A Word from the Acting Governor

The euro area economy recovered slightly in 2024, driven largely by bothy private and government consumption. Economic growth doubled compared to the previous year, but it nevertheless remained subdued and below expectations. The economic outlook remained stable, albeit subject to significant uncertainty – an increasingly common feature of the economic landscape in recent times. In contrast to the euro area, economic growth in Slovenia slowed last year to its lowest rate since 2020. However, the Slovenian economy continued to perform better than the euro area average, with some positive structural shifts evident in the composition of growth. Geopolitical and political uncertainty increased further last year and is expected to continue adversely affecting economic growth and slowing the anticipated recovery in the euro area, which also continues to face weak productivity growth – one of the key focus areas of future policy measures in the EU. At Banka Slovenije we monitor the international and domestic economic environment carefully over the course of the year, and regularly publish our findings in the Review of macroeconomic developments, which twice a year also features our projections for domestic economic growth and inflation over the following years.

Inflation decreased significantly in 2024, following two previous years largely marked by high price growth. From the last interest rate hike in September 2023 to June 2024, inflation in the euro area fell by nearly 2 percentage points, reinforcing our conviction that we are succeeding in our effort to bring it down. In June, the ECB Governing Council began reducing the restrictiveness of monetary policy, lowering the interest rate on the deposit facility by a total of 100 basis points last year to 3%. Three more cuts followed over the first four months of this year, bringing the rate to 2.25%. Over the past year, the gradual and predictable downsizing of the portfolio of securities purchased for monetary policy purposes also continued. The monetary policy stance will continue to be data-dependant and determined by the Governing Council on a meeting-by-meeting basis, taking into account the assessments of the inflation outlook, incoming financial and economic data, and the intensity of monetary policy transmission. The Governing Council does not pre-commit to any particular level that key interest rates will reach in the future.

The Slovenian banking system performed well last year, despite the slightly less favourable economic environment. The banks further strengthened their already high resilience to various risks, and continued to record high profitability, driven in part by the effects of the monetary policy regime, while the main performance indicators remained robust. Bank asset quality as measured by the NPE ratio remained at a very favourable level in 2024, and the capital adequacy ratios at the end of the year were indicative of good solvency in the Slovenian banking system. Although certain liquidity indicators deteriorated slightly last year, liquidity remains well above the regulatory requirement, and among the highest in the euro area.

The overall risk level in the Slovenian financial system further improved last year, despite the increase in geopolitical risks, particularly in the second half of the year. The key risks to the banking sector continue to stem from the external environment, while standard risks to the financial system are assessed as low or moderate. The stability of the financial system that we have seen in recent years was successfully maintained last year through a combination of active macroprudential policy, and intrusive and effective microprudential supervision. Our macroprudential policy, which identifies, monitors and assesses systemic risks to financial stability and adopts the requisite measures to prevent and mitigate systemic risks, remained preventive in nature in 2024. We report on key findings on the evolution of risks and the macroprudential instruments used throughout the year in the Financial Stability Review, which is published twice a year. Our most recent findings were published in the spring edition in April 2025. In the area of microprudential supervision, we prioritised credit risk last year, with a focus on banks’ exposure to geopolitical tensions and increased macroeconomic uncertainty. To review cyber resilience at banks, cyber stress tests were conducted in 2024, with all Slovenian banks participating. Our assessment is that banks responded appropriately to the security event simulated, but given the rise in risks of this kind, it is important that in the future banks continue investing in the adequate technological infrastructure to upgrade their information systems.

We also performed a range of other tasks at the bank as part of our mandate, many of which are critical to the functioning of the economy and the financial system, such as issuing cash, operating payment systems, managing the foreign exchange reserves and Banka Slovenije’s portfolio of other assets. We also act as the payment and fiscal agent of the state, and as Slovenia’s representative in international monetary organisations, we manage accounts for the state, for government bodies and for public-sector entities, and we manage the central credit register. Under the Resolution and Compulsory Winding-Up of Banks Act, Banka Slovenije also exercises the powers and tasks of the bank resolution authority, where in 2024 our focus was on updating resolution plans. We are also actively involved in the Eurosystem’s digital euro project, within the framework of which the preparation phase was continued in 2024. The first part of the preparation phase will end in October 2025, but the decision to issue a digital euro has not yet been taken. The Governing Council will only take such a decision after the legal basis has been put in place at EU level.

