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UPDATE 1-Bad loans in Slovenian banks rise to 6 bln
May 28, 2014 / 11:21 AM / 3 years ago

UPDATE 1-Bad loans in Slovenian banks rise to 6 bln

* Bad loans at 14.5 pct

* Banks have profit in Q1 (Updates with details, analyst quote, background)

By Marja Novak

LJUBLJANA, May 28 (Reuters) - Bad loans in Slovenian banks, which were rescued by a government financial injection last year, rose to almost 6 billion euros in March from 5.8 billion in February, the central bank said in a report on Wednesday.

Slovenia, a member of the euro zone, narrowly avoided an international bailout last year by pumping some 3.3 billion euros of its own funds in local banks in December, to save them from collapsing under bad loans.

State-owned banks have since then also transferred some 3.5 billion euros of bad loans to the state-owned bad bank but the amount of loans whose repayment has been delayed by 90 days or more is still on the rise.

In March those loans represented 14.5 percent of all loans versus 13.9 in February, the central banks said.

It also said local banks had a joint net profit of 57.4 million euros in the first three months of this year versus a profit 4.1 million in the same period of 2013.

Banks had said bad loans were still on the rise because of high indebtedness of local companies and poor economic growth which will reach 0.5 percent this year according to the government after two consecutive years of recession.

Analysts said that bad loans would rise further this year but that the banks had enough capital to absorb them.

“The companies have to do a lot of deleveraging while economy is growing at a very small rate or is even stagnating so we can expect bad loans to rise further this year but the banks have sufficient capital to handle that,” said Saso Stanovnik, chief economist of investment firm Alta Invest.

“However, if such a trend would continue well into 2015 and 2016, Slovenia could again face bailout speculation,” he added.

The centre-left Prime Minister Alenka Bratusek, who avoided needing to seek a bailout for her country, resigned earlier in May after losing the battle for the leadership of the Positive Slovenia party.

She will form a new party - the Alliance of Alenka Bratusek - on Saturday to compete in the early election which are expected to take place in July.

Slovenia has borrowed some 4.5 billion euros on international markets this year which covers its financial needs for the whole year and partly also for 2015 so no further sovereign issues are planned in 2014. (Reporting by Marja Novak; Editing by Alison Williams)

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