The Central Bank of Slovenia, known as the Bank of Slovenia, is a fully independent legal entity governed by public law. Since the introduction of the euro on January 1, 2007, the Bank of Slovenia has fully abided by the provisions of the European System of Central Banks and by European Central Bank statutes. The Bank of Slovenia’s tasks include implementing the common EU monetary policy, co-managing the official foreign reserves of EU member states in accordance with EU treaty agreements, and promoting the smooth operation of payment systems.
The Bank of Slovenia also carries out all other tasks pursuant to the Bank of Slovenia Act, among which is the supervision of the banking sector. As an independent institution, the Bank of Slovenia also has the autonomy to set goals for the country’s economy, including price stability and keeping inflation at around 2% or less over the medium term.
The Bank of Slovenia believes that a current priority for Slovenia is to step up the pace of structural reforms in order to stimulate economic growth and attract foreign investment. The global financial crisis hit Slovenia hard because of the economy’s dependence on exports, which account for some 60% of Slovenia’s GDP, but the bank anticipates a recovery soon. Marko Kranjec, the Bank of Slovenia’s Governor, explains, “When our key trading partners of Germany, Italy and Austria suffered a downturn, so did Slovenia, but as these economies recover, Slovenia’s economic growth will also get back on track. Unlike many other countries, Slovenia has never required standby assistance from the International Monetary Fund, but we are below the euro zone average so we must be prudent.”
Overall, Slovenia’s banks have weathered the global economic crisis. Banking sector profits reached €300 million in 2008 and fell to €160 million in 2009, but Marko Kranjec explains, “Due to higher provisions and reservations, the gross profits of the banking system have not declined. In any case, in an economic downturn banks have been working with lower interest margins and are also becoming more competitive with each other.”
Foreign interests have a 40% share of banking sector
Marko Kranjec points out that the Bank of Slovenia closely monitors the portfolios of all banks operating in Slovenia to ensure their stability. The banking sector is open to foreign investment, and foreign banking interests now account for around 40% of the sector overall, while the state has around a 40% share in two banks. He says, “We welcome foreign investment in the banking sector. We want to see banks that are efficient, profitable and competitive, no matter what their ownership structure is. Our priorities are for banks to be solvent, stable and have adequate liquidity. Any investor interested in Slovenia’s financial sector can come to us for advice and support.”