a result we are talking here now after the 20 long years," the Croatian prime minister said.

NLB is still not present in Croatia because of the LB issue as the Croatian central bank has always prevented its access to the market. Janša expressed the expectation that NLB would enter the market with Croatia's accession to the EU and the single market on 1 July.

"The same rules that apply to banking operations of Slovenian banks in any other EU member state will also be effective in Croatia," Janša said in a reference to the single market's rules of a free movement of people, goods and capital.

Both prime ministers were congratulated on the signing by President of the European Council Herman Van Rompuy, who labelled the countries' constructive approach to the LB issue and the border dispute a "sign of maturity" and an "example for the whole region".

The signing in his view marks an important moment in Slovenia-Croatia relations as well as for their relations with the EU. "By choosing the path of dialogue, tenacity and compromise, you have been able to turn the page as member states of our Union," Van Rompuy stated in the congratulatory cable.

The agreement is also an important step on Croatia's path towards the EU, said Van Rompuy, who is looking forward to next steps: the Commission's last monitoring report and the finalisation of the ratification of the Accession Treaty in all national parliaments.

The word at the end of last week was that Van Rompuy could attend the signing at Mokrice Castle, but his press service announced on Friday that his tight schedule would prevent him from arriving in Slovenia.