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In return the three banks combined will receive state-guaranteed bonds worth 1.1 billion euros in total.
The three banks, NLB, Nova KBM and Abanka Vipa hold the lion's share of 7 billion euros of bad loans that are choking the euro zone member's banking sector and placing it at a heart of speculation that it might need a bailout within a year.
The bad bank is due to become operational in June.