BELGRADE Oct 22 Serbia's finance ministry said on Tuesday it plans to transfer assets of Privredna Banka Beograd to state-owned Postanska Stedionica, the second such takeover this year.
Serbian media reported earlier this month that Privredna Banka Beograd had a high percentage of non-performing loans.
Serbia's central bank estimates bad debts at about 20 percent of all loans in the country's financial system.
In a statement, the ministry said it would ask the government to approve the transfer of all insured and non-insured deposits and some other assets of Privredna Banka Beograd to Postanska Stedionica.
"The difference between liabilities and assets will be covered with government bonds," the statement said. "This is necessary to preserve the stability of the financial system."
Absorbing the bad loans into the state-owned bank will add to the pressures on Serbia's finances just as the government is making a fresh attempt to reverse a trend of mounting state debt.
Shares of Privredna Banka Beograd traded at 0.08 euros on Tuesday. The market capitalisation of the bank is 450,000 euros ($619,800), according to Belgrade stock exchange data.
In April, Postanska Stedionica took over the assets and liabilities of Razvojna Banka Vojvodine after it collapsed under the weight of bad loans.
Last year, Postanska Stedionica also took over assets and 260,000 clients of Agrobanka after a 2011 unaudited loss of 29.7 billion dinars was revealed.
($1 = 0.7260 euros) (Reporting by Ivana Sekularac; Editing by Catherine Evans and Ruth Pitchford)