Slovenia’s bad loans ratio keeps falling in August

Slovenia’s bad loans ratio keeps falling in August
By Ivana Jovanovic in Belgrade October 12, 2016

The share of bad loans in the Slovenian banking system fell to 6.7% in August, following the decline to 7.3% in July, after it had remained steady at 8% for the previous three months, the Slovenian central bank Banka Slovenije (BS) said on October 11.

Since 2013, the bad loans ratio in Slovenia has maintained a downward trend. At end-2015 it declined to 9.9% against 11.9% at end-2014 and 13.4% at end-2013. The downsizing of bad loans is a result of BS’s efforts to stabilise the banking sector, an integral part of the Slovenian government's strategy for the restructuring of the financial sector since late 2013.

The value of loans on which repayments have been delayed for over 90 days totaled €2.21bn through August, declining from €2.44bn through July. Through June, bad loans in Slovenian banking system stood at €2.65bn.

The share of bad loans in the corporate sector kept decreasing slightly, reaching 9.3% in August, from 10.7% in July and 12% in June.

The share of bad loans in the household segment in August also shrank compared to previous months, to 3.5% against 3.6% and 4.2% in July and June respectively.

Slovenian bank loans in August totaled €33.14bn.

Slovenia's largest lender Nova Ljubljanska Bank (NLB) is in the process of selling off €800mn worth of non-performing loans NPLs in three tranches, as it cleans its balance sheet ahead of a planned privatisation.

The bank announced on July 19 that it had agreed to sell a package of retail NPLs with a face value of approximately €104mn. It was also reported to have concluded a deal to sell a €396mn package of corporate loans at the end of June. The name of the buyer was not disclosed, but according to local daily Dnevnik the corporate package was sold to US fund Pine River Capital, Swiss buyout fund DDM Group and Czech APS Holding.

Slovenia is a somewhat unusual market in that state-owned banks have already transferred a large part of their NPL portfolios to the country’s bad bank, the Bank Assets Management Company (BAMC). However, aside from NLB, other Slovenian banks are also considering portfolio sales of the bad loans they still hold.