January 21, 2020 / 6:25 PM / 7 months ago

Slovenia's NLB asks top court to rule on "too radical" loan curbs

LJUBLJANA, Jan 21 (Reuters) - Slovenia’s largest bank, NLB , on Tuesday asked the Constitutional Court to rule on whether restrictions on consumer loans, imposed by the Bank of Slovenia in November, were in line with the constitution.

“NLB believes that the restrictions were enforced too fast, are too radical and need to be removed,” the bank said in a statement sent to Reuters.

Under the restrictions, borrowers’ debt costs, including housing loans, can no longer exceed 67% of their income. At the same time, consumer loans, excluding housing loans, have a maximum maturity of seven years.

The central bank said in a statement sent to Reuters that “it was too early” to come to conclusions about the effects of the restrictions, adding the annual growth of consumer loans remained high at 10.3% in November, down from 11.9% in October.

The Slovenian Bank Association said on Monday that according to reports of 10 local banks, the number of new consumer loans, excluding housing loans, fell by about 60% in November compared to a month before and by a further 5% in December.

NLB pointed out that the restrictions were not in line with the fact that Slovenian citizens have relatively low debt and that Slovenian banks have sufficient capital and liquidity to absorb possible “bigger shocks”.

The Constitutional Court is expected to rule on the matter in coming months. (Reporting by Marja Novak; editing by Nick Macfie)

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