NLB has 20 percent bad loans - CEO in paper
LJUBLJANA, July 6 |
LJUBLJANA, July 6 (Reuters) - Bad loans at Nova Ljubljanska Banka represent about 20 percent of the portfolio at Slovenia's largest lender, or around 3 billion euros ($3.7 billion), chief executive Bozo Jasovic said in an interview published on Friday.
A capital raising by NLB, completed this week, should be sufficient unless conditions in the European Union and Slovenia deteriorate further, he also told Slovenian weekly Mladina.
Exports to EU states are the main driver of Slovenia's economy, which sells about 70 percent of its products abroad.
Jasovic said NLB has already made provisions for non-performing loans in the value of 1.8 billion euros, adding the rest of the bad loans were covered by insurance.
On Monday, Slovenia injected 381 million euros into NLB to raise its core tier 1 capital ratio to 9 percent from 6 percent, as required by the European Banking Authority.
NLB's need for capital was at the core of market rumours last week that Slovenia itself might need a bailout.
Finance minister Janez Sustersic told Reuters on Thursday the country will not need a bailout for at least a year and, most probably, not thereafter as the capital stability of its banks had been ensured.
Jasovic said the bank had sufficient money to make new loans, adding the size of new loans in Slovenia has been falling amid low demand.
"The credit crunch story is made up. Who is asking for loans in a country where the economy is stagnating?" he said.
Slovenia, the fastest-growing euro zone member in 2007, was badly hit by the global crisis due to its dependency on exports.
After a mild recovery in 2010, the economy contracted 0.2 percent in 2011 and the government expects a 0.9 percent fall this year due to lower export demand and a fall in domestic spending amid budget cuts.
The government, which controls 64 percent of NLB, hopes to find strategic investors for the bank by the year-end and lower its stake to 25 percent. Belgian banking and insurance group KBC holds a 22 percent stake. ($1 = 0.8077 euro) (Reporting By Marja Novak; Editing by Dan Lalor)
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