Credit rating agency Moody's on Tuesday downgraded Slovenia's three largest banks, Nova Ljubljanska Banka (NLB), Nova KBM (NKBM.LJ) (NKBM) and Abanka Vipa (ABKN.LJ), as the country struggles to recover from the financial crisis. "The ratings downgrades are driven by continuing pressure on the banks' financial metrics, given the weak credit environment in Slovenia and in other regional markets in which they operate," Moody's said in a statement.
NLB's deposit ratings have been downgraded by two notches to A3/Prime-2 and its bank financial strength rating to D+, Moody's said. NKBM's deposit ratings have been downgraded by two notches to Baa1/Prime-2 while its financial strength rating was downgraded to D.
Abanka's financial strength rating was affirmed at D+ but its long-term deposit rating was downgraded by one notch to Baa1, Moody's said.
The ratings agency said all of the ratings carry a negative outlook.
"The anaemic economic recovery in Slovenia, which has followed the sharp recession in 2009, continues to generate corporate insolvencies and is likely to result in further asset quality deterioration and significant provisioning needs in the second half of 2010," Moody's said. Slovenia was badly hit by the global crisis because of its dependency on exports. Its economy contracted by 8.1 percent in 2009. The government expects a mild recovery this year.
NLB, which was Slovenia's only bank to have been included in the EU stress test scheme, barely passed the stress test in July and said it needed to raise 400 million euros of fresh capital by the middle of 2011 in order to meet tougher EU capital requirements. NLB said in a statement that its financial position remains under pressure
News souce: Balkans.com link: article
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