Slovenia’s Two Biggest Banks’ CEOs Step Down as Woes Mount

Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d., Slovenia’s two largest banks, are without chiefs as they struggle with mounting bad loans.

Andrej Plos, the chief executive officer of Nova Kreditna Banka Maribor, who took the helm of Slovenia’s second-biggest bank in January, offered his resignation today without giving a reason. Bozo Jasovic, the CEO of the larger Nova Ljubljanska Banka d.d. stepped down in December over the bank’s attempt to sell the holding in retailer Mercator Poslovni Sistem d.d. to the Croatian rival Agrokor d.d.

“It’s actually hard to believe that the biggest lenders are without a proper leadership in such crucial times for the banking sector and as Slovenia sees its credit rating lowered due to a fragile bank system,” Saso Stanovnik, head of research at Ljubljana brokerage Alta Invest d.d., said in an e-mail today. “One can only hope the new leaderships are in place as soon as possible to tackle the problems of the banking sector.”

Slovenian banks are struggling with mounting losses as the faltering economy pushes more companies into bankruptcy. Lenders in Slovenia, which adopted the euro in 2007, reported 356 million euros ($469 million) of losses last year, the central bank said on Feb. 7.

Abanka Vipa d.d., Slovenia’s third-biggest lender by assets, reported a loss of 119 million euros, while NLB will report a third consecutive loss for 2011, Jasovic has said.

Slovenia had its credit rating cut one level to A2 from A1 along with five other euro-region nations yesterday on uncertainty over the prospect for institutional reform in the euro area and the weak economic outlook for the 17-member bloc. The European Commission, the executive arm of the European Union, yesterday said Slovenia needs an in-depth review of its imbalances, including its “high debt at the banking industry.”

Reluctant to Lend

Banks in the country are reluctant to lend to the economy even as they benefit from financing from the European Central Bank, the government’s forecasting institute, said on Feb. 3. That may further damage the economy, which is sliding into recession as austerity measures in Europe damp demand for its exports. Gross domestic product in the 17-member bloc contracted 0.3 percent in the fourth quarter from the previous three-month period, the EU’s statistics office said today.

NLB, majority owned by the government, wants to raise 400 million euros of equity capital by mid-2012 to improve its core Tier 1 capital ratio to above 9 percent.

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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