April 4, 2014 / 8:22 AM / 4 years ago

Slovenian bank NLB says bad loans expected to fall in 2014

LJUBLJANA, April 4 (Reuters) - Slovenia’s largest bank, state-owned Nova Ljubljanska Banka (NLB), said it expected to reduce its bad loans by the end of the year on account of privatisation and improved economic performance in the country.

The bank, which received a capital injection of 1.6 billion euros in December when Slovenia overhauled its banks and narrowly avoided an international bailout, currently has a bad loan rate of about 25 percent.

“Our estimate is that there are elements which confirm that things are improving... and we expect to reduce bad loans by some percentage points this year,” CEO of NLB Janko Medja told Reuters on the sidelines of a banking conference.

“Privatisations will bring in new liquidity which will be distributed in the economy so companies will be able to reduce debt which is what we are looking for,” he added.

Last year the government earmarked 15 firms for privatisation, recently selling two of them, while it this week called for non-binding bids for the telecoms operator Telekom which is the largest company on the list. {ID:nL5N0MU1PL]

The government expects higher exports will lead to economic growth of 0.5 percent this year after two consecutive years of recession.

Bank of Slovenia Governor Bostjan Jazbec told the conference that economic growth was of utmost importance for banks struggling to get rid of bad loans.

“Without economic growth we will run only into more problems,” Jazbec said.

In an interview with a local newspaper last week he said total bad loans in the Slovenian banks amounted to 11 billion euros, which is about 31 percent of GDP.

The transfer of about 4.5 billion euros of those loans to the state-owned bad bank is expected to be completed by the end of April while banks themselves will have to deal with the remaining bad loans. ($1 = 0.7291 Euros) (Reporting by Marja Novak; Editing by Toby Chopra)

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