"It will take a couple of years to get to a rebound situation," he said, adding that the bank will initially need some 400 million euros ($524 million) for immediate recapitalization. Economists estimate that NLB needs some 2.5 billion euros ($3.2 billion) for a complete bailout.
"We in the NLB are proceeding as if there will be no need for a bailout," Medja said.
But the Slovenian banks' troubles are large enough for investors to fear the government might face huge costs rescuing them. That has pushed up the government's borrowing rates in bond markets to near the levels Cyprus faced on the eve of seeking the bailout.
"Recent events have underlined our view that the Slovenian government will struggle to finance itself this year despite the small size (relative to GDP) of its troubled banks and public debt," Capital Economics Ltd., a London-based analyst group, said. "To avoid a bailout, the government will need rapidly to put in place a credible plan to tackle the banking crisis."
The government is setting up a so-called bad bank to retake shaky loans and investments off banks' hands and is working "literally day and night" on fixing the financial sector, Bratusek said.
"The first priority of our government is the stabilization of our banking system," said Bratusek, whose center-left government took over two months ago after the fall of previous center-right Prime Minister Janez Jansa over corruption allegations. "But that alone won't help our economy, as we also have to also stabilize our over-indebted companies."
Slovenian economic analysts are unimpressed by the new government actions taken so far.
"It is still possible that Slovenia will escape the bailout, but it depends on government measures," analyst Joze P. Damjan said. "The problem is that we still don't know what those measures are."
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