Bloomberg News

NLB Bank Posts Fourth Annual Loss as Bad Loans Surge

February 18, 2013

Nova Ljubljanska Banka d.d., Slovenia’s biggest lender, posted a loss for a fourth consecutive year as bad-loan provisions surged.

Net loss was 275 million euros ($367 million) in 2012 as bad-loan provisions rose to 511 million euros, Chief Executive Officer Janko Medja said at a news conference in Ljubljana today. The bank’s net loss was 239 million euros in 2011.

“The economy is in very bad shape,” Chief Executive Officer Janko Medja, appointed to the top post in September, told reporters today. “Bad loan provisions were the main reason for our loss last year. We won’t have a positive result this year as provisions will still be relatively high.”

The Slovenian banking industry, which last year had a combined pretax loss of 606 million euros, is grappling with surging bad loans as a second recession in three years pushes more companies into bankruptcy, forcing lenders to set aside record reserves. Slovenia may ask for international assistance if the euro-region nation fails to fully implement the so-called bad bank plan to recapitalize the ailing industry, former Finance Minister Janez Sustersic said Feb. 14.

Political Turmoil

The Adriatic nation plunged into a political turmoil last month over corruption allegations against Prime Minister Janez Jansa, prompting two coalition partners to leave the ruling group. Jansa vowed to continue with a minority government.

“We are worried by the political situation in the country as it affects the economy and the country’s credit rating and ultimately our business,” Medja said.

Slovenia had its credit rating cut to A- by Standard & Poor’s on Feb. 12, the fourth lowest investment grade with a stable outlook. Fitch Ratings rates the country as A- and Moody’s Investors Service Baa2, its second lowest investment grade.

State-controlled Nova Ljubljanska is seeking to increase capital by 400 million euros, Medja said today. The government boosted its capital by 381 million euros in June and bought KBC Groep NV (KBC)’s entire 22 percent stake for 2.8 million euros in December, becoming the lender’s largest owner.

The bank doesn’t expect to be weaned off the European Central Bank long-term refinancing operation this year, Medja said.

“We have just over 1 billion euros of loans with the ECB,” Medja said today. “The bank is liquid and stable.”

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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