Ten more Slovenian banks subject to state bank stress tests

By IVCPOST Staff Reporter

Aug 19, 2013 11:14 AM EDT

The Slovenian Central Bank announced that it would expand its external stress tests to cover ten more lenders. The European Commission earlier requested a stress test on the country's banks. In a statement, the Central Bank of Slovenia explained that the test "aims to assess the potential capital needs... for a three-year projection period (2013-2015)."

Initially, officials from the Finance Ministry indicated that only the three biggest banks would need to participate in the stress tests.These are state-controlled Nova Ljubljanska Banka, Nova KBM and Abanka Vipa. In its latest announcement, however, the central bank said that the tests would also include local branches of Italy's Unicredit Bank, Austria's Hypo Alpe Adria Banka and Raiffeisen Bank, and several smaller local lenders.

Slovenian banks are burdened with non-performing loans worth EUR 7.5 billion or USD 10 billion. This corresponds to an estimated 21.5% of Slovenia's gross domestic product. Unless Slovenia will be able to clean up these bad loans, it will be forced to seek an international bailout like other members of the euro zone. Results of the tests for the additional banks will be released by the end of 2013.

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