Press release-On the basis of opinions and information provided by the Bank of Slovenia, the government approved decisions on the further implementation of measures to strengthen bank stability -19 March 2014
On the basis of opinions and information provided by the Bank of Slovenia, the government approved decisions on the further implementation of measures to strengthen bank stability.
Ljubljana, 19 March 2014 - The government took note on the Bank of Slovenia’s information on the situation in the Slovenian banking system, and the Bank of Slovenia’s information on the progress of the current strengthening of capital adequacy at five banks. On the basis of the Bank of Slovenia’s opinion, the government today took the decision that Banka Celje is ready to embark on the procedure for implementing measures on the basis of the Act Determining the Measures of the Republic of Slovenia to Strengthen Bank Stability (ZUKSB).
On the basis of activities undertaken at five banks (Banka Celje, Gorenjska banka, UniCredit Banka Slovenije, Raiffeisen bank and Hypo-Alpe-Adria Bank) to cover the capital deficit derived from the adverse scenario of the stress tests, the Bank of Slovenia has established that all the banks carried out the required activities to eliminate or reduce the projected capital deficit. Despite the activities carried out, Banka Celje was unsuccessful in its search for potential investors.
The government thus resolved to continue procedures under the ZUKSB unless Banka Celje undergoes a timely capital increase by private investors.Despite its efforts in the aforementioned period, Banka Celje failed to adequately strengthen its capital position, for which reason the Bank of Slovenia required the bank to carry out a capital increase. Should a capital increase not be carried out by private investors, the government will follow through on its commitment made in December 2013 to carry out a capital increase at the bank and to transfer risk-bearing items to the BAMC, which would entail the initiation of procedures to obtain state aid.
Despite a significant reduction in the projected capital deficit and the current high capital adequacy, the expectation at Gorenjska banka is for the potential realisation of additional credit risk losses in 2014. The Bank of Slovenia will consequently extend the deadline for the final implementation of measures to strengthen the capital position to 31 December 2014.In light of the aforementioned information on the progress of the current strengthening of capital adequacy at the five banks, the government decided to extend its commitment to carry out a capital increase at Gorenjska banka to 31 December 2014.
In conjunction with the Ministry of Finance, and under the aegis of observers from the European Commission, the ECB and the EBA, last year the Bank of Slovenia coordinated and supervised a comprehensive review of a representative part of the banking system. One prerequisite of the aforementioned comprehensive review was the implementation of measures to strengthen bank stability (i.e. the transfer of non-performing claims to the BAMC and a parallel capital increase). The results of the review, which was conducted by experienced international consultants and real estate appraisers, were released on 12 December 2013.
The results of the comprehensive review of the banking system provided the basis for assessing the requisite capital increase and for implementing measures to strengthen the capital position of the banks. The banks were divided into several groups in terms of the approach to covering the capital deficit. While measures to strengthen bank stability (a capital increase after prior suspension of all qualified liabilities and, in the cases of NLB and NKBM, the transfer of claims to the BAMC) were carried out at five banks (NLB, NKBM, Abanka, Probanka and Factor banka) immediately after a positive opinion was received from the European Commission, the other five banks included in the comprehensive review were requested by the Bank of Slovenia to draw up a detailed action plan for the elimination of the capital deficit, and to eliminate the capital deficit by 30 June 2014. At the same time the government also undertook to provide the appropriate capital backstops should the banks fail to cover the capital deficit by June.
Given the activities carried out and the capital adequacy situation at the end of 2013, the government’s capital increase commitment is no longer necessary in the cases of Raiffeisen bank and Hypo-Alpe-Adria Bank.
In light of the aforementioned information from the Bank of Slovenia, the government also resolved to support measures aimed at further consolidation in the banking sector.
PUBLIC RELATIONS DEPARTMENT
BANK OF SLOVENIA
MINISTRY OF FINANCE