Cyprus: Slovenia could be then next to follow suit

After a decade of government corruption and toxic debts

25 March, 15:22

(ANSAmed) - LJUBLJANA, MARCH 25 - Slovenia could be next in line for eurozone bailout, according to a recent banking report by the national anti-corruption commission. ''Over the past decade, the top Slovenian banks have extended enormous sums of now-toxic credit, amounting to one fifth of national GDP, with decisions based on political and personal relationships in an atmosphere of structural political corruption,'' the report alleges. Slovenian banks, most of which are state-owned, have reportedly run up 7 billion euros in toxic debt, equal to 20% of their total loan portfolios, with major ratings agencies downgrading Nova Ljubljanska Banka (NLB) and Nova Kreditna Banka Maribor (NKBM) in past months.

The newly elected center-left government, which took office last week, will have to decide whether or not to set up a bad bank to take on the toxic debt, recapitalize the detoxed banks, and then sell them off to the private sector. Slovenian banks in 2012 posted overall losses of 606 million euros, or 67 million euros more than in 2011. According to former Finance Minister Janez Sustercic, the country will probably ''be forced to apply for international aid unless the bank restructuring plan goes through.'' (ANSAmed).

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