According to estimates by Fitch, Slovenian banking system needs 2.8 billion euros for the recovery which is more than double of initial estimate made by the Slovenian Government.
In the beginning of September , the Bank of Slovenia has decided to liquidate two slovenian banks, Probanka and FACTOR BANK, after establishing an inadequate level of capital adequacy.The Governor of the Bank of Slovenia has explained that the liquidation of these banks was necessary in order to prevent further collapse of the banking sector.
The Governor of the Bank of Slovenia Bostjan Jazbec has reported to Slovenian government that Probanka and Factor bank are not to save but to close.
“As you know, for bad bank financing is planned to issue a bond in the amount of 4 billion euros.That money will have to give taxpayers and we are likely to borrow money from abroad“, said Jazbec.He explained that the rehabilitation of the banking sector would cost around 15 billion euros.“ Such amount would pay taxpayers if the collapse of the banking sector occured“, warned Jazbec.
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He added that for the part of the cost ,owners would be responsible.“ Regardles of the process(bankruptcy or liquidation), tjhe costs will be borne by the owners and holders of subordinated financial instruments.The first ones will lose 122 million euros and the second ones 64 million euros“, said the Governor of the Bank of Slovenia.
He warned about the risk for financial stability of Slovenia, in the case of bankruptcy of the banks.There is 631 million in deposits in both of the banks, from which 400 million euros role is under one hundred thousands guaranteed by the state, and that amount shoul be payed by the other banks in Slovenia.
“ Banks do not have that kind of money, and in any case it would have to be ensured by the state“, the governor said.Besides, slovenian banks guarantee severally for deposits in other banks.Since banks do not have money, the country would do the payment, then the state would claim the money from the bank.
