Sovereign Holding Could Assume Bad Loans from Banks, FinMin Says

5. 7. 2012

Ljubljana - The sovereign holding which the government wants to set up to manage state assets could assume bad loans from state-owned banks, Finance Minister Janez Šušteršič announced after Thursday's cabinet session. He stressed that the problems at banks appeared to be manageable for Slovenia.


The announcement comes after the cabinet debated at its session the state of the country's banking sector and plans for the Slovenian Sovereign Holding, a super-custodian of state assets assuming the role of the Capital Assets Management Agency and bringing current state asset funds SOD, KAD and DSU under one roof.


Beyond this the government wants to craft a strategy giving the new holding the power to manage bad assets of Slovenian state-owned banks in a bid to clean up their balance sheets and deal with the ongoing credit crunch, Šušteršič said.


The bill on the Slovenian Sovereign Holding is expected to be debated by the cabinet next week so that parliament can pass it before the summer recess and the holding can come to life in the autumn, he announced.


Šušteršic said under the bad loan scheme red-flagged loans or those expected to sour would be transferred to the holding at fair value. This way banks would be cleansed of non-performing loans in one swoop instead of gradually getting their balance sheets in order through periodical write-downs as is the case now.


While admitting that the state will have to contribute to the mechanism initially, he said that it would be tweaked to ensure that in the mid-term banks would shoulder the bulk of the burden.


"This cabinet is under no illusion that the situation will fix itself," said Šušteršič, stressing that current data suggest that the scope of the problem was within boundaries that Slovenia can manage alone.


However, should the state be worse than it appears or should new risks arise, it cannot be excluded that Slovenia would have to turn to the European Stability Mechanism for aid in the coming years, he said.


The government was expected to review today the findings of the due diligence at state-owned NLB, the country's biggest bank, but Šušteršič announced that these were not available yet although the review was complete.


The minister reiterated that the government achieved its initial goal of stabilising the banking sector by providing fresh capital to NLB. Now it must attain its key objective - for banks to start financing business again, he added.


The recapitalisation conducted earlier in the week has ensured that NLB now meets capital adequacy demands, he said.


Admitting that the contingency scenario under which the capital injection was conducted with state funds was not what the government had planned, he said that it had no alternative after Belgium's KBC group, the second-largest owner, pulled out at the last moment.


"The main responsibility of the government is to provide for the stability of the banking system," he said in defending the use of state funds.


Slovenia now has a year to seek to secure private capital for NLB, Šušteršič added, emphasising that this would be a priority for the government in the coming months.


The minister also stressed that the government would work to see those responsible for the bad loans to be brought to account. While investments that soured due to the economic conditions will not be targeted, those that are the result of mismanagement and recklessness will.


