Slovenian bank losses higher than expected

Slovenian banks ended 2012 with higher-than-expected losses mainly due to higher provisions, a central bank's governor preliminary report said Friday.

Pre-tax losses in Slovenian mostly state-owned banking system in 2012 amounted to 606 million euros ($810 million) compared with 539 million euros in 2011, local media reported central bank governor Marko Kranjec as saying.

Net provisions for bad loans in 2012 amounted to 1.4 billion euros, compared with 1.2 billion euros in 2011, the central bank said.

A third of those losses corresponded to Slovenia's largest bank, state-owned Nova Ljubljanska banka (NLB), the report said with final figures expected next week.

Earlier this week rating firm Standard & Poor's downgraded Slovenia's government bond ratings by a notch citing the struggling eurozone country's larger-than-expected debt burden due to its announced support of its state-owned banks.

Problems at Slovenia's banks, struggling under a mountain of bad debts, have raised speculation that the former Yugoslav republic, once a model newcomer to the European Union, may need a bailout.

Slovenian parliament approved in October setting up a bad bank, a financial institution that would take over risky debt held by state-owned banks to restore trust in their balance sheets.

Under the plan, the bad bank would buy risky debt and assets at a substantial discount, providing the lenders state-guaranteed bonds in return.

Kranjec said conditions in the Slovenian banking system "slowly start looking better" adding he expected 2013 results to be better.