Last year saw us organise a number of events, most notably the joint conference between Banka Slovenije and the IMF on financial systems in the region. Since 2017 we have been engaging in financial education, as strengthening financial literacy is one of our strategic objectives. Because we are aware that only financially educated individuals are capable of managing their personal finances responsibly and carefully, we have stepped up our efforts in this area in recent years, with Banka Slovenije education programmes reaching more than 6,000 children, young people and adults in 2024.

I assess that we have successfully fulfilled our legally defined mandate again last year. By helping to shape monetary policy, we played a part in bringing inflation closer to its 2% target rate. Notably, the October monetary policy decision was taken in Slovenia, which hosted a monetary policy meeting of the ECB Governing Council for the second time – 12 years after the first. Our macroprudential policy helped to maintain bank resilience and financial stability, while our microprudential supervision encouraged individual banks to maintain high standards in their operations and to be proactive in risk management. We remain committed to fulfilling our mandate consistently in the future as well.

Primož Dolenc,
Acting Governor

1Economic Developments

1.1International situation

Global economic growth stood at 3.2% in 2024, similar to the previous year. The economic outlook remained stable, but considerably more uncertain in the wake of major political changes. Economic developments varied considerably across the major economies last year. GDP in the US increased by 2.8%, slightly less than in the previous year, but well ahead of expectations. It was supported by strong private consumption amid a robust labour market. Growth in other leading advanced economies was more modest. It stood at 0.9% in the euro area, up from 0.4% in the previous year. The growth in the euro area was driven by private consumption and government consumption, while investment declined. Services was the main sector to perform well, while manufacturing remained weak. Consequently, several euro area countries ended the year in recession, among them Germany and Austria.[1] The UK ended the year with growth of 0.9%, while Japan saw economic growth of 0.1%. China saw economic growth of 5%, owing in particular to a moderate recovery late in the year, supported by fiscal and liquidity policy measures in force from September. Economic growth in India stood at 6.4%. The economic outlook remained stable, but subject to substantial uncertainty following the political changes in the US and certain other countries, which increased the likelihood of shifts in trade policy, fiscal policy and other policy areas.

Despite slowing, global and euro area inflation remained above the target. With the effects of past shocks dissipating, global inflation excluding the euro area stood at 4.2% in 2024, a decline of 0.8 percentage points compared with 2023. Inflation in the euro area moderated faster, reaching 2.4% in 2024 – a decrease of 3.0 percentage relative to the previous year. The decline was attributable to all subcomponents, most notably prices of food and other goods. Other goods inflation stabilised close to its long‑term average, indicating that the impact of past shocks dissipated almost entirely. By contrast, service price inflation remained elevated, mainly due to the pass‑through of rising labour costs into final prices, which kept core inflation above the 2% target rate. Monetary policy measures, which became less restrictive, also had an impact on inflation developments in the euro area last year: the ECB cut interest rates four times, by 100 basis points in all.

Global GDP growth remained solid last year at 3.2%, but there was considerable variation between economies.

1.2Slovenian economy

Economic growth in Slovenia was relatively low in 2024 at 1.6%, but there were a number of positive changes evident in its structure. GDP growth was down 0.5 percentage points on the previous year, but remained above the euro area average. Amid the fall in the inflation, real growth in the wage bill strengthened, which revived private consumption, which increased by 1.6%, and contributed 0.9 percentage points to GDP growth (see Figure 2). Growth in government consumption was considerably higher still at 8.5%. Much of this growth was attributable to the reclassification of supplemental health insurance as a compulsory contribution, but it was additionally driven by a further rise in employment in the government sector and increased funding for the post-flood reconstruction. The more favourable situation on the domestic market brought a rise in growth in value-added in private-sector services, which reached 1.8%. Gross fixed capital formation by contrast declined by 3.7%, reducing GDP growth by 0.8 percentage points. The reversal was linked to the high level of uncertainty, high energy prices, and the government’s reduced role in investment following the end of the previous European financial framework. This hit construction in particular, where value-added declined by 1.4%, having seen high growth in the previous year. Despite the weaknesses of the European economy, growth in merchandise exports recovered, which drove up growth in value-added in manufacturing to 3.1%. The build-up of inventories and the strengthening of domestic final consumption drove an even stronger recovery in imports, which meant the contribution to GDP growth by net trade was negative (in the amount of 0.4 percentage points).

