Slovenia leads rise in bank-stability risk across Europe
Slovenia’s banks are suffering from weak capital buffers and rising non-performing loans, according to Euromoney Country Risk.
Slovenia has seen the largest fall in its bank-stability score of any European country during the past two years, according to ECR’s survey contributors. The indicator (one of 15 in ECR’s constantly updated survey) has plunged 2.7 points, from 8.3 out of 10 to 5.6.
ECR’s bank-stability indicator provides a useful measure of banking strength, ranging from zero, where a systematic breakdown in the system has occurred, to 10, which is indicative of a perfectly functioning system with all possible exposures comfortably covered.
The situation in Slovenia is explained in a recent report (Is Slovenia next?) by one of ECR’s contributors, Ales Pustovrh, managing director of Bogatin Consulting, together with Marko Jaklic at the Faculty of Economics, University of Ljubljana. The authors believe that:
“Slovenia really could become the next EU country awaiting rescue from the bailout fund."
“As a direct consequence of the excessive lending in the boom years, banks are now left with a large amount of non-performing loans. Exactly how large the amount really is remains unclear but most estimates put it at €6 billion.”
Other countries experiencing the largest falls in their bank-stability perceptions among economists and other country risk experts since 2010 include Ireland, Greece and Portugal – the three countries that required a sovereign bailout.
Spain, which has recently requested a bank bailout, is unsurprisingly another.
Italy and Hungary, both of which have been subjected to intense scrutiny among risk experts in recent months (Plunging Italy now riskier than Colombia and Hungary still riskier than its CDS trend suggests), are also high on the list.
This article was originally published by Euromoney Country Risk.
ECR’s bank-stability indicator provides a useful measure of banking strength, ranging from zero, where a systematic breakdown in the system has occurred, to 10, which is indicative of a perfectly functioning system with all possible exposures comfortably covered.
The situation in Slovenia is explained in a recent report (Is Slovenia next?) by one of ECR’s contributors, Ales Pustovrh, managing director of Bogatin Consulting, together with Marko Jaklic at the Faculty of Economics, University of Ljubljana. The authors believe that:
“Slovenia really could become the next EU country awaiting rescue from the bailout fund."
“As a direct consequence of the excessive lending in the boom years, banks are now left with a large amount of non-performing loans. Exactly how large the amount really is remains unclear but most estimates put it at €6 billion.”
Other countries experiencing the largest falls in their bank-stability perceptions among economists and other country risk experts since 2010 include Ireland, Greece and Portugal – the three countries that required a sovereign bailout.
Spain, which has recently requested a bank bailout, is unsurprisingly another.
Italy and Hungary, both of which have been subjected to intense scrutiny among risk experts in recent months (Plunging Italy now riskier than Colombia and Hungary still riskier than its CDS trend suggests), are also high on the list.
This article was originally published by Euromoney Country Risk.