Source: STA

More articles from this issue:
Foreign Affairs
Govt to Open New Consulates in Turkey, US and Malaysia
Ljubljana - The government decided at its session on Thursday to open four new consulates in Turkish cities Trabzon, Erzurum, Kayseri and Mersin, one in Roseville in the US state of Minnesota and one in Klang, Malaysia. The consulate in Trabzon, a Black Sea port with 230,000 inhabitants, will be ... More »
FM Highlights Contribution to Overcoming Balkan War Legacy
Dubrovnik - Foreign Minister Karl Erjavec pointed to Slovenia's efforts to help the former Yugoslav region overcome the effects of the Balkan War as he addressed the Croatia Summit 2012 regional conference in Dubrovnik on Saturday. Participating in a a debate on political and security challenges ... More »
Experts to Tackle LB Savers Issue
Dubrovnik - The foreign ministers of Slovenia and Croatia, Karl Erjavec and Vesna Pusić, agreed that the countries would appoint experts to come up with solutions to the savings deposits of Croatian savers in the defunct LB bank. Under the agreement the ministers reached in Dubrovnik on Saturday... More »
Defence & NATO
Slovenia to Contribute Half a Million Dollars for Afghan Security Forces
Ljubljana - Slovenia will contribute half a million dollars to Afghan security forces after NATO combat operations there are scheduled to end in 2014, Prime Minister Janez Janša said after a meeting with NATO Secretary General Anders Fogh Rasmussen. Slovenia is willing to help Afghan security fo... More »
Economy & Finance
Finance Ministry Denies Slovenia Headed Towards Bailout
Ljubljana - The Finance Ministry rejected suggestions Tuesday that Slovenia may become the next eurozone country to ask for a bailout. "There is no need to ask for aid from European financial mechanisms, either due to bank capital adequacy or due to fiscal reasons," the ministry said. T... More »
Govt Introduces New Tool to Combat Late Payments
Ljubljana - The government adopted late on Thursday a bill intended to tackle the problem of late payment in Slovenia. The document is to introduce an enforcement draft, a document with which debtors will obligate themselves to repay a certain amount of money. The enforcement draft, issued by the... More »
Sovereign Holding Could Assume Bad Loans from Banks, FinMin Says
Ljubljana - The sovereign holding which the government wants to set up to manage state assets could assume bad loans from state-owned banks, Finance Minister Janez Šušteršič announced after Thursday's cabinet session. He stressed that the problems at banks appeared to be manageable for Slovenia.... More »
EU Sources: Slovenia is Nowhere Near Requiring Aid
Brussels - Slovenia is "nowhere near" the necessity for applying for financial aid, EU sources in Brussels told the STA on Friday. Mounting speculations that Slovenia was next in line to ask for an EU bailout were due to "unclear communications", the sources said. "Examin... More »
Eurogroup Boss Confident Slovenia Up to the Task
Brussels - Jean-Claude Juncker, the head of the Eurogroup and Luxembourg's prime minister, expressed confidence that Slovenia was capable of "making the steps necessary to address the challenges it is facing" after the Eurogroup on Thursday took note that the Slovenian government had no in... More »
Hidria Boss Named Best Exec in SE and Central Europe
Sarajevo - The boss of Idrija-based climate and automotive equipment maker Hidria, Iztok Seljak, has been named best manager in south-east and central Europe by the Independent talent agency in cooperation with the European Management Association and the Euromanagers magazine. The international j... More »
Minister Says Ruling of EU Court over Erased Must Be Respected
Ljubljana - Justice and Public Administration Minister Senko Pličanič told the press on Tuesday that all decisions by the judiciary must be adhered to, pointing to the ruling of the European Court of Human Rights regarding compensation that Slovenia will need to pay to people erased from the perma... More »
Govt Adopts Streamlining Measures in Public Administration
Ljubljana - The government adopted Thursday changes to the general administrative procedure act introducing the option to have documents authenticated at administrative units. It tasked postal operator Pošta Slovenije with providing IT services for the state. Justice and Public Administration Mi... More »
Slovenians Living Abroad Get Together in Ljubljana
Ljubljana - Slovenians living outside the country gathered in Ljubljana on Wednesday for an event dubbed "Welcome Home", where they were addressed by Minister for Slovenians Abroad Ljudmila Novak and Ljubljana Mayor Zoran Janković. Novak stressed that she wished they would feel at home... More »
Culture & Media
Idrija's UNESCO Listing to Open Many Opportunities, Mayor Says
Idrija - The listing of Idrija's mercury mine as a UNESCO World Heritage Site will bring development to the town and open many opportunities, Idrija Mayor Bojan Sever told a press conference in Idrija on Wednesday. The sites from the UNESCO list are annually visited by some 0.6% of all tourists, he ... More »
Kopitar Brings Stanley Cup Home
Jesenice - One of the most prestigious sports trophies in the world, the Stanley Cup, came to Slovenia on Friday as LA Kings member Anže Kopitar brought the trophy to his hometown of Hrušica to show to thousands of fans. Like every member of Stanley Cup winners LA Kings, Kopitar had the honour ... More »
Award Winning Producer Filming Documentary about Slovenia
Ptuj - Award winning US producer of travel shows Ashley Colburn will be staying in Slovenia over the summer to shoot a documentary series dubbed "Wonders of Slovenia". She is currently staying in Ptuj to film footage for the first episode which will focus on the NE part of the country. ... More »
Schedule of Events in the week for 9-15 July
MONDAY, 9 July
  • LJUBLJANA - Italian President Giorgio Napolitano will arrive for a three-day state visit. Talks with President Danilo Türk, Prime Minister Janez Janša and Parliament Speaker Gregor Virant are scheduled.
  • BRUSSELS, Belgium - The start of a two-day ses... More »
2009 1  2  3  4  5  6  7  8  9  10  11  12 
2010 1  2  3  4  5  6  7  8  9  10  11  12 
2011 1  2  3  4  5  6  7  8  9  10  11  12 
2012 1  2  3  4  5  6  7  8  9  10  11  12 
2013 1  2  3  4  5  6  7  8  9  10  11  12 
2014 1  2  3  4  5  6  7  8  9  10  11  12