A move to make the European Central Bank chief supervisor of euro-area lenders, paving the way for direct bailouts from the currency bloc’s firewall fund, may come too late to help Slovenia, Prime Minister Janez Jansa said.
Jansa is pushing an economic overhaul, including the recapitalization of the country’s biggest banks, that’s in doubt because of a trade union’s referendum call. European Union Finance Ministers are concerned that the political stalemate will block the bailout plan, Finance Minister Janez Sustersic said on Dec. 7.
The new supervisor should be ready by March 1, 2014, with about 200 banks automatically qualifying for direct ECB oversight. In the interim, the 500 billion-euro ($654 billion) European Stability Mechanism could aid banks directly using its own procedures and asking ECB supervisors to step in, EU finance chiefs agreed in Brussels earlier today.
“This supervision is good news if we consider the situation at Slovenian banks, even though it will take some time to become operational,” Jansa told reporters in the Belgian capital today. “ I hope we will soon see an unblocking of the legislation to recapitalize Slovenian banks. If not, the time that will take for this EU mechanism to become operational could be fatal for Slovenia.”
Referendums threaten key legislation in Slovenia, including the bank recapitalization plan and the creation of a wealth fund. Mired in its second slump in three years, the country is struggling to avoid an international bailout amid government austerity measures to overhaul the economy.
Jansa also faces a referendum on the budget for the next two years. The administration has asked the Constitutional Court to address the legality of the vote.