Last year’s lower growth in the Slovenian economy was attributable to a reversal in the investment cycle, while the situation in the export sector improved despite a challenging international environment.

Employment growth slowed, but the labour market remained tight. Employment level hit a record high of 1,101.8 thousand, up 1.6 thousand on the previous year. Year-on-year employment growth slowed over the course of the year, and ended the year in negative territory. It averaged 0.1% over the year, with the number of employees falling by 0.2% in the private sector, but rising by 1.6% in the public sector (see Figure 3). Aggregate employment growth was outpaced by the euro area average, which stood at 0.9%. Despite a moderation in demand for workers, which in addition to more cautious hiring was also evidenced in a gradual but continual decline in notified vacancies, the Slovenian labour market remained tight. This was reflected in the continued low level of ILO unemployment rate. It averaged 3.7% over the year, and remained well below its long-term average, and 2.7 percentage points below the euro area average. As a result, hiring of foreign nationals continued and their share of the number of persons in employment increased to 15.7%.

The labour market remained strong last year, despite signs of slowing.

Nominal wage growth slowed last year, but remained well above its long-term average. It stood at 6.2%, down 3.3 percentage points on the previous year (see Figure 4).[2] It remained above its long-term average (of 5.1%), primarily on account of the persistent tightness of the labour market and increases in line with past inflation. The latter also had an impact on growth in the minimum wage, which was raised by 4.2% in January. The fall in inflation strengthened real wage growth, which stood at 4.2%.[3] Amid low employment growth, labour productivity growth also picked up, but at 1.5% remained below real wage growth.

Nominal wage growth slowed, but remained above its long-term average, influenced by past inflation and a tight labour market.

The moderation in headline inflation was broad‑based in 2024. Headline inflation as measured by the HICP averaged 2.0% in 2024, down 5.2 percentage points compared with the previous year, and 0.4 percentage points lower than in the euro area (see Figure 5). With the dissipation of past shocks in commodity and energy markets, the moderation in inflation during the first part of the year was primarily driven by lower year-on-year food price growth, which averaged at 1.9% in 2024 (2023: 11.8%). The year-on-year decline in energy prices averaged 2.3% in 2024, with considerable volatility in the year-on-year growth rates over the course of the year. The growth rate was positive until May and then turned negative. The year-on-year decline in energy prices was deepening until October, but then the growth rate began to strengthen in November with the changeover to the high season for billing electricity network charges and in the presence of a base effect related to the cuts in excise duties and margins on motor fuels from December 2023, before turning positive again in December (see Figure 6).

The moderation in core inflation was mainly held back by domestic factors. Core inflation stood at 2.9% in 2024, down 3.8 percentage points on 2023. The slowdown was mainly attributable to a decline in other goods inflation, which averaged 0.6% over the year (2023: 5.4%), thus approaching its pre-pandemic average[4] and indicating that the effects of the post-pandemic shocks have almost entirely dissipated. By contrast, service price growth declined more gradually and averaged 4.8% over the year. It remained elevated mainly due to domestic factors related to the pass-through of higher labour costs into final prices. Service price inflation was the main factor in headline inflation, contributing 1.7 percentage points to the total rate.

Headline inflation moderated in 2024, mainly due to slower growth in prices of food and other goods. Core inflation remained above the 2% due to services prices.

The price and cost competitiveness of the economy remained unchanged last year.[5] Compared to a year earlier, the price competitiveness indicator remained at a similar level (–0.1%), while more than half of euro area Member States experienced less favourable developments than Slovenia. Domestic inflation, which was lower than the average of partner countries last year, improved the price competitiveness of the Slovenian economy, while the appreciation of the euro against a basket of partner currencies continued to worsen it (see Figure 7). The level of price competitiveness at the end of the year was still worse than before the pandemic, but was slightly better than its long-term average. The cost competitiveness of the Slovenian economy also remained similar to the previous year (–0.1%), but was a tenth worse than before the pandemic. Less favourable developments than in Slovenia were seen in just over half of the euro area countries. Price and cost competitiveness improved on average over the year vis-à-vis euro area partners, but deteriorated vis-à-vis countries outside the euro area.

