Bloomberg News

NLB Bank Borrowed $1.5 Billion From ECB to Repay Debt

May 18, 2012

Nova Ljubljanska Banka d.d. borrowed 1.2 billion euros ($1.5 billion) from the European Central Bank to “finance liquidity obligations,” acting Chief Executive Officer Bozo Jasovic said.

Slovenian banks have limited access to funding from abroad after the euro-region country saw its credit rating cut in September, the economy slid into its second recession in three years and lenders posted record losses last year. The ECB in December started offering unlimited three-year loans to European banks as it sought to ease pressure on bond yields of countries such as Spain and Italy amid the sovereign debt-crisis.

“We have borrowed 1.2 billion euros and the funds will be used to pre-finance our liquidity obligations that we need to repay in the coming months,” Jasovic said in an interview in Portoroz, Slovenia. “The bank has the option to repay loans a year after it took them out and we may do so in case of an adequate liquidity position.”

Slovenian banks, including Nova Ljubljanska, need to repay about 4 billion euros of maturing debt this year, the government’s forecasting institute said in February. NLB, the biggest bank by assets, reported a loss for a third consecutive year amounting to 239 million euros on surging provisions for bad loans.

The shrinking Slovenian economy is contributing to the worsening of Slovenian banks’ loan portfolio and profitability, the central bank in Ljubljana said May 14. Banka Slovenije proposed lenders reduce their dependence on wholesale markets, ECB funding and lower the loan-to-deposit ratio.

Guidelines

“We are trying to follow the unofficial guidelines and suggestions from the central bank and we are therefore managing our balance sheet in a way to fulfill these suggestions as soon as possible,” Jasovic said in the May 16 interview.

NLB is looking for a new chief executive after Jasovic stepped down in December over disagreements about the sale of Slovenian retailer Mercator Poslovni Sistem d.d. to its Croatian rival Agrokor d.d. Jasovic said the bank will probably get a new CEO once NLB finds a partner that would contribute to a 400 million-euro capital boost. The lender needs equity capital to improve its ratios by the end of June as demanded by the central bank and the European Banking Authority.

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

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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