REUTERS SUMMIT-Bad loans in Bulgaria have peaked, says Unicredit Bulbank executive

* Bank chief says many loans well-collateralised

* Backs calls to seek Europe's banking supervision

* For other news from Reuters Eastern Europe Investment Summit, click on http://www.reuters.com/summit/EasternEuropeInvestment14

By Tsvetelia Tsolova

SOFIA, Sept 29 (Reuters) - Bad loans at Bulgarian banks have already peaked apart from a possible one-off spike once the troubles of failed Corpbank are catalogued, the chief executive of major lender Unicredit Bulbank said on Monday.

Non-performing loans surged after the global financial crisis punctured a real estate and construction boom in Bulgaria's fledgling economy. They stood at 16.9 percent in 2013.

Levon Hampartzoumian told the Reuters Eastern Europe Investment Summit that a significant part of Bulgaria's bad loans were well collateralised and getting value out of them was a matter of time.

He also said bad loans at his bank, part of Unicredit Group were at a manageable level and that it would not look to sell on its non-performing loan portfolio.

"I believe the peak of non-performing (loans) is behind us. You may see some non-performing spikes because of Corporate Commercial Bank's one-off effect on the system, but generally judging also from our non-performing portfolio, I think the worst is behind us," he said.

A full audit at Corporate Commercial Bank is expected next month after the central bank seized control over Bulgaria's fourth-largest lender and shut its operations. An initial audit showed a lack of information on many of its loans.

The banking crisis has raised concerns about the quality of banking supervision in Bulgaria, the European Union's poorest state.

Hamparzoumian joined calls by Bulgarian politicians for the country to join Europe's Single Supervisory Mechanism (SSM) and allow European control over its banks to restore trust in the system.

Bulgaria would be the first country outside the 18-nation euro zone to join the SSM, set up in response to the global financial and euro zone debt crises.

"This to some extent will ... restore confidence, knowing that it is not just a local supervision but something overseen by European authorities," he said.

The banking crisis has also put renewed scrutiny on the investment climate in Bulgaria. Ratings agency Standard & Poor's downgraded Bulgaria's credit rating in June and the country has struggled to revive economic growth and foreign investment.

The economy is expected to grow by 1.5 percent this year, after expanding by 0.9 percent in 2013.

Hampartzoumian said he hoped a stable government after an Oct. 5 election would boost growth, which could also boost bank lending to businesses.

The election will be Bulgaria's third in two years. A Socialist-led government, whose one year in office was overshadowed by anti-graft protests, floods and a banking crisis, resigned in July.

"If after the election ... we have the opportunity to have a more stable political constellation, this creates conditions for higher growth of the economy," Hampartzoumian said.

The centre-right GERB party is tipped to win the election but may fall short of an outright majority, raising the risk of further political and economic instability.

The recovery will also depend on growth in the euro zone, a major export destination.

Hampartzoumian said Bulgaria's economic growth of around 1 percent was not enough to boost business appetite, but that Bulbank, part of Unicredit (Milan: UCG.MI - news) group, was ready to boost lending if the economy picked up.

For now the bank plans to keep lending next year in line to levels in 2013 and this year. The bank's credits grew by 3 percent for the first eight months to 9.53 billion levs, after 2.5 percent growth in 2013.

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(Reporting by Tsvetelia Tsolova; Editing by Ruth Pitchford)