Tuesday

22nd Oct 2019

Slovenia promises to save its own banks, as doubts grow

  • Bratusek: 'We are not a tax haven, we are export oriented' (Photo: ec.europa.eu)

Slovenian Prime Minister Alenka Bratusek has said the country can save its banks by itself, amid growing opinion it will need EU help.

Speaking in Brussels on Tuesday (9 April) alongside European Commission chief Jose Manuel Barroso, she said: "Day and night, we are dealing with this problem … I'd like to assure you we will solve our problems on our own."

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

She rejected comparisons with Cyprus, which had to seek an EU bailout to stop its banks, worth almost eight times the island's GDP, from going bust.

With Slovenia's bank-GDP ratio at well below the EU average of 3.5 percent, Bratusek added: "I would like to say we are not a tax haven, we are export oriented … Some countries we've been compared to have this [bank-GDP ratio] at 800 percent, so I think the difference is obvious."

For his part, Barroso reprimanded a journalist for asking if Slovenian depositors could lose money if there is a bailout on the Cyprus model.

"I'm sorry, but I will not engage in any comparisons with Cyprus … It is at the least abusive to make comparisons with Cyprus," the commission chief said.

The Brussels pep talk came after two high-profile reports which say Slovenia's banks are in more trouble than earlier thought.

The Washington-based bank lobby, the International Institute of Finance (IIF), on Monday called for the EU's bailout fund, the ESM, to set aside between €3.5 billion and €10 billion for a potential bank bailout in order to restore market confidence in Slovenian government bonds.

The Paris-based think tank, the OECD, on Tuesday noted: "The [Slovenian] authorities evaluate [bank] recapitalisation needs at up to 3 percent of GDP (€1 billion). Yet, capital needs are uncertain and could in fact be significantly higher."

The banks got into trouble because of giving loans, largely to construction firms, which are not being paid back.

In one case, the two largest state-owned banks, Nova Ljubljanska Banka and Nova Kreditna Banka Maribor, lent money to a financial holding company, Zvon Ena, worth up to 20 percent of the banks' capital.

Zvon Ena is now in bankruptcy procedures.

Bratusek plans to deal with the situation by creating a "bad bank" - the Bank Asset Management Company - in June to siphon off the bad loans and restore core banks' stability.

But with Slovenia facing a severe recession, made worse by its banks' reluctance to lend more money, and with the cost of its bonds on the up, it risks falling into a negative spiral.

Barroso and Bratusek also admitted Slovenia needs to do more to fight high-level corruption.

The previous government fell in January after investigators exposed that former leader Janez Jansa failed to declare €210,000 of private assets.

This week, state sleuths said the country's telecoms provider, Telekom Slovenije, lost €25 million due to dodgy deals in Kosovo and Macedonia.

Bratusek said the fight against economic crime is a "priority" enshrined in her coalition pact.

Barroso noted that corruption risks undermining popular support for austerity measures, aggravating economic risk.

He said: "The population asks: 'Why should I make sacrifices, when those politicians do not make sacrifices or when they know about corruption?' And here is a problem about the sustainability of the [fiscal consolidation] effort."

He added: "It's not only an ethical problem … it's also a question for the success of the policy."

Slovenian government collapses

Slovenian leader Jansa has been ousted from office in a no-confidence vote on Wednesday amid economic gloom compounded by corruption allegations.

Austria attacks UK, as EU finance talks get ugly

Austria has accused the UK of being a haven for money launderers ahead of an EU meeting in Dublin, with Cyprus, Ireland, Portugal and Slovenia's (potential) bailout needs also on the agenda.

News in Brief

  1. Four businessmen charged in Slovak journalist murder
  2. Erdogan accuses EU of 'standing by terrorists' in Syria
  3. Migrants riot in Maltese camp
  4. Spanish PM refuses dialogue with Catalonia president
  5. Putin: Russia will help Africa without 'conditions'
  6. Almost 200 arrests in Catalonia independence protests
  7. Report: Russian hackers used Iranian cover to attack UK
  8. Next EU economy chief calls for looser budget policies

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  2. Nordic Council of MinistersBrussels welcomes Nordic culture
  3. UNESDAUNESDA appoints Nicholas Hodac as Director General
  4. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  5. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  6. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  7. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  8. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  9. Nordic Council of MinistersNo evidence that social media are harmful to young people
  10. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  11. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  12. Nordic Council of MinistersEducation gets refugees into work

Latest News

  1. Macron breaks Balkans promise in quest for EU dominance
  2. Snap elections in North Macedonia after EU rejection
  3. UK opposition MPs attack new Brexit deal
  4. Deep divisions on display over post-Brexit EU budget
  5. Juncker: 'Historic mistake' against Balkan EU hopefuls
  6. EU leaders spent just 12 minutes on climate
  7. Crunch Brexit vote in UK This WEEK
  8. EU envoy sheds light on weird US diplomacy

Join EUobserver

Support quality EU news

Join us