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By Marja Novak
LJUBLJANA, July 17 (Reuters) - External stress tests of Slovenia’s troubled banks will take longer than expected to complete due to demands made by European authorities, Finance Minister Uros Cufer said on Wednesday.
Slovenia is struggling with a banking sector burdened by 7 billion euros ($9.2 billion) of bad loans which it needs to overhaul successfully to avoid becoming the fifth euro zone state to take a sovereign bailout.
Earlier this month, the finance ministry said a test of the financial health of the country’s biggest lender, NLB, was being conducted by international consultants Oliver Wyman and the results would be known in mid-July.
But “it will take a bit longer ... we have no deadline,” Cufer said on Wednesday, citing demands made by the European Commission which he did not specify.
Slovenia needs approval from the Commission to clean up the banks’ portfolios by transferring bad loans to a newly-established ‘bad bank’.
The first transfer had been due on June 28 but was postponed as the Commission said it would only approve the transactions after getting the results of the stress tests.
Cufer did not say when the first transfer was expected.
Prime Minister Alenka Bratusek said time was of the essence but it was even more important to do the transfer properly “so that we would not have to repeat the exercise in January or February”.
“We are doing everything to do it (transfer the bad loans) as soon as possible,” Bratusek said after she and Cufer held preliminary talks with Bostjan Jazbec, who took over as central bank governor earlier on Wednesday.
Slovenia was the euro zone’s fastest growing economy until the global crisis hit in 2008, exposing a toxic mixture of political cronyism, economic mismanagement and failure to enforce market reforms.
$1 = 0.7612 euros Reporting by Marja Novak; Editing by Zoran Radosavljevic and John Stonestreet