Ljubljana, 18 March (STA) - Slovenia's two leading banks, both state-owned, will be subject to a new round of EU stress tests, central bank Banka Slovenije announced on Friday, after the European Banking Agency (EBA) disclosed plans for the tests in London today.
The NLB and NKBM will be among the banks included in what the newly-founded EBA said would be tougher tests than those conducted last year.
Banka Slovenije said that the tests were being conducted on banks that jointly hold at least half of a country's banking sector by total assets.
NLB (including Banka Celje, which the bank has put up for sale) and NKBM together control around 45% of the market.
It is unclear how many banks will be tested around Europe, with the EBA saying only that the group would be roughly the same size as last year, when 91 banks were included. It added that the banks involved would represent more than 65 percent of EU banking assets.
The tests will begin in March and the results will be known in June, the Slovenian central bank added.
In response to criticism of last year's tests, which many analysts saw as being too easy, the EBA said today that criteria have been made stricter this year.
The "adverse scenario" of the tests would involve a drop in the current growth forecasts for the EU by four percentage points. That compares with a three percentage-point growth shock applied last year.
Moreover, the tests this year will focus on the ratio of prime capital, known as core tier 1, as opposed to the broader tier 1 capital. But the hurdle the banks will need to pass has not been determined yet.
NLB, which reported EUR 202m in pre-tax losses for 2010, was the only Slovenian bank to be tested last year. It was reported to have been at the bottom of the 84 banks that passed.