The competitiveness of exporters remained broadly unchanged last year.

The current account surplus increased slightly further, largely as a result of an improvement in the terms of merchandise and services trade. It amounted to EUR 3.0 billion or 4.4% of GDP, compared to EUR 2.9 billion or 4.5% of GDP in the previous year (see Figure 8). The majority of the increase came from the increase of almost EUR 160 million in the merchandise trade balance, entirely as a result of an improvement in the terms of trade, with the fall in import prices outpacing the fall in export prices. The services trade surplus remained at the high level of EUR 3.6 billion. It strengthened slightly compared with the previous year, again as a result of the improvement in the terms of trade, while the main factor in the increase was a wider surplus of trade in other business services.[6] Conversely, the current account balance was reduced by an EUR 80 million higher deficit in income. This was driven primarily by a decline in labour income, while various current transfers prevented an even larger deficit in income.

The current account surplus strengthened slightly further as a result of the favourable terms of trade.

The surplus also strengthened last year in the financial account of the balance of payments, Slovenia thereby increasing its net creditor position against the rest of the world. The financial account surplus of EUR 2.5 billion or 3.7% of GDP exceeded the result from the previous year. In terms of the main instruments, the net outflow of capital from the domestic economy to the rest of the world proceeded solely via net investments in securities, most notably bank purchases of foreign bonds. The net inflow of capital into Slovenia via other instruments, i.e. mainly non-residents’ direct investments and their holdings of other assets, was significantly smaller. Slovenia disclosed no net external debt last year for the fourth consecutive time. Having amounted to 8.5% of GDP at the end of 2023, net debt claims against the rest of the world had increased to 12.6% of GDP by the end of last year. Just under half of the euro area countries held net claims against the rest of the world alongside Slovenia, while the others remained net external debtors (see Figure 9). The government sector was the only sector to remain a net debtor to the rest of the world: the ratio of its net debt to GDP declined by 1 percentage point to 25.7%. The private sector by contrast further strengthened its net creditor position against the rest of the world to 25.9% of GDP.

A financial account surplus saw Slovenia further strengthen its net creditor position against the rest of the world.

As ratios to GDP, the general government deficit and debt declined further in 2024. The general government deficit amounted to 0.9% of GDP, 1.7 percentage points less than in the previous year, and significantly better than had been forecast by the government plans (a deficit of 2.9% of GDP). General government revenues were up 9.3%, with social security contributions accounting for the majority of the increase on account of a labour market situation that was favourable to the public finances and the transformation of supplemental voluntary health insurance into a compulsory contribution. On the expenditure side this was reflected most notably in high growth in transfers in kind. Growth in expenditure stood at 5.3%. There was a notable decline in subsidies as a result of the withdrawal of high energy prices compensatory measures, while government investment also declined contrary to the government plans. Employee compensation increased by 6.2%, while interest expenditure was up a tenth. Government debt as a ratio to GDP declined to 67.0% in the wake of continuing economic growth. As ratios to GDP, the general government deficit and debt were significantly lower than in the euro area overall (see Figure 10).

The general government deficit narrowed in 2024, primarily as a result of the downsizing of support measures to mitigate high energy prices, while the decline in the ratio of government debt to GDP was driven by economic growth.

Government borrowing was at slightly better terms. Yields on 10-year government bonds were relatively stable, and averaged 3.1% over the year. According to the weighted average of coupon rates, the government borrowed at very close to this rate (3.0%), a slight improvement compared with the previous year (3.4%). Spreads on Slovenian 10-year government bonds over the German benchmark narrowed over the course of the year; their average over the year of 76 basis points was less than in the previous year. Government borrowing was diverse in terms of the financial instruments issued: alongside the usual treasury bills and bonds in the domestic currency, which accounted for the majority of the borrowing, the year saw the first issuances of bonds for citizens, DLT bonds, and bonds in Japanese yen. There was no change in the rating agencies’ assessments of sovereign risk, but several of the agencies did revise their outlook upwards (see Table 1).

The price of government borrowing was slightly more favourable last year than in the previous year. There were no changes to Slovenia’s sovereign ratings.

