Slovenia will not require financial assistance from the euro zone, the European Commission said yesterday, after the eastern European state unveiled the results of long-awaited stress tests of its troubled banking system.

With Slovenia desperately trying to avoid becoming another euro zone country to require a bailout, its government yesterday announced a total recapitalisation plan of €4.78 billion for its banking sector, which it said it will fund without outside help.

The stress tests of the country’s three largest banks, which are all fully or majority state-owned, revealed capital requirements of just over €3 billion, which will be funded by the state but which also involve a burning of junior bondholders to the sum of €440 million. The government plans to issue just over €900 million in bonds to help fund the capital injunction, along with about €2.1 billion in cash.

In addition, five smaller banks were ordered to raise €1.7 billion from private sources, with around €1 billion expected to be raised within the next six months.

Yields on Slovenia’s government bond yields fell to a nine-month low yesterday, as the total recapitalisation figure came in slightly less than the €5 billion that had been expected. Slovenia’s banking system is believed to be harbouring €7.9 billion in bad loans.

EU economics commissioner Olli Rehn said the tests had used a "credible methodology".