November 4, 2019 / 12:58 PM / 14 days ago

Slovenia PM's party asks central bank to rethink loan restrictions

LJUBLJANA, Nov 4 (Reuters) - The party of the Slovenia’s centre-left Prime Minister Marjan Sarec asked the Bank of Slovenia on Monday to reverse restrictions on bank loans imposed this month, saying the policy will hurt many citizens.

The central bank has ordered banks to halt lending if a borrower would have to pay more than 67% of net income to service debt, and has imposed a maximum seven-year maturity for consumer loans other than mortgages.

It says the restrictions are necessary to curb excessive credit growth, with consumer lending rising faster than 10% per year.

The central bank is independent, giving politicians no direct way to force it to change the policy, which has become a major public issue in a country where rising real estate prices have forced many people to take out ever-bigger housing loans.

Sarec’s parliamentary group, which leads a five-party governing coalition, said the bank should cancel or delay the new restrictions.

Other politicians, including the economy minister who heads another coalition party, have also criticised the central bank move, though they have stopped short of demanding it be reversed.

While the government controls about 12% of the banking sector, most local banks are owned by foreign banks and investors, including US investment firm Apollo Global Management , Italy’s Unicredit and Intesa Sanpaolo , Hungary’s OTP bank, Serbia’s AIK bank, Russia’s Sberbank and Austria’s Sparkasse and Addiko Bank. ($1 = 0.8958 euros) (Reporting by Marja Novak Editing by Peter Graff)

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