The Ljubljana SBI Top Index: a barometer of depression.
acting-man.com / By Pater Tenebrarum / June 19, 2013
Bank Recap Slightly Delayed
We have previously made a few remarks on Slovenia’s astonishing three-card Monte, whereby the toxic assets of its banks (some 30% of their assets are reportedly non-performing) are to be transferred into a ‘bad bank’ owned by the government.
What makes this so astonishing is that the banks also belong largely to the government, so the government is transferring bad loans from itself to itself. One wonders how exactly that is supposed to alter the situation. Moreover, the question ‘where is the money to recapitalize the banks going to come from?’ sort of suggests itself. The idea is apparently to sell the banks once they have been cleaned up. In principle not a bad plan.
However, it turns out now that the plan is hitting a few snags, one of which is that the ‘government may have underestimated the problems‘.
“Slovenia’s ring-fencing of billions of euros of bad debt racked up by state-owned banks may be delayed by an audit expected to show the country has underestimated its economic problems.
Transfers of the debt to a ‘bad bank’ – called The Company for Management of Bank Claims – are due to start this month, and the entity has scheduled its first news conference for Tuesday. But the audit ordered by the European Commission to uncover the extent of the non-performing loan problem is expected to delay the start of the cleanup until July.
The government aims to absorb 3.3 billion euros of loans that turned sour after a real estate bubble burst, putting Slovenia at risk of becoming the euro zone’s euro zone’s next bailout recipient.