Macroprudential restrictions on consumer lending
Pursuant to the first paragraph of Article 31 of the Bank of Slovenia Act (Official Gazette of the Republic of Slovenia, Nos. 72/06 [official consolidated version], 59/11, 55/17 and 5/18), and Articles 4, 17 and 19 of the Macroprudential Supervision of the Financial System Act (Official Gazette of the Republic of Slovenia, Nos. 100/13 and 42/23), the Governing Board of Banka Slovenije has adopted the Regulation on macroprudential restrictions on consumer lending (Official Gazette of the Republic of Slovenia, No. 63/23) and the Regulation laying down the minimum creditworthiness amount for consumers (Official Gazette of the Republic of Slovenia, No. 63/23). The two regulations enter into force on 1 July 2023.
The Regulation on macroprudential restrictions on consumer lending adjusts the macroprudential restrictions introduced by two earlier regulations, namely the Regulation on macroprudential restrictions on household lending (Official Gazette of the Republic of Slovenia, Nos. 64/19 and 75/20) and the Regulation on macroprudential restrictions on consumer lending (Official Gazette of the Republic of Slovenia, No. 60/22). The new regulation applies to banks, savings banks, branches of Member State banks and branches of third-country banks in Slovenia (subsequently referred to simply as “banks”). The aim of the measure is to mitigate and prevent excessive credit growth and excessive leverage.
The Regulation laying down the minimum creditworthiness amount for consumers sets out the minimum amount of income that consumers must be left with each month after paying all instalments under credit agreements.
Principal changes
The principal changes brought by the new regulation are:
- A change in the minimum creditworthiness amount for consumers
The new lower limit on creditworthiness will now be based on the minimum cost of living (plus an amount for family dependants), which is adjusted as necessary for the general level of inflation and other factors.
Banka Slovenije reviews the minimum creditworthiness amount for consumers at least once a year, publishes it online, and also publishes any change in the amount in the Official Gazette of the Republic of Slovenia. In the event of a change in the minimum creditworthiness amount, Banka Slovenije also publishes an explanation of its calculation online.
The minimum creditworthiness amount will be EUR 745 as of 1 July 2023.
In determining the minimum creditworthiness amount Banka Slovenije took account of the calculation of the minimum cost of living by the Institute for Economic Research in the amount of EUR 669.8 from November 2022, which it adjusted for the inflation forecasts for 2023 and 2024.
Pursuant with the Regulation on macroprudential restrictions on consumer lending, the Bank of Slovenia reviewed the minimum amount of consumer creditworthiness at the end of December 2024 and concluded that this amount does not need to be adjusted. The minimum amount of consumer creditworthiness for 2025 remains at EUR 745.
- The introduction of a standardised cap on debt-servicing-to-income ratio (DSTI), irrespective of the level of income
When a new credit agreement is concluded, the DSTI may not exceed 50%. Irrespective of their level of income, the consumer must be left with the minimum creditworthiness amount each month after paying all instalments under credit agreements. A consumer who maintains a family dependant or another person whose maintenance is required by law must also be left with the amount of income stipulated for the maintenance of the aforementioned person, according to the criteria set out by the law governing social security benefits for the award of cash social assistance.
- Changes to the calculation of annual income
Child benefits and certain other social security benefits, which previously had been excluded, can also be included by banks in the calculation of the consumer’s annual income.
When the amount of a credit agreement for consumer purposes does not exceed EUR 5,000, the consumer’s income may be calculated by annualising the last three monthly employment income or pension income amounts.
- Reduction in allowable deviations from the cap on DSTI
The cap on DSTI may be exceeded by no more than 3% of new credit agreements for residential real estate, and no more than 3% of credit agreements for consumer purposes. Credit agreements for consumer purposes that exceed the cap on DSTI must comply with the cap on maturity for consumer credit.
The macroprudential restrictions on household lending in force until 30 June 2023 can be found on this link.
FAQs in connection with macroprudential restrictions can be found on this link.