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Central bank says bad loans still rising at Slovenian banks: newspaper
March 28, 2014 / 8:07 PM / 3 years ago

Central bank says bad loans still rising at Slovenian banks: newspaper

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Bostjan Jazbec, Slovenia's central bank governor, speaks during an interview in Ljubljana December 13, 2013.Srdjan Zivulovic

LJUBLJANA (Reuters) - Bad loans in Slovenian banks have risen since the government pumped money into the troubled lenders in December, central bank governor Bostjan Jazbec was quoted as saying.

Non-performing loans at local banks total some 11 billion euros ($15 billion) and might rise further, Jazbec said in an interview to be published in the Saturday edition of daily newspaper Delo.

The euro zone country narrowly avoided an international bailout in December by injecting 3.3 billion euros into the banks itself. Bad loans, accumulated through years of reckless lending, stood at some 8 billion euros in November, before the bank overhaul.

The government has started moving toxic loans to the "bad bank" - the state-owned Company for Management of Bank Claims (DUTB) - a process the largest banks should complete by May.

Jazbec said the 11 billion figure included bad loans already transferred to the bad bank, but struck a note of caution: "Unless we soon ensure higher economic growth and debt restructuring in companies, the ratio of bad loans in banks will increase."

The government expects the economy to grow 0.5 percent in 2014, boosted by higher exports, after two years of recession.

Jazbec also urged the government to improve the local judiciary's efficiency to help attract foreign investors.

"Slovenian courts need more than 1,200 days to solve an economic dispute. Unless we change (that) ... we will remain unattractive for foreign investors."

On Monday, Jazbec said there was no investor interest in state-owned Banka Celje, which the government will have to recapitalize with 160 million euros unless a buyer is found by April 25.

Slovenia was the fastest-growing euro zone member in 2007, when it joined the bloc. But its export-oriented economy has yet to recover from the global crisis in 2009.

It declared independence from communist Yugoslavia in 1991 but successive governments have resisted selling state companies and the government still controls about 50 percent of the economy.

($1 = 0.7278 Euros)

Reporting by Marja Novak; editing by Zoran Radosavljevic and Ruth Pitchford

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