The BAMC, popularly known as the bad bank, will present the planned activities on Monday following last week's release of bank stress test results, showing that the government can follow through with its plans for salvaging the Slovenian banking system.

The state-owned NLB, NKBM and Abanka Vipa will transfer up to EUR 4.5bn of non-performing loans with a total transaction value of EUR 1.68bn to the BAMC, which will take over assets in exchange for bonds backed up by up to EUR 4bn in state guarantees.

NLB and NKBM will start transferring their non-performing loans immediately, while Abanka needs to draw up a restructuring plan and submit it for approval to the European Commission before being able to get rid of EUR 543m worth of bad loans. However, the state plans to inject it with enough fresh capital to get its adequacy to 9%.

The state is preparing a EUR 1.55bn injection for NLB, EUR 870m for NKBM and EUR 591m for Abanka, with another EUR 445m for injections to Probanka and Faktor banka, which are undergoing a controlled winding-down.

Prior to the capital hikes, holders of NLB, NKBM and Abanka subordinated bonds are to be stripped of their rights stemming from the bonds, as EU state aid rules stipulate that the state is allowed to recapitalise a bank with public funds only after existing shareholders and holders of subordinated debt have participated in the restructuring.

However, small shareholders have requested a constitutional review of the bail-in legislation.