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Slovenia Bank Assets Fall $4.1 Billion on Debt Payments, Rating

Slovenian bank assets fell 3.1 billion euros ($4.1 billion) in 2012 as lenders repaid debt while a cut in the country’s credit rating limited funding sources, the central bank said.

Banks paid back 3.6 billion euros of debt on international markets, which accounted for 10 percent of the country’s gross domestic product, Banka Slovenije said in an e-mailed statement today. The industry’s total assets were 46.7 billion euros in November, according to the latest data from the central bank.

“The possibility of debt refinancing was sharply reduced by the uncertain economic and political situation as well as due to investors mistrust toward Slovenian long-term debt,” the central bank said.

Slovenian banks’ combined pretax loss was 664 million euros last year, according to the central bank, as the second recession in three years pushed companies into bankruptcy, forcing lenders to set aside bad-loan reserves. The nation’s economy shrank an annual 3.3 percent in the third quarter on lower exports and falling domestic demand.

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

The Adriatic country was plunged into political turmoil last month over corruption allegations against Prime Minister Janez Jansa, prompting two of his coalition partners to abandon the government and increasing the risk of early elections.

Reduced sources of funding were also caused by shrinking state deposits at commercial banks, the central bank said.

Asset writedowns and bad-loan provisions last year surged 23 percent to 1.5 billion euros, the central bank said.

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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