Banks fear credit squeeze
Slovenian banks are sounding the alarm and urging the central bank to ease lending conditions after a significant increase in the minimum wage and new capital requirements have rendered much of the population ineligible for a mortgage.
The central bank imposed relatively high capital demands for home mortgages at the start of 2023, whereas the increase in the minimum wage, by €100 net to €878 net, means that the amount of credit households are eligible for has contracted substantially.
An individual must have 76% of gross minimum wage left after paying their loans. This amount has gone from €816 to €915 after the minimum wage was increased at the start of the month. For every child, lenders must have an additional €249 left over after loan payments.
As a result, only individuals with above-average pay are creditworthy, Stanislava Zadravec Caprirolo, the chair of the Slovenian Bank Association, told parliament on 17 January.
"An individual with average pay and one child is not eligible for a loan ... No other country has that," Blaž Brodnjak, the CEO of Slovenia's largest bank, NLB, added.
Zadravec Caprirolo noted that people are forced to rent "hovels" for €800 a month but are not eligible for a loan that would allow them to live in a bigger apartment while paying a monthly instalment of €500.
Bank representatives also pointed out that the situation on capital markets was becoming more demanding. The EU's minimum requirement for own funds and eligible liabilities (MREL), which the banks can only meet by issuing bonds on international markets, is making capital needed for the crediting of businesses even harder to access.
"Banks have excess liquidity, we have EUR 10 billion in liquid reserves, but cannot use them for loans because of MREL and capital requirements," Brodnjak said.
The requirement to issue bonds in the international market leads to repeated dependence of banks on international markets, Brodnjak believes. "This is economic colonisation."
Primož Dolenc, a vice governor of the Bank of Slovenia, said that the central bank imposed only measures appropriate for Slovenia and that they were similar to those in similar countries.
But he indicated the rules might change saying that if need be, the central bank could opt to suspend the restrictions practically overnight.