Ljubljana, 05 October (STA) - Banka Slovenije Governor Marko Kranjec Tuesday played down the importance of the upcoming capital increase at NLB, Slovenia's leading bank, highlighting instead the lack of strategy as the bank's biggest problem.
Business daily Finance reported last week that the central bank had requested a EUR 400m capital increase at NLB but Kranjec denied having made this specific request, saying the issue was being overhyped by the media.
The majority state-owned NLB is seeking EUR 400m from shareholders to beef up its capital base, but it is unclear how much money it will actually get.
Kranjec said NLB's main problem was the lack of an appropriate strategy, which the supervisory board is yet to adopt.
The strategy ought to cover all aspects of the capital increase as well as internal consolidation of risk management and, if necessary, disposal of investments.
He said return must be the main criterion for investment. "Slovenia needs to decide how to get a profitable, efficient and appropriate bank".
Rating agency Moody's recently downgraded NLB along with the second and third largest banks in the country, NKBM and Abanka.
Stanislava Zadravec Caprirolo, a member of the central bank's governing board, said the move was not unexpected considering the slow and uncertain recovery of the Slovenian economy, which is increasing credit risk.
She said Slovenian banks on average had Tier 1 capital ratios of about 9%, comparable to the eurozone, but noted that there were differences among individual banks.
Kranjec added that there was no general answer to how the downgrade would affect lending, as this also depends on bank policy.