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Bankers Agree Bad Bank and Selling State Firms Needed

Ljubljana, 03 April (STA) - The salvaging of the Slovenian banking system is necessary and the planned $bad bank$ solution should be implemented as soon as possible, was a view shared by the speakers at Tuesday's panel on the state and prospects of Slovenia's banking system, most of whom added that some state-owned companies would need to be sold.

GEA College of Entrepreneurship boss and former banker Draško Veselinovič said that Slovenia had failed to sell in the good times and would now probably be forced to sell in the most unfavourable times at low price, which he labelled the worst possible scenario.

"When assuming office, every minister had the idea of selling one bank, which did not happen," was critical Veselinovič, who was briefly at the helm of the country's largest and state-owned bank NLB.

However, he added it would be hard to bring in foreign capital after fighting it off for 20 years, to which chairman of the Slovenian Bank Association France Arhar added that Slovenians were afraid of foreign capital and had a generally negative attitude towards it.

Arhar, a former central bank governor, noted that three non-European investors were interested in Slovenian banks last year, but that the first reaction in an actual sale would be that foreigners were taking our money.

He moreover noted that foreigners were very much interested in Slovenian banks as early as 1993, but added: "It is a pity that at the time the process of privatisation of the Maribor bank was stopped. Private ownership does not necessarily guarantee success, but in Slovenia it unfortunately does."

Arhar also stressed that given the circumstances, a bad bank was a good solution and that Austria had already established one in 2009.

Director of the Institute for Macroeconomic Analysis and Development (IMAD) Boštjan Vasle also stressed that the banking system needed to be healed in order to stop economic decline, noting that Slovenian companies had a total of EUR 20bn of debt to banks, of which the biggest 16 firms accounted for EUR 4bn.

Chief economist of finance group ALTA Sašo Stanovnik identified three priority goals for Slovenia: to salvage the banking system, restore trust in the state and for politics to withdraw from the economy.

Slovenia has solutions which are not complicated, but must change its perception of the economy and start actually implementing solutions and concrete reforms, he said.

The situation in Slovenia is completely different than in Cyprus, Stanovnik stressed. The main problem is not the extent of loans or the safety of deposits but trust.

Hypo bank management member Matej Falatov also noted that the perception of Slovenia among foreigners had grown very negative.

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