The fragility of profits and need for efficiencies is evidenced by the fact that four banks currently report losses- Moreover, despite high margins, net interest income after tax for the system, is on average less than 1 percent of total assets.
Slovene banks’ foreign currency deposits placed at the former SFRY central bank were confiscated and assets held in other republics of the federation were frozen.
Banks’ non-performing assets and contingent liabilities were exchanged for bonds issued by the Bank Rehabilitation Agency. A total of bonds of just under 10 percent of 1993 GDP were issued.
The number of previous months included in the revaluation clause, also called the basic rate (in Slovene, TOM: temeljna obrestna mera), has changed over time; it is currently twelve months.
The largest five banks account, on a consolidated basis, for about 70 percent of the sector’s assets.
Capital ratios are supported by the large holdings of government and central bank paper, which are risk-weighted at 0 percent and a significant share (more than one third) of capital consists of revaluation reserves.
Calculations by the BoS indicate that, in a few cases, industry sectors with low ex/import-to-GDP ratios have a surprisingly high share of foreign currency financing reaching up to 50 percent in some cases, even after correcting for foreign direct investment. Notwithstanding, these sectors account for a small share of total bank financing
Indicators on the health of the corporate sector, especially debt-equity ratios, were analyzed for the largest stock exchange-traded corporates, using data for end-1999. The analysis suggests that, with some dispersion, debt-equity ratios range from lows of 10 percent through 140 percent. For long-term debt only, ratios range between 20-50 percent, especially for companies in wholesale and retail activity, which are high relative to international levels.
The size of the simulated shock was chosen taking into account the difference between the historical high and low of the Slovene stock market.
Since the BoS is always present in almost the full maturity spectrum and there is always full allocations to applicants at relatively stable yields, there is little incentive for bilateral market activity.
According to the Securities Market Agency, PIDs are very tightly regulated. Every single transaction with an unlisted company must be reported; management companies are required to provide regular reports on their affiliates’ activities and use a third party broker when trading on their own account in the Central Securities Clearing Corporation (KDD).
Because of their mixed asset composition—vouchers in socially-owned enterprises and regular equities—and dispersed ownership, the funds are neither mutual funds nor venture capital or holding companies. Hence, a clear investment and management strategy cannot be developed.
The aggregate asset value of the 46 PIDs amounted to SIT556 billion, including unused privatization vouchers of SIT175 billion (or 31 percent). Shares of listed and unlisted companies accounted for 21 percent and 37 percent of PIDs’ assets respectively.
This has now been removed for policy durations of more than ten years.
The key legal components of this framework are contained in the Law on the BoS (1991) and the Law on Banking (1999). Other relevant financial sector legislation deals with foreign exchange, savings and loan undertakings, money laundering, and financial operations of companies. Sector-specific laws covering the securities, insurance, and pension sectors are discussed elsewhere in this report.
This Office has wide powers to detect and prevent money laundering. It acts as a link between financial institutions on the one hand and the judiciary and the police on the other hand. It receives, gathers, disseminates, and analyses data obtained from specified institutions, and participates in a variety of training and public relations activities.
It is understood that revised company law legislation is to be considered in early 2001. This would provide an opportunity to address some of the conflict of interest issues which arise between the banks and their shareholders.
It is noted that the decree on consolidated supervision will come into force fully on December 31, 2000.
Prior to the formation of the Agency supervision was the responsibility of a semi autonomous unit in the MoF. The initial staffing of the new entity came from the Ministry unit.