Bloomberg News

IMF Says Slovenian Financial Industry Needs Fresh Capital

April 16, 2012

Slovenia’s financial system needs to be strengthened after being “strongly” hit by the global financial crisis and the euro member’s banks must clean up their balance sheets, the International Monetary Fund said.

“Even though the Slovenian authorities have maintained the stability of the system, the business of their commercial banks has worsened, affected mostly by their exposure to the construction industry, resulting in losses in the last two years,” the IMF said in a statement today after it completed its visit to Slovenia.

The short-term priority of the country’s authorities “should be to re-capitalize its banks and clean their balance sheets,” said the IMF, whose mission led by Vassili Prokopenko studied Slovenia’s financial sector, vulnerability to systemic risk and regulatory framework.

Slovenian banks, including the two largest Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor (KBMR) d.d., are still reeling from the 2009 recession which forced them to post record losses as they put aside reserves to cover bad loans. NLB posted its third consecutive loss for last year amounting to 239 million euros ($314 million) while Nova Kreditna reported its first loss of 53.6 million euros since the share sale in 2007.

Banks will probably report further losses this year as the economy slides into recession, the central bank said last month. The export-driven economy, which contracted an annual 0.2 percent last year, may shrink 1.2 percent this year, according to the central bank’s estimate.

To contact the reporter on this story: Boris Cerni in Ljubljana at bcerni@bloomberg.net

To contact the editor responsible for this story: Jeffrey Donovan at jdonovan26@bloomberg.net


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