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SARAJEVO, July 23 (Reuters) - Bosnia is working on laws to tackle the growing problem of non-performing loans, either by selling them or creating a “bad bank” to ringfence the toxic debt, its central bank governor said on Wednesday.
Kemal Kozaric told Reuters the finance ministry was working with banking agencies in Bosnia’s two autonomous regions on legislation “allowing the sale of bad debt or the creation of a bank for bad loans”.
“We are looking to October to have these laws in place,” he said on the sidelines of a banking conference in the capital, Sarajevo.
Bad loans stood at 15.1 percent of total lending in Bosnia in the first half of 2014, but Kozaric said he expected them to rise following devastating floods that hit the Balkans in May.
Serbia, Bosnia’s neighbour and fellow former Yugoslav republic, is also looking at ways to tackle the problem of bad loans, which account for 22.9 percent of lending.
Incoming Serbian Finance Minister Dusan Vujovic told Reuters last week he had met representatives of Goldman Sachs and discussed the model of Slovenia’s “bad bank”, created last year to relieve domestic banks of billions of euros of soured loans.
$1 = 1.452 Bosnian marka $1 = 0.7426 Euros Reporting by Daria Sito-Sucic; Editing by Catherine Evans