Slovenian lenders, including Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d., have reduced lending because of the restricted availability of financing from outside the country.
“As the funding from abroad worsens, banks have tightened their lending rules and continued to reduce credit,” the Ljubljana-based central bank said in an e-mailed statement today. “Lower economic activity in the majority of the euro region along with the worsening debt crisis in the second half of the 2011 caused a drop in exports and industrial output in Slovenia.”
The government’s austerity measures, the rising jobless rate and the reduction of labor costs have also contributed to a weak home demand, Banka Slovenije said. Banks reported record 2011 losses on mounting bad loans as the faltering economy, which slid into recession in the last quarter of 2011, pushed many companies into bankruptcy.
Europe’s economy also contracted in the fourth quarter as investment declined and exports and consumer spending dropped, the European Union’s statistics office said today.
The banking industry reported a net loss of 356 million euros ($467 million) for last year and put aside 1.1 billion euros to cover bad loans, the central bank has said.
Overall pretax profit rose 7.7 percent to 24 million euros in January as bad-loan reserves dropped, the central bank said. The banking system is “keeping adequate liquidity ” because of availability of three-year loans at the European Central Bank, central bank Governor Marko Kranjec said last month.
“The new bundle of measures from the European Central bank has improved confidence on the financial markets,” Banka Slovenije said.
The Frankfurt-based ECB poured more than 1 trillion euros of cheap loans into hundreds of European lenders as the rate-setting bank seeks to push banks to lend to the economy.
Slovenia’s export-driven economy shrank 0.7 percent in the last three months of 2011 from the previous three-month period, entering its second recession in three years.
Public spending cuts will further reduce home demand even though the efforts are needed to ensure a sustainable financing for the government, to spur the economy and keep the sovereign credit ratings, the central bank said.