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Slovenia „No Problem for Austrian Banks“

Published: September 5, 2012; 17:52 · (Vindobona)

Although Austria is the biggest investor in Slovenia, the Austrian banking industry does not fear a national bankruptcy.

Slovenia „No Problem for Austrian Banks“ / Picture: ©

According to estimations, the restructuring of the financially stricken banking sector may cost up to € 5.0bn. In total, the Slovenian banking sector holds NPL of € 8.0bn. Slovenia´s main problem is that the banking industry is mainly nationalized. At the end of 2011, 18% of the business loans are non-performing. In the construction industry, the share of NPL is about 50%. Nevertheless, according to Bank Austria, Erste Group and RBI, the Slovenian crisis would be no real problem.

With an investment volume of € 5.7bn, Austria is the biggest investor in Slovenia. “In the worst case, Austria is clearly highly affected. Austria´s banking industry has the biggest exposure in Slovenia.” William Jackson at Capital Economics told APA. However, Slovenia´s GDP only comes at € 35bn. A bail-out of € 5bn would be no problem for the EU and the IMF, he said. Thus, the danger for Austrian banks in Slovenia is rather limited, he explains

At the moment, the yield on 10-year sovereign bonds is above 7%. According to Jansa, taking up loans at these conditions is “almost impossible”. Since 2008, Slovenia´s public debt quota almost doubled to 48% of GDP.

Only this year, Ljubljana Stock Exchange lost about 30%. Already 2009, the Vienna Stock Exchange´s stake in Ljubljana Stock Exchange had to be devalued. For VSE´s CEO Michael Buhl, a further devaluation is not excluded this year. Prime Minister Janez Jansa considered initiating privatizions, which could help the regional stock exchange. However, the time for privatizations is rather bad, Buhl admitted.

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