Banka Slovenije's board of governors approved the plan after the two banks, which hold a combined 4.5% market share, submitted the required restructuring plans by 21 October.

In line with the planned wind-down, the banks will be liquidated by the end of 2016, with the state providing around EUR 434m to cover the capital shortfall after all the capital in the form of shares and subordinate debt is used.

As part of the liquidation process, Factor banka is expected to have to tap up to EUR 347m of the envisaged EUR 540m in state guarantees provided by the Finance Ministry. Probanka is meanwhile expected to need around EUR 294m of the EUR 490m in guarantees for liquidity during the wind-down process.

The plan will now be forwarded to the Finance Ministry, which is expected to send it to the European Commission for approval of the use of state funds. The Commission welcomed the announced operation in September as part of Slovenia's efforts to fix its ailing banking system.

The orderly wind-down of the two banks was ordered by the central bank at the end of September after months of failed attempts by the banks to raise fresh capital and rising speculation about the possible collapse of the two banks.

Factor banka is said to have incurred massive losses financing property developments and Probanka was sank by the financing of management buyouts.

As part of the operation, the central bank appointed crisis management boards to run the banks during the liquidation process. The first tasks of the crisis managers was to draw up opening balances, which have been used in finalising the restructuring plans.