2Banking System

The number of credit institutions in Slovenia fell by one in 2024 to 14. Nine banks, three savings banks and two branches of Member State banks were operating in Slovenia at the end of the year. The banks held the dominant market share in the banking system, accounting for 91.6% of the balance sheet total, followed by the savings banks with 5.5%, and the branches of Member State banks with 2.9%. There were no significant changes in the breakdown compared with the previous year. The banking system accounted for two-thirds of the Slovenian financial system’s financial assets at the end of last year. The merger of two major banks further increased the concentration in the Slovenian banking system last year, which was reflected in a rise in the Herfindahl-Hirshman index (HHI) for total assets. This indicator has doubled over the last decade as a result of consolidation and a number of bank mergers.

A total of 14 credit institutions were operating in Slovenia at the end of last year.

The banking system’s balance sheet total increased by 2.2% in 2024 to end the year at EUR 54.2 billion. The year-on-year increase was almost 3 percentage points lower than in the previous year. The increase of EUR 1.2 billion in the balance sheet total was attributable on the funding side to equity (EUR 0.6 billion), deposits by the non-banking sector (EUR 0.6 billion) and debt securities (EUR 0.3 billion), while liabilities to banks and to the ECB declined. On the asset side last year’s largest increases were in securities holdings (EUR 3.3 billion) and loans to the non-banking sector (EUR 1.5 billion), while the stock of the most liquid assets declined (by EUR 3.9 billion). The ratio of the banking system’s balance sheet total to GDP declined again last year to reach 79%, as growth in nominal GDP outpaced growth in the balance sheet total.[7]

The stock of loans to non-financial corporations declined last year, but household lending, particularly via consumer loans, continued to strengthen.

After slowing in 2023, lending to the non-banking sector strengthened again last year. The loan stock was up EUR 1.5 billion in year-on-year terms at the end of 2024. The year-on-year rate of growth was still negative in January in the amount of 2.9%, but had strengthened to 5.5% by December. It again outpaced the euro area average, which after the stagnation in January of last year (-0.1%) had increased only moderately by December to 1.5%. The year saw a considerable difference in the dynamics in lending to the two largest customer segments, namely non-financial corporations (NFCs) and households. While the stock of loans to NFCs declined by EUR 206 million (2.1%) over the year, mainly as a result of an increase in loan repayments, the stock of household loans increased by EUR 755 million (6.0%). The decline in lending to NFCs was broadly based across activities, across corporate sizes, and in terms of loan purpose. The stock of loans to other financial institutions (OFIs) saw a one-off uptick in connection with financing for one of the leasing companies.

Household lending continued to increase last year. There were increases in the stock of housing loans (EUR 319 million) and consumer loans (EUR 377 million) last year. After reaching a low of 3.2% in September 2023 following a year of decline, aggregate year-on-year growth in household loans strengthened almost continuously, reaching 6.0% in December of last year. This widened the gap with the euro area average, where growth remained modest at 0.7%. The dynamics in terms of loan type remained similar to the second half of 2023, when there was a significant increase in the monthly figures for new consumer loans following the changes to the macroprudential restrictions on consumer lending. Last year this was again one of the most important segments of growth in loans to the non-banking sector. Year-on-year growth in this segment strengthened sharply, reaching 16.8% in June. It then gradually slowed on account of a high base effect, reaching 13.5% in December, even though new lending remained high. The volume of new housing loans was also greater last year than in 2023, which drove an increase in the stock of housing loans. Year-on-year growth in this segment has been on the rise since September 2023 (when it stood at 0.5%), and reached 3.9% in December of last year, well outpacing the euro area average (0.6%). Alongside the relatively favourable economic situation with high employment and real wage growth, another significant factor in household lending was the level and dynamics of fixed interest rates that prevail in the segment. They declined last year for consumer loans and, in particular, for housing loans, and were slightly below the euro area averages at the end of the year.

The quality of bank assets as measured by the NPE ratio remained at a very favourable level in 2024. The NPE ratio remained unchanged between April 2023 and the end of 2024 at 1.0%. The stock of NPEs did increase over this period by EUR 9 million to EUR 595 million, amid an increase of EUR 5.0 billion in total bank exposure. Since 2021, when the NPE ratio first fell below the euro area average, the gap has widened, reaching 0.4 percentage points in 2024.[8] Amid minor fluctuations, last year the NPE ratios in the NFCs and consumer loans portfolios also remained at their levels of December 2023, at 1.8% and 3.1% respectively, while the NPE ratio in the housing loans portfolio declined slightly to 1.0%. The only segment to see a larger deterioration in portfolio quality in terms of this indicator was sole traders, where the NPE ratio rose by 0.5 percentage points in 2024 to 4.2%.

