Slovenia Bad Bank to Absorb $6.1 Billion of Bad Loans

Slovenia’s bailed-out banks will be paid for 4.5 billion euros ($6.18 billion) of bad loans with two and three year bonds that will allow them to access cash and fund new business, the head of the country’s bad bank said on Monday.

Slovenia announced on Thursday that its banks would be paid about 1.6 billion euros for transferring their most troubled loans to the bad bank. Torbjörn Mansson, head of the bad bank, told journalists on Monday banks would be paid with a combination of two and three year bonds.

“We are structuring the bond that it should be acceptable in the system, banks can use it to secure liquidity, fund new businesses,” he said. Banks can pledge high quality bonds with the European Central Bank in exchange for cash, which they can then lend.

Slovenia’s eight largest banks have to boost their capital by 4.8 billion euros as a result of long-awaited stress tests published last week. Slovenia said the money could be found without a sovereign bailout.

In documents published on Monday, the bad bank said it would not be a long-term owner of non-performing loans and would sell them as soon as soon as the assets were “interesting to the market”.

via Reuters

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