The Slovenia Times

Banks pledge to support development but decry consumer loan curbs

Economy

Ljubljana - Slovenian banks are stable and in good shape, banking representatives said at Wednesday's press conference organised by the Bank Association. With liquidity at record levels, the banks are fully prepared to continue to support development, but urged lifting restrictions on consumer lending imposed in 2019.

Bla┼ż Brodnjak, the Bank Association's supervisory board chairman and the chairman of the NLB bank, said that bankers played a central role in managing the situation during the Covid crisis and are co-responsible for the current good economic situation in Slovenia.

The director of the Bank Association, Stanislava Zadravec Caprirolo, said that despite the challenges brought on by low interest rates and pressures on bank profitability, bankers were dedicated to supporting the economy and the people, aided by high liquidity and capital strength.

However, the state must ensure that the banking system is able to do so and level the playing field with other countries in the EU, she added.

The Bank Association has long been bothered by the central bank's macro-prudential measure from 2019, which introduced crediting conditions for households and heavy restrictions on consumer loans.

The measure is illogical, according to Zadravec Caprirolo - she believes that Slovenian households are among the least indebted in Europe and could support consumption and thus the economy.

Brodnjak was even harsher, as he believes that these measures demonstrate an elementary misunderstanding of the Slovenian way of life, and that no institution should have the right to interfere with people's financial independence in this way.

Banks are willing to agree to a limit on the maturity of consumer loans, but they do not agree with the borrower having to be left with at least 76% of the gross minimum wage after paying a monthly instalment. This is a limitation of the population's financial capacity, said Brodnjak.

The banks also consider these measures to be discriminatory, as they are restricted in their activities while other companies can take on the role of financial intermediaries without supervision, lending money to people at higher interest rates and pushing them into high risks.

According to Brodnjak, bankers only expect business conditions which are comparable to the rest of the EU or the euro area. In the absence of dialogue with Slovenia's central bank, they will be forced to turn to European institutions if this situation continues, he said.

Meanwhile, Gorenjska Banka chairman Mario Henjak noted at today's press conference that exports and investments were a key element of success for Slovenia's economy, adding that such positive trends should be encouraged in the future as well.

Henjak, Brodnjak and Sparkasse Bank CEO Stefan Vavti also touched on the issue of consolidation in the banking system. According to Henjak, it is important to understand the benefits of consolidation, such as economies of scale and lower costs.

Both Brodnjak and Vavti believe that regulation in the banking system is excessive. Vavti wondered how much added value came from it being that it increased rigidity and unresponsiveness compared to competitors that are not so heavily regulated.

All three bankers also expressed their confidence in Slovenia's future economic development and the banking system, which they believe to be in excellent shape and should continue to operate in a healthy and stable manner this year, they concluded.

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