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Banks Meet Capital Adequacy Demands Only with Difficulty

Ljubljana, 17 July (STA) - Slovenian banks meet capital adequacy demands only with difficulty because of increased risks brought about by the economic crisis, Banka Slovenije said after Tuesday's session of the governing board of the central bank.

The board went through the latest business reports of Slovenian banks, noticing that their assets kept falling in May.

The central bank said that capital adequacy could be achieved not only by injecting capital but also through other activities of restructuring in the banking system and the real sector.

In May, the banks' total assets decreased by EUR 296m to EUR 49.1bn. The central bank attributes this to the paying off of loans abroad and the slowing down of the growth in household deposits to 1.1% at the annual level.

The drop in the credit activity also continued in May, mostly because big domestic banks are giving out fewer loans to the non-banking sector.

The other indicator of the quality of the banks' investment, the classification of claims in credit rating groups from A to E, showed an increase in loan risks in May, the central bank's governing board said.

The risks concerning revenues were in the first five months negatively affected by the contraction in net interest and net non-interest incomes and the growing costs of provisions and impairments.

The share of provisions and impairments in the banks' gross revenues is the highest with big domestic banks and the lowest with banks that are owned by foreigners.

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