Sunday

16th May 2021

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

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe 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. No EUobserver newsletter on Friday 14 May
  2. Germany stops Facebook gathering WhatsApp data
  3. Italy rebuts reports of EU deal with Libya
  4. MEPs demand EU states protect women's reproductive rights
  5. At least nine dead in Russia school shooting
  6. Bulgaria interim government appointed until July election
  7. German priests defy pope to bless same-sex couples
  8. New EU public prosecutor faults Slovenia

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  2. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  3. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  4. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  5. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  6. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance

Latest News

  1. EU aims at 'zero pollution' in air, water and soil by 2050
  2. French police arrest Luxembourg former top spy
  3. Vaccine drives spur better-than-expected EU economic recovery
  4. Slovenia causing headaches for new EU anti-graft office
  5. 'No place to hide' in Gaza, as fighting escalates
  6. EU chases 90m AstraZeneca vaccines in fresh legal battle
  7. Fidesz MEP oversees FOI appeals on disgraced Fidesz MEP
  8. Belgium outlines summer Covid relaxation plans

Join EUobserver

Support quality EU news

Join us