Slovenian banks recorded a total loss of 606 million euros in 2012, according to the first estimate from the Bank of Slovenia, revealed on Thursday by the governor of the Bank of Slovenia, Marko Kranjec, speaking at a banking and finance forum in Ljubljana.
The estimated loss is greater than in 2011, when it amounted to 539 million euros. Last year marked the third consecutive year in which the Slovenian banking system recorded an overall negative result due to high write-offs and provisions for bad loans, while from 2005 to 2011, it averaged a profit of 140 million euros.
Kranjec warned the government at the forum that it is not only important to rehabilitate banks with bad loans but also to focus on rescuing a large number of over-indebted companies, as these two issues are ‘part of the same story’.
– It is not enough to restore the sources from which banks were financed before the crisis; restructuring the real sector is also necessary, and that is the task of the owners and the government – said Kranjec.
If the banks’ loan portfolio is not cleaned up in the next few years, owners will again be called upon to recapitalize them, warns the governor of the Bank of Slovenia to the government.
Kranjec also stated in an interview with the professional journal Banka Vestnik on Tuesday that it is difficult to assess which model of assistance to banks would be cheaper for the state, the establishment of a ‘bad bank’ or new recapitalization of Nova Ljubljanska Banka (NLB) and the other two banks in majority state ownership. Kranjec asserted that he would personally advocate for the state to recapitalize the banks and then sell them.
Kranjec’s term as governor ends in the middle of the year, and he has already indicated that he will not run for a new term as he meets the conditions for retirement.
