LJUBLJANA: Slovenian banks have not seen major deposit withdrawals in recent days, ECB policymaker Marko Kranjec said on Friday, after Cyprus's bailout raised concerns about other vulnerable euro zone banking sectors.
Kranjec also said he expected Slovenia's new government to give clear signals that it is determined to stabilise the economy which would bring down national borrowing costs.
Slovenian banks are sitting on some 7 billion euros ($9 billion) of bad loans, equal to 20 percent of annual economic output, prompting speculation that the country may be the next in the euro zone to need an international bailout.
As Slovenia's central bank governor, Kranjec also sits on the European Central Bank's Governing Council. "Our policy makers have to give clear signals that they are serious regarding stabilisation and if that will be done the markets' confidence will raise immediately," Kranjec said on the sidelines of a banking conference.
"I'm an optimist, I expect that will be done," he added. Asked whether Slovenian banks had detected any significant movements of money over the past days, Kranjec said: "No significant ones. "We cannot talk of any significant money moves. I am not worried at this moment," he said.
The new centre-left government of Prime Minister Alenka Bratusek, who took over on March 20, plans to cut the public sector wage bill and set up a 'bad bank' by September to take over the bad loans of state banks, enabling their privatisation.
The head of the Slovenian Banking Association, France Arhar, told Reuters at the same conference that the handling of the Cyprus bailout, which imposed a levy on large bank deposits after proposals to tax small depositors sparked uproar, was "completely wrong". Arhar said Slovenia could still avoid a bailout.
The yield investors demand to hold the Slovenian benchmark bond which expires in 2021 reached 6.25 percent on Friday versus 6.06 percent a week ago, Reuters data showed.
Comments
Comments are closed.