July 5 (Bloomberg) -- Slovenian banks including Nova Ljubljanska Banka d.d. continued to reduce lending and their bad debt rose further in May amid the country’s second recession since 2009, the government’s economic institute said.
Total lending fell 200 million euros ($258 million) in May, bringing the decline to 850 million euros in the first five months of 2013, the Institute for Macroeconomic Analysis and Development said in an e-mailed statement today.
“The pressure with maturing debt owed to institutions outside Slovenia increased in May and there are liquidity pressures tied to household deposits,” the institute said. “The quality of loan portfolio continues to worsen.”
Slovenia came to the fore of Europe’s debt crisis in March after Cyprus’s bailout put the focus on the Adriatic nation’s financial industry. Slovenians withdrew a combined 423 million euros from banks in March and April, according to the central bank, while the yield on the benchmark dollar-denominated bond due in 2022 surged to a record 7.5 percent on June 24.
The government has pledged to help its banks, offering to transfer bad loans to a state agency and increase capital of its three biggest lenders, including NLB, by 1.2 billion euros.
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