The bank health check that showed the two Slovenian banks requiring minimal capital injections are not surprising, analysts said after European Central Bank (ECB) released the results of stress tests in which the NLB and NKBM, were shown to have a combined shortfall of EUR 65m
The figures are "nothing that would require intervention from Slovenian taxpayers," Ljubljana Faculty of Economics professor Sašo Polanec told the STA, noting that the underlying scenarios were too negative but such exercises are nevertheless useful.
The review showed that banks are sufficiently capitalised and will not have a profound impact on the sector. "We're already recognised these things to a certain extent and no major changes are expected," he said.
France Arhar, president of the Bank Association and former chair of the NLB supervisory board, said he was not surprised by the overall test results though the EUR 65m capital shortfall is "somewhat of a surprise" given last year's recapitalisation and the transfer of toxic loans to the bad bank.
While Arhar noted that the economic situation has improved in the last year (the stress tests are a snapshot of banks' health at the end of 2013), he was quick to point out that banks should nevertheless remain cautious.
"Successful companies largely do not need money. Those that are not doing well cannot be helped by banks - they are usually overleveraged," he said, echoing the appeals by central bank officials that the focus should now be on corporate restructuring.
Financial analysts Primož Cencelj and Matej Šimnic likewise described the results as expected, noting that Slovenian banks have been shown to be reasonably well capitalised given that the underlying assumptions of the exercise were very conservative.
"It is bad that they are on the list [of banks that failed], but it is good that the state will not have to recapitalise them again," Cencelj said.
Šimnic noted that the capital shortfalls were "negligent". "The report suggests that the financial year could be slightly worse because of the additional adjustments, but this should not affect confidence in the stability of both banks," he said.
