The European Commission will conduct an inspection of ten Slovenian banks, including the largest ones that are state-owned, to review the quality of their assets, the Slovenian central bank announced on Monday, adding that this fulfills a recommendation from the European Council made in June of this year.
Alongside representatives from the Slovenian central bank and the Ministry of Finance, observers from the European Commission, the European Central Bank (ECB), and the European Banking Authority (EBA) will be part of the committee monitoring the inspection of the banks’ status.
According to the Slovenian central bank, stress tests and asset quality reviews will be conducted on Nova Ljubljanska Banka (NLB), Nova Kreditna Banka Maribor (NKBM), and Abanka Vipa, as well as seven other banks: Banka Celje, Gorenjska Banka, Probanka, Factor Banka, Unicredit Bank Slovenia, Hypo Alpe Adria Bank, and Raiffeisen Bank, as per EU recommendations.
Oliver Wyman has been appointed to conduct the stress tests, while Deloitte and Ernst & Young will carry out the asset quality reviews in the banks. An independent assessment of the real estate held by the banks will also be conducted, and all results of the banks’ status review are expected to be known by the end of the year.
According to Slovenian media reports, the stress tests in the banks and the review of their asset quality should indicate how much additional capital they would need under various scenarios of financial market developments until 2015 and how burdened they are with bad loans.
Media reports indicate that this is related to the European Commission’s demand for an independent audit to be conducted in state-owned banks before their bad loans are transferred to a so-called bad bank, which will be recapitalized with government-guaranteed bonds.
