Slovenia must privatise banks to avoid bailout, says EU

By bne IntelliNews April 19, 2013

bne -

Slovenia must immediately take action to restructure and privatise its banks and shore up public finances if it wants to avoid becoming the next Eurozone country to require a bailout, EU Economic and Monetary Affairs Commissioner Olli Rehn said on April 18.

Slovenia is back in recession, with a banking system that is coming apart under the burden of bad loans worth about €7bn, or 20% of GDP. The majority of those NPLs are on the balance sheets of state-controlled banks. The mess has also provoked a political crisis, as politicians squabble over the reforms necessary to put the country's finances in order.

"Slovenia is facing serious challenges but its situation is certainly manageable on the condition that it takes decisive action immediately, in the coming weeks, as the new government is committed to do," Rehn told Reuters in an interview. "This means restructuring and recapitalising the banking sector and it means also a certain degree of privatisation of state-owned enterprises ... restoring the health of public finances, and undertaking structural reforms to boost growth and employment."

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