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Governor Kranjec Not Worried about Postponed NLB Capital Injection

Ljubljana, 29 December (STA) - Central bank governor Marko Kranjec is not worried about a planned capital injection of the NLB bank being put off. For the central bank this is not a tragedy, since Slovenia's largest bank has enough capital if its operations remain within the existing volume, he said late on Monday.

A capital injection would be necessary if the bank grew fast or the volume of its loans increased, Kranjec told public broadcaster RTV Slovenija's news show Odmevi after the EUR 250m capital injection planned to be carried out between 28 December 2009 and 11 January 2010 was postponed to the first quarter of 2010.

The governor attributes the postponement to the fact that the bank's two major owners (the state and Belgian group KBC) simply failed to reach agreement on the capital injection. He added it was hard for Banka Slovenije to assess the relations between owners regarding capital injections.

Kranjec explained it was not Banka Slovenije as the guardian of the banking sector that called for a capital injection at NLB, but the state nevertheless opted for it. He understands the move as the state wanting NLB to shoulder part of its burden for boosting the economy, which now depends on the budget.

Turning to the situation in the Slovenian banking sector, Kranjec said the central bank was closely monitoring the situation, but added that "there are no serious patients" among Slovenian banks.

He noted however that the crisis did affect the sector, with a significant decrease in crediting as well as a fall in profits. The trends are not expected to change much in 2010, since loans are available to banks abroad are scarce and more expensive.

The governor also noted that Slovenian banks were not as jeopardised by bad loans as foreign banks, yet the situation was getting worse.

He is however concerned about the crediting of the construction sector. "Construction companies used to build en mass, however now they are unable to sell the real estate, which causes them problems in paying off the loans," Kranjec summed up the situation in the construction sector.

Asked about loans used in disputed management buyouts, the governor said that according to the central bank's information, these loans were well secured and none of the banks was facing problems because of them.

He also touched on the trade unions' demand for a higher minimum wage, saying he supported higher wages, however within reasonable limits. "We need to ask ourselves whether the economy's results allow for higher wages," said Kranjec, who He believes that the sectors with low added value would not survive it.

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