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UPDATE 2-Slovenian bad loans "still big and worrisome" -central bank
March 24, 2014 / 2:20 PM / 4 years ago

UPDATE 2-Slovenian bad loans "still big and worrisome" -central bank

(Adds Jazbec saying no investor interest in Banka Celje)

By Marja Novak

LJUBLJANA, March 24 (Reuters) - Slovenia’s three largest banks still hold a “big and worrisome” amount of bad loans, around 20 percent of their total loans, central bank governor Bostjan Jazbec said on Monday.

He also told a banking conference there was no investor interest in state-owned Banka Celje. The government will have to inject at least 160 million euros ($220 million) of capital into it if no private investor is found by April 25.

Slovenia rescued its banks in December, narrowly avoiding having to turn to its euro zone peers for a bailout after years of reckless lending by mostly state-owned banks.

The banks will finish moving a large chunk of their soured loans to a state-run ‘bad bank’ by the end of April.

Asked by Reuters what proportion of loans at Nova Ljubljanska Banka, Nova KBM and Abanka Vipa had soured, Jazbec said: “It is still big and worrisome ... Yes, about 20 percent” of all loans.

Janko Medja, chief executive of Nova Ljubljanska Banka (NLB), said earlier this month about 20 to 25 percent of its loans, worth 9.5 billion euros ($13 billion), had gone bad. But he told Reuters on the sidelines of the banking conference that NLB “surely cannot run into trouble in the short term”.

“The macroeconomic situation is still difficult, but NLB is stable due to provisions it has made already,” Medja said.

NO INVESTORS’ INTEREST

Jazbec said nobody wants to invest in Slovenian companies because of previous bad experiences.

“We sent a call for bids for Banka Celje to 38 addresses last week but got no reply,” he said.

Slovenia has for decades been reluctant to privatise its firms. The government still controls about 50 percent of the economy.

Belgian banking and insurance group KBC bought 34 percent of Slovenia’s largest bank NLB in 2002 for 435 million euros, but sold its stake back to the government in December 2012 for only 2.8 million euros after Slovenia repeatedly refused to allow KBC a majority stake, citing national interest.

Slovenia started a roadshow on Monday for a euro-denominated bond issue, expected in the coming week.

It has not indicated the size of the bond but has said it plans to borrow up to 7.7 billion euros this year to cover its budget deficit and prefinance debt that will mature in 2015 and 2016.

In February, Slovenia issued its first two bonds of this year to the total value of $3.5 billion. ($1 = 0.7256 Euros) (Reporting by Marja Novak,; Editing by Susan Fenton/Ruth Pitchford)

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