The Slovenia Times

New Governor to Take Over at Central Bank


Put forward by President Borut Pahor, Jazbec won overwhelming support in parliament on 2 April with 77 MPs voting in favour and seven against. With the exception of the coalition Social Democrats (SD) MPs praised his expertise and experience.

The change at the banking regulator comes as banks are preparing to start cleaning up their balance sheets to get rid of the accumulated non-performing loans.

After the many difficulties that accompanied the decision to set up the Bank Asset Management Corporation, the bad bank, the project hit a new snag as the pilot transfer of toxic assets from the NLB bank was put on hold pending approval from Brussels.

Slovenia and the European Commission disagree over what is the right price and the cost of the transfer. The Commission has demanded an independent external review of the quality of bank assets and system-wide stress tests of banks, which were to be completed by Deloitte and Oliver Wyman by the end of this week.

In the meantime, the Slovenian banking sector remains deep in the red and is blamed for the credit crunch that is preventing the real sector from breaking out of the crisis and taking the country out of recession. Slovenian banks generated a pre-tax loss of EUR 41.5m in the first four months of the year, after the loss amounted to EUR 664m last year according to preliminary data.

Kranjec had a turbulent term, in the midst of the global economic and financial turmoil. So were his predecessors' terms eventful; France Arhar (1991-2001) laid the groundwork for the birth of the national currency, the tolar, and saw the banking system through a restructuring; Mitja Gaspari (2001-2007) kept an eye on the country's monetary indicators so that it could adopt Europe's single currency.

The outgoing governor has often faced criticism and accusations that the central bank failed to perform the role expected of the regulator in the oversight of the banking system and thus shared part of the blame for its poor present state.

Kranjec rejected the accusations while assessing that Banka Slovenije managed the crisis well and that it redressed the consequences of the overheating of the economy ahead of the crisis when the central bank kept warning that the economic growth was not sustainable.

It was against this backdrop of turmoil in the Slovenian financial and banking system that Jazbec won deputies' trust mainly because of his fresh approach. As a candidate who was reluctant to make statements in the media he persuaded them with his views on the clean-up of bank balance sheets and with his support for the bad bank and for a staffing renewal at the banking system.

A monetary policy specialist, Jazbec graduated from the Ljubljana Faculty of Economics and then obtained his masters from the European University in Prague and doctorate at the Institute of Advanced Studies in Vienna.

After short stints at the World Bank and the European Bank for Reconstruction and Development, Jazbec served on the governing board of Banka Slovenije between 2003 and 2008. He is a senior adviser to the International Monetary Fund and an associate professor at the Ljubljana Faculty of Economics.

Jazbec had bid for the position of central bank governor already in 2007, but was overlooked by former President Janez Drnovšek. Two of the president's candidates - the outgoing governor Gaspari and vice governor Andrej Rant, failed to get parliament's support then, whereupon Kranjec was appointed to the post.


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