The Slovenia Times

Central bank urged to reconsider lending restrictions


The appeal came at a session on Wednesday called by all five coalition parties after the central bank curtailed lending to consumers with the argument that consumer loans would pose a risk to the banking system if left unchecked.

In resolutions adopted at the session, the committee said the restrictions would have a negative impact on spending and reduce the financial strength of those with the lowest incomes.

The central bank was urged to reassess the systemic risks potentially stemming from consumers seeking to secure loans outside banking channels or even on the grey market.

After issuing a set of precautionary recommendations last November to curb imprudent consumer lending practices, Banka Slovenije moved from recommendations to formal restrictions on 1 November while also further stiffening conditions.

The restrictions include a maximum 84-month maturity for consumer loans, down from 120 months recommended last year, and, most notably, curbs on housing loans.

Banks will for the most part have to keep loan-to-value ratios (loan payments relative to the client's annual income) to below 50% for clients with monthly income of up to twice the gross minimum wage and below 67% for those making more than that.

Coalition MPs accused the central bankers of being heavy-handed, but central bank governor Boštjan Vasle dismissed the allegation and indicated the measure would remain in place because the risks are substantial.

"Banka Slovenije had to intervene to safeguard financial stability," he said.

He also hit back at Prime Minister Marjan Šarec's sharp criticism of the move, saying that he had tried several times to meet Šarec in advance of the decision but "the prime minister was always busy".


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