Slovenia’s New Cabinet Under Pressure to Avoid Cyprus Fate
Source: San Francisco Chronicle / Bloomberg
March 26 (Bloomberg) -- Slovenias six-day-old government is being urged to prevent the nation becoming the euro regions next bailout battleground.
Prime Minister Alenka Bratuseks Cabinet must quickly carry out a plan to revamp the countrys ailing lenders, the central bank said yesterday. The former Yugoslav nation needs about 3 billion euros ($3.9 billion) of funding this year, while banks need 1 billion euros of fresh capital, the International Monetary Fund said last week.
European Union officials are striving to contain a debt crisis that prompted Cyprus to join Greece, Portugal, Ireland and Spain in agreeing on a bailout. Slovenian banks such as Nova Ljubljanska Banka d.d. are struggling with surging bad loans that equal a fifth of economic output, fueling investor concern that it may be next to seek aid.
If the government starts implementing the plan, in the end they can avoid going to the EU for a bailout, Lutz Roehmeyer, a fund manager at Landesbank Berlin Investment, who oversees 10 billion euros in assets including Slovenian government and corporate bonds, said yesterday by phone. If they dont move and do nothing, I think well have the next crisis in Slovenia in a few months.
Read more: http://www.sfgate.com/business/bloomberg/article/Slovenia-s-New-Cabinet-Under-Pressure-to-Avoid-4385599.php
msongs
(67,456 posts)dipsydoodle
(42,239 posts)During most of the 2000s, it outperformed the eurozone on growth. But it had a correspondingly large amount of debt.
Unlike many countries, which overdosed on housing debt, Slovenia had a problem with corporations financing operations through high levels of debt. An EU review found that in 2007 alone, private-sector debt grew by 23.5 percent and nonfinancial private sector debt grew more than 40 percent.
A lot of that debt went bad when the financial crisis hit in 2008. Slovenias economy took a sharp dive during the initial downturn taking a bigger hit than the eurozone as a whole and has underperformed relative to its monetary union partners during the recovery.
An International Monetary Fund report filed last week blamed a negative loop between financial distress, fiscal consolidation and weak corporate balance sheets for the countrys woes. Because corporations took out such large quantities of debt and are having trouble repaying it, banks are suffering too. For example, the IMF report notes that at Slovenias three biggest banks, the share of loans that are nonperforming that is, in default or near default grew from 15.6 percent in 2011 to 20.5 percent in 2012. Nearly a third of those loans went to private companies.
http://www.japantimes.co.jp/news/2013/03/27/business/slovenia-next-in-line-to-face-debt-woe/#.UVKzvTflq3M
Iceland was plain and simply fraud and their government has nationalised those banks. Please provide links to demonstrate the same acts of fraud in Slovenia given you have drawn the comparison.