Eurogroup chief: Slovenian banks need credible stress tests

Visiting Eurogroup chief Jeroen Dijsselbloem on Monday attached great importance to the ongoing stress tests at eight Slovenian banks, which are belived facing financial problems. "It was crucial that the assessments are done according to the highest standards," said Dijsselbloem, noting that the results must be accurate and credible so that Slovenian people and international investors "know for sure that the banks are in a healthy state in the future." The stress tests being conducted at the Slovenian banks are taking longer than expected, according to Dijsselbloem, who is also Dutch finance minister. However, he denied the saying that the delay may indicate Slovenia likely needs to tap the European Stability Mechanism (ESM). He also denied that his visit, and that of a regular IMF mission which is currently in the country, meant that Slovenia was being watched more carefully. Dijsselbloem made the remarks after he met Slovenian President Borut Pahor and Prime Minister Alenka Bratusek and his Slovenian counterpart Uros Cufer. The ESM was officially inaugurated in October 2012 when 17 euro area member states agreed to create this permanent crisis resolution fund to provide loans under strict conditionality to euro area countries in temporary need of assistance. Seven more banks in Slovenia have been ordered to have stress tests and asset reviews following initial reviews of the three biggest banks in the country earlier this year, Slovenia's central bank Banka Slovenije announced in mid-August. In cooperation with the Slovenian government and the European Union's demand, the results of the tests and reviews for the 10 banks will be available by the end of this year. In addition to the three biggest banks in Slovenia, namely Nova Ljubljanska Banka (NLB), Nova Kreditna Banka Maribor (NKBM), and Abanka Vipa, smaller banks in the country, including Banka Celje, Gorenjska banka and Unicredit banka Slovenija are receiving stress tests. Apart from Slovenia's government and central bank, the European Commission, the European Central Bank and the European Banking Authority are involved in the inspections. Slovenia is reportedly shouldering some seven billion euros (nine billion U.S. dollars) of bad loans, equal to about 20 percent of GDP of the country, raising fears the country might seek a bailout.