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Development Minister Says State to Demand More Transparency from Banks

Brdo pri Kranju, 12 November (STA) - The state will demand more transparency and accountability from the banks it owns in return for providing them with fresh capital, Development Minister Mitja Gaspari told a meeting of bankers on Friday.

Speaking at the Days of Slovenian Bankers at Brdo pri Kranju, Gaspari said the state was ready to invest fresh funds in state-owned banks as a good owner should. In return, it will demand a transparent programme and accountability from the executives.

He said that it was up to the state to show that it can be just as competent owner of banks as private equity if it wants to retain an important say in the banking sector.

Gaspari, who has served three terms as finance minister since independence and was the central bank governor from 2001 to 2007, assessed the crisis had laid bare the need to focus on core activity at banks which are not part of multinationals.

If these banks want to be a stable source of financing for business, they must promote domestic savings and then invest this funds wisely, he said.

Meanwhile, chairman of Unicredit banka Slovenija France Arhar warned that throwing cash at banks was no guarantee of success. The weakness of banks must be fixed first, since no amount of capital will guarantee success at poorly-run institutions, said Slovenia's first central bank governor.

Gaspari responded by saying that the banking system in Slovenia faced a contradiction in that banks have been striving hard to retain their independence but at the same time failed to do enough to fill their ranks with competent managers.

Moreover, he pointed out that use of new and opaque financial instruments to tap into excess liquidity in the financial sector was an important cause of the financial crisis. The current efforts by some countries to boost liquidity therefore carries a threat of new bubbles and crises despite more stringent capital rules, he warned.

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