Slovenian Central Bank Urges Next Government to Support Banks

Slovenia’s central bank called on Premier-designate Alenka Bratusek to form a government that will continue with plans to recapitalize banks and pull the economy out of its second recession since 2009.

Bratusek should continue with fiscal and financial stabilization as the central bank will “strongly support expert solutions to rebuild the banking system,” the Banka Slovenije said in an e-mailed statement today.

“The new government should accelerate measures to boost the economy, including the restructuring of companies and lower their financial leverage,” the bank said in the statement.

Slovenia, which adopted the euro six years ago, is mired in a deepening banking crisis and a recession as Bratusek seeks to forge a new coalition that would replace the minority Cabinet of Janez Jansa, who was ousted in a vote in parliament Feb. 27. Nova Ljubljanska Banka d.d., the biggest lender, reported a 2012 loss of 275 million euros ($358 million) on surging bad-loan reserves. It was its fourth consecutive annual loss.

Gross domestic product in the Adriatic nation shrank 3 percent in the fourth quarter of 2012 from a year earlier after a 3.3 percent contraction in the previous three-month period. GDP fell 2.3 percent last year.

The latest available data “point to a strong decline in economic activity this year,” the central bank said today.

Bratusek has until mid-March to form a new government and have it approved by parliament, or early elections will be held.

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