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New Slovenia central bank head rules out bailout

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(Globalpost/GlobalPost)

Slovenia's new central bank governor Bostjan Jazbec said Tuesday the small but troubled eurozone country can steady its wobbly banking system without international help.

"Measures that have been put in place by the previous government and that are being implemented by the new government ensure that there will be no need for (international) aid," Jazbec said shortly after parliament appointed him.

The former International Monetary Fund senior advisor, 43, told journalists "we know that we have to fix the banking system, balance public spending and continue with reforms that will help restore economic growth and create new jobs."

Slovenia, once a model newcomer to the European Union, is in recession and a mountain of bad debts at its banks have raised concerns the country may be the latest eurozone member after Cyprus to need help.

Prime Minister Alenka Bratusek's new government, which took office only two weeks ago following the collapse of the previous administration, has vowed to press ahead with structural reforms and creating a "bad bank".

Highlighting the problems, Standard and Poor's on Tuesday cut its rating on Slovenia's second-largest bank NKBM to 'Bpi' from 'BBpi', citing a continued sharp deterioration in asset quality.

Earlier on Tuesday, NKBM's board gave the green light for a conversion of state bonds to shore up its capital base and meet European Banking Authority (EBA) requirements, a move that will raise the government's stake to 79 percent.

In 2012, NKBM posted a loss of 205.5 million euros ($263.6 million), mainly due to write-downs of bad loans.

bk/stu/wai

http://www.globalpost.com/dispatch/news/afp/130402/new-slovenia-central-bank-head-rules-out-bailout