Press release after the meeting of the Governing Board of the Bank of Slovenia on 14 January 2014
1. The Governing Board of the Bank of Slovenia discussed current supervisory matters.
2. The Governing Board of the Bank of Slovenia was briefed on current economic and financial developments, and approved the release of the December 2013 report on Economic and Financial Developments and the October 2013 report on Slovenia’s International Economic Relations.
After the euro area recorded weak growth in the third quarter of 2013, the figures for the final quarter do not suggest any significant economic recovery. The monthly decline in industrial production and construction activity increased in October, while turnover in the retail sector was also down on September. In contrast to the real indicators, the trend in the survey indicators remained favourable. The unemployment rate remained stable in October at 12%.
Economic activity was also stable in Slovenia at the end of 2013. Industry has stagnated overall in recent months: as exports to the euro area have grown, demand on other markets has declined, partly as a result of a fall in foreign currencies. The contraction in domestic demand slowed slightly, in line with the slowdown in the decline in purchasing power. The end of the decline in GDP has also been reflected in an end to the widening of the current account surplus. Economic sentiment remained stable at the end of last year, albeit at a low level.
The number of registered unemployed rose again in December, primarily as a result of the expiry of temporary contracts. The year-on-year increase was the lowest in 2013, primarily as a result of a base effect. The average nominal wage has increased in recent months, albeit by less than inflation in the period to October.
Inflation is increasingly reflecting the low level of domestic final consumption. Year-on-year inflation as measured by the HICP slowed to 0.9% in December, and would have been negative in the absence of consolidation and administrative measures. The slowdown of 0.3 percentage points from November was primarily the result of further falls in prices of non-energy industrial goods, lower growth in prices of certain marketable services, and a temporary reduction in health insurance premiums.
3. The Governing Board of the Bank of Slovenia discussed the performance of the banks in the current year, developments on the capital market, and interest rates.
The main features of the banks’ performance in November remained the anticipation of the results of the comprehensive review of the banking system and the maintenance of existing trends. The changes in balance sheets primarily reflect the contraction in the banking system caused by the orderly wind-down process at two banks, which is resulting in an increase in impairments, a larger decline in (net) lending activity and larger losses. The decline in disposable household income is being reflected in a decline in consumer loans, but housing loans are nevertheless maintaining positive growth. Household deposits remain stable. The banks’ refinancing risk is low, particularly at the banks under majority domestic ownership, which have sharply reduced their maturing debt to the rest of the world over the horizon of one year.
4. The Governing Board of the Bank of Slovenia was briefed on the findings of a survey of corporate access to financial resources conducted for the third time by the bank. The purpose of the survey was to investigate corporate opinions of financing in Slovenia, thereby expanding the information base that the Bank of Slovenia obtains from banks. The survey shows that payment indiscipline was again the main limiting factor for SMEs in 2013. SMEs recorded lower demand for external financial resources in 2013 than in 2012, submitted fewer loan applications, and were less successful with the applications. SMEs also expect no improvement in their access to financing in 2014. The conditions in different sectors in 2013 were more equal than in the previous year, and there was a notable improvement for construction firms. Large enterprises assess their financing situation similarly to SMEs. The results of the survey have been published on the Bank of Slovenia website (http://www.bsi.si/publikacije-in-raziskave.asp?MapaId=223 ).
5. The Governing Board of the Bank of Slovenia adopted two regulations:
Regulation on the implementation of the Regulation (EU) on prudential requirements for credit institutions and investment firms with regard to the implementation of options and discretions and other tasks of the competent authority for credit institutions
The regulation sets out the manner and scope of the implementation of options and discretions and of other tasks that Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (the CRR) assigns to the competent supervisory authority. These are primarily discretions that set out the way in which capital is calculated for banks during the transition period to full enforcement of the new rules and capital requirements for various types of risk and the treatment of certain other prudential requirements from the CRR.
Regulation amending the Regulation on the documentation for demonstrating fulfilment of the conditions for performing the function of a member of the management board of a bank or savings bank The amendments relate to an update of the questionnaire in the part applying to the assessment of the reputation and experience of a candidate for the position of member of the management board of a bank or savings bank.Practice has shown that candidates can give deficient answers to some of the existing questions that do not allow the Bank of Slovenia to make a comprehensive assessment of their reputation and experience.