Slovenia Bank Fix Results May Come Earlier, Cost Covered

Slovenia may release results of tests on its banking industry earlier than previously announced, and the country does not need to borrow more funds to fix its ailing lenders, Finance Minister Uros Cufer said.

Investors are awaiting the outcome of the tests to see how much the Adriatic state must pay to fix mostly state-owned banks and avoid an international bailout. After central bank Governor Bostjan Jazbec said last month the results would be released on Dec. 13, Cufer said today Slovenia hadn’t officially set a release date and “changes are possible.”

Prime Minister Alenka Bratusek has said the nation has built up a 5 billion-euro ($6.8 billion) cash buffer after the sale of 1.5 billion euros of bonds in a private placement in November. Fitch Ratings has said the bank rescue may cost as much as 4.6 billion euros, while the central bank has dismissed outside estimates of the price tag as “speculation.”

“Anything is possible, as we haven’t published the date yet,” Cufer told reporters today in the capital Ljubljana. Slovenia won’t need to sell more debt this year to provide the cash for the plan in which the government will move non-performing loans to a state-run bad bank and recapitalize the lenders, Cufer said.

The yield on Slovenia’s dollar-denominated bonds maturing in 2022 was little changed from yesterday at 5.87 percent at 12:47 p.m. in Ljubljana, according to data compiled by Bloomberg. The yield dropped to the lowest level in six months on Nov. 29, the data showed.

‘Bad Investments’

Slovenian banks are burdened with bad loans nominally worth about 8 billion euros, or more than a fifth of the nation’s economic output. Combined losses at lenders surged to 567 million euros at the end of September from 115 million euros a year earlier, the central bank said Nov. 20.

Biggest lender Nova Ljubljanska Banka, which is state-owned, expects to show more than 3 billion euros in “bad investments” this year, it said today in a statement. The euro area member country may announce the bank review results Dec. 12, Slovenian newswire STA said yesterday, citing an unnamed official from the single currency region.

The government had deposits of 5.75 billion euros at the end of November after the sale of 1.5 billion euros in three-year bonds, according to an estimate from Jaromir Sindel, an economist at Citigroup Inc. in Prague, in a report today.

Nova Ljubljanska Banka d.d. will need “big additional” borrowing because bad loans and asset writedowns “will show a high level of unhealthy portfolio”, Janko Medja, chief executive officer, said in an interview yesterday. The Ljubljana-based bank’s nine-month loss was 294 million euros, with bad loans surging to 345 million euros, it said Nov. 7.

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