Slovenia’s State Banks Cleanup to Start by End-June

Slovenia’s recently formed Bad Asset Management Company, or DUTB, will receive its first batch of non-performing loans from the country’s state-owned lenders by end-June, clearing the way for the privatizations slated to help this small euro-zone member avoid an international bailout, The Wall Street Journal Emerging Europe blog reported. “The first transfer will total about 2 billion euros ($2.67 billion),” Simona Rodez, a DUTB spokeswoman told The Wall Street Journal. “These will be non-performing loans from Nova Ljubljanska Banka.” NLB is the largest of the three heavily-indebted Slovenian banks currently controlled by the government, which has already injected fresh capital into all three to keep them afloat amid fears they could undermine the overall economy. The other two troubled lenders are Nova Kreditna Banka Maribor, or NKBM, and Abanka-Vipa. Together they control the majority of the Slovenian banking sector and their financial problems have added to the overall economic recession by stoking a credit crunch. The three banks shoulder some EUR7 billion worth of bad loans, which are 90 or more days overdue, equaling about one-fifth of total Slovenian economic output. The three lenders also swapped some of their other loans into equity stakes in various companies to avoid classifying these as non-performing. Read more. (Subscription required.)