LJUBLJANA Deposits in Slovenian banks are safe, the euro zone country's central bank said on Monday, rejecting any comparisons between their bad debt burden and the problems of Cyprus.
Banks in Slovenia are nursing some 7 billion euros of bad loans, equal to about 20 percent of GDP, underpinning persistent speculation that the country might have to follow other vulnerable euro zone countries in seeking a bailout.
But the central bank said Slovenia's banking sector was much smaller relative to its economy than Cyprus's and denied any risk that it would follow Cyprus in taxing bank deposits.
"One of the reasons for the tax on the deposits in Cypriot banks is the large share of deposits of foreign citizens there. In Slovenia, the share of foreign depositors is symbolic," the bank said in a statement. It put balance sheet assets of Slovenia's banks at 135 percent of gross domestic product compared with 800 percent in Cyprus.
Local lenders said there were no unusual money withdrawals or transfers on Monday, while the finance ministry told Reuters "the comparison with Cyprus in this context is completely inappropriate".
However, Slovenia's second largest bank Nova KBM said on Monday it will need more capital by the end of June because of bad loans and analysts said the market will be watching Slovenia's deposit data.
"The hope will be that the problems in Cyprus just concentrate the minds of the Slovene policy elite to ... push ahead with its own bad bank rehabilitation programme," said Timothy Ash, an analyst of Standard Bank.
(Reporting by Marja Novak; Editing by Ruth Pitchford)