The Slovenia Times

Stress Test Methodology to Be Applied in Other Eurozone Tests


The contractor for the stress tests in Slovenia, Oliver Wyman, will also oversee the tests in the eurozone, Jazbec announced, adding that the goal of Slovenia's central bank in carrying out the stress tests was obtaining credible data.

"In the past a frequent question was whether the data we were presenting to the public was correct," said the governor, explaining that this is why foreign experts were called in to use internationally-accepted methods to gauge the state of Slovenian banks.

"There should be no doubt about these results," Jazbec said as he turned down speculation about the qualification of people working on the project.

Key points of stress tests at Slovenian banks:

- Bottom up stress tests to determine capital deficit/surplus at individual banks, top down to check results of bottom up tests

- Carried out by Oliver Wyman (bottom up) and Roland Berger Strategy Consultants (top down) for a three-year period

- Baseline and adverse scenarios applied: macroeconomic scenarios based on the European Commission's spring forecast, revised based on economic figures for the first quarter of 2013

- Baseline scenario envisages economic contraction of 2.7% this year, 1.5% in 2014 and growth of 0.1% in 2015; adverse scenario based on three years of severe economic recession in Slovenia (-3.1% in 2013, -3.8% in 2014 and -2.9% in 2015)

- Capital shortfall calculations based on Core Tier 1 capital requirements of 9% for baseline and 6% for adverse scenarios

- Claims whose repayments are being made more than 90 days in arrears are defined as non-performing in line with European Banking Authority (EBA) definition


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