UPDATE 1-Slovenian bank NLB warns of more losses this year

Mon Feb 18, 2013 9:05am EST

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* Needs some 400 mln euros

* 2012 loss at 273.5 mln euros (Adds comments, futher details and background)

By Marja Novak

LJUBLJANA (Reuters) - Nova Ljubljanska Banka (NLB), Slovenia's largest bank, expects further losses this year due to more bad loans and will need fresh capital of about 400 million euros ($534 million) in a few months' time, it said on Monday.

The state-controlled bank, which is at the heart of speculation that Slovenia may be forced to apply for a bailout later this year, was reporting it made a net loss last year of 273.5 million euros due to provisioning on its loans, up from a loss of 239 million euros in 2011.

Chief Executive Janko Medja said the bank will need fresh capital, presumably by the middle of the year after a capital hike of 375 million euros was postponed by shareholders in December.

"The situation in the environment and the situation in the bank is very serious. The year 2013 will be very difficult for us as we will continue to clean up the bank's portfolio," Medja told a news conference.

The government will in the coming weeks raise its stake in the bank to over 90 percent from around 85 percent currently by converting a 320 million-euro contingent convertible bond issued last year.

The conversion will ensure that NLB's Core Tier 1 capital solvency ratio will reach 8.7 percent, but still below the 9 percent that is recommended by the European Banking Authority (EBA).

At the end of last year Slovenian banks, mostly state-owned, nursed some 7 billion euros of bad loans, equivalent to 20 percent of GDP.

The conservative government plans to establish a "bad bank" that will take over the state banks' bad loans and enable their privatisation but the plan was slowed in January when the government lost its majority in parliament over a corruption scandal involving Prime Minister Janez Jansa.

By early March two junior coalition parties plan to quit the government over the scandal, leaving it with only 30 out of 90 seats in parliament.

Jansa has denied any wrondgoing and pledged to stay on at the helm of the minority government but analysts expect an early election later this year as the opposition has so far not been able to agree on a new prime minister to replace Jansa. ($1=0.7490 euros) (Reporting by Marja Novak; Editing by Greg Mahlich)

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