Crisis management teams take over Probanka and Factor Banka today. The Slovenian Central Bank sent them into liquidation immediately after work on Friday.

At the Second Morning Newscast on Radio Slovenia, Uška Jereb Brankovič reported that with this day nothing changes for the clients of Probanka and Factor Banka. It is already clear that all the deposits in both banks of both individual persons and legal entities, even those over 100 thousand euros, are safe and guaranteed for by the state.

The news, which upset Slovenia's banking system, was released on Friday and right after that Finance Minister Uroš Čufer stated that: "When the banks reopen on Monday all clients can walk in as usual, use their accounts, do business with the credit cards and normally pay-off their loans. Everything will take its normal course."

New management has experience with similar cases
The old managements have already been removed. Crisis management teams named by the Slovenian Central Bank will take their places. Central Bank Governer Boštjan Jazbec explained his choice: "The crisis managements will be headed by foreigners with experience in managing similar cases in other EU countries and in the euro area."

The new president of the board of Probanka will be Imre Balogh from Hungary, while other members of the board will be Igo Gruden and Marko Novak. In Factor Banka the new management will be headed by Klaus Schuster from Austria, while other board members will be Matevž Slabničar and Vitomir Krašovec. What is going to be their first task?

"Both managements in both banks have to prepare opening balance sheets within 45 days. On the basis of those opening balance sheets we will then be able to be more specific about all the upcoming procedures," explained the governor.

There are three soft closure scenarios for the banks. A foreign takeover by foreign banks already active on the Slovenian market is also possible. Potential investors most often mentioned are Sberbank, Erste and Unicredit, according to the reporter from Radio Slovenia.

Billion euros given for guarantees

According to the Slovenian Press Agency (STA) the supervised liquidation procedure means that the state has issued guarantees of EUR 490m for Probanka and EUR 540m for Factor Banka. The guarantees will make it possible for the Central Bank to take out loans from the European System of Central Banks to ensure the liquidity of both banks until they settle all their debts.

The state will pay up to EUR 400m
All creditors will be paid-off in full, while shareholders and subordinated debt instrument holders will take part in the division of the burden. The process is expected to take two to three years. According to the Finance Ministry, the final costs of the state guarantees for both banks are estimated to reach up to EUR 400m. The STA adds that in this time, the new management will not be allowed to make new deals.