Text file: 3507.txt
author: drejko78
downvotes: 0
end consideration date: 2012-09-14
id: '3507'
number comments: 2
number views: 3181
proposal type: Competent authority response
response: "Response from the Ministry of Finance\nThe recapitalisations of state-owned\
  \ banks were aimed at meeting the supervisory authorities' requirements for capital\
  \ adequacy. In this context, we would like to clarify, using the example of the\
  \ recent recapitalisation of NLB d.d., that the European Banking Authority (EBA)\
  \ recommended that, in view of the tight economic and financial conditions and the\
  \ consequent disclosure of insufficient capital adequacy of banks in Europe and\
  \ globally, systemically important banks should achieve a capital adequacy ratio\
  \ of at least 9 %, measured by the best quality core capital, by 30 June 2012.\n\
  The EBA's recommendation thus constituted an obligation for NLB d.d., which, if\
  \ not met, would have significant negative effects on the bank's future business.\
  \ The State, as the responsible co-owner of NLB d.d., primarily sought sources of\
  \ funding for the bank's recapitalisation in the private sector, which were not\
  \ available within the set deadline, and therefore actively approached the bank\
  \ itself to ensure its capital adequacy. However, in order not to burden the budget\
  \ in this specific case, the State granted a hybrid (convertible) loan to NLB d.d.\
  \ This type of financial instrument is considered by regulators (including the EBA)\
  \ as the highest quality form of Core Tier 1 capital and does not necessarily affect\
  \ the State's indebtedness.\nThe proposal is also partly linked to the observation\
  \ that banks also have bad debts on their balance sheets which they are not able\
  \ to manage optimally (failed construction companies, etc.) or which are a burden\
  \ on the normal operations of banks, with a consequent impact on uncertainty in\
  \ the financial sector. To address this problem, the Law on Measures of the Republic\
  \ of Slovenia to Strengthen the Stability of Banks has recently been adopted.\n\
  The Act regulates the Bank Claims Management Company (hereinafter: the BCBS) and\
  \ measures to strengthen the stability of banks in the Republic of Slovenia with\
  \ a view to preserving the stability of the financial system as a whole. The objectives\
  \ of the establishment of the BPSD are to implement measures to ensure the efficient\
  \ use of public funds and the recovery of budgetary resources, to promote lending\
  \ to the non-financial sector, to privatise the banks and to establish liability\
  \ for the banks' bad debts. One of the measures envisaged is the purchase or acquisition\
  \ of the banks' assets at a price and the management of these assets in the BPSD,\
  \ which will be able to realise the banks' bad debts in a more optimal way in the\
  \ longer term.\nAs regards the proposal that banks should be prohibited from making\
  \ any loans for projects that are already doomed to failure, it should be made clear\
  \ that bank managements must comply with the applicable banking legislation, which\
  \ is supposed to prevent such loans. In fact, before granting a loan, banks must\
  \ verify the debtor's ability to repay the loan, which must also be adequately secured.\
  \  \n "
response date: 2012-10-11
response due date: null
sent date: 2012-08-16
title: Recapitalising state-owned banks differently
upvotes: 15
url: https://predlagam.vladi.si/predlog/3507
