We believe the prospect of extraordinary government support for Slovenian banks is now uncertain in view of the country's well-advanced and effective resolution regime. We are therefore removing the one notch of uplift for government support that we had previously incorporated in the long-term counterparty credit ratings on Slovenia-based Nova Ljubljanska Banka (NLB). We consider that NLB is unlikely to increase its additional loss-absorbing capacity (ALAC) above our 5% threshold within a four-year projection period. We have also recognized a strengthening in NLB's intrinsic creditworthiness and are therefore applying a one notch positive transitionary adjustment. In our view, credit risk is reducing for NLB following its restructuring and ongoing workout, its now more conservative lending policy, and gradual economic recovery.