The breakdown of bank exposures by credit risk stages worsened in the final months of 2024. After declining slightly over the first ten months of the year, the share of exposures with increased credit risk (Stage 2 under the IFRS) increased significantly in November and December, reaching 5.4% by the end of the year, the highest level of the last two years. There was a sharp increase in the share of Stage 2 exposures in the NFCs portfolio over those two months, from 7.2% to 9.3%, where the decisive factor was the increase in the manufacturing portfolio, where the share of Stage 2 exposures almost doubled from 8% in October to end the year at 15.0%. An increase in the share of Stage 2 exposures was also seen in other activities of the NFCs portfolio. The share of Stage 2 exposures in the consumer loans portfolio also increased, reaching 13.0% in December, the highest figure since measurement began in 2016; the increase followed last year’s 14% expansion in exposure to consumer loans.

Coverage of NPEs by impairments and provisions increased further last year, while coverage of performing exposures also increased more strongly late in the year. Coverage of NPEs by impairments stood at 59.9% in December, and remained among the highest in the euro area. Coverage of performing exposures was relatively stable over the course of the year, but increased a little in December to 0.45%. The main driver of the increase was an increase in impairments in the manufacturing portfolio, in connection with the reclassification of exposures to Stage 2. Of the total increase of EUR 26 million in impairments in the NFCs portfolio, manufacturing accounted for EUR 21 million. Coverage by impairments thus increased from 0.58% to 1.01%. Coverage in the entire NFCs portfolio also increased, by 0.15 percentage points to 0.61%.

The banking system’s capital position remains good.

The capital adequacy ratios at the end of 2024 were showing good solvency in the Slovenian banking system. The total capital ratio and the common equity Tier 1 capital (CET1) ratio on a consolidated basis declined slightly at system level over the course of the year (by 0.7 percentage points and 0.3 percentage points respectively), but remained solid. The first stood at 19.7%, and the second at 17.5%. The decline in the capital adequacy ratios in 2024 was attributable to an increase of 10.0% in risk-weighted exposure amounts, largely as a result of an increase in risk-weighted exposure amounts for credit risk in the household segment, while other segments accounted for significantly less of the increase. Regulatory capital increased by 6.4%, driven primarily by CET1 components, where the largest increases were recorded by retained earnings and reserves.

Just over half of the banks succeeded in increasing their surplus over allocated capital requirements in 2024, although the divergence in the surpluses widened slightly relative to 2023. There remain differences between the banks in their surpluses above overall capital requirements, and thus in their capacity to absorb the potential realisation of risks or negative shocks from the environment.

The banking system’s liquidity remained high, despite a deterioration in certain liquidity indicators. The liquidity coverage ratio (LCR) on an individual basis declined by 19 percentage points at system level to 316%, but remained well above the minimum regulatory requirement of 100%, and among the highest in the euro area. This means that the banking system maintained a high capacity to cover net liquidity outflows over a short-term stress period. Last year’s deterioration in the LCR was attributable to a change in liquidity structure.

After increasing for several years, the stock of primary liquidity declined sharply in 2024, as banks redirected funds held in accounts at the central bank into purchasing debt securities, thereby strengthening their secondary liquidity. Although the stock of primary liquidity declined by EUR 3.9 billion to EUR 9.9 billion, equivalent to 16.3% of the balance sheet total, it is still well above its long-term average. In addition to the LCR, there was also a slight deterioration in the net stable funding ratio (NSFR) at system level on an individual basis, which declined by 5 percentage points over the first nine months of last year to stand at 168%. The NSFR nevertheless remains relatively high above the minimum regulatory requirement of 100%, and with it the capacity to cover required stable funding over a one-year period. Although all banks exceeded the minimum LCR and NSFR requirements, there remain considerable differences between them in terms of their liquidity surpluses and thus in their resilience to systemic risks.

Deposits by the non-banking sector increased in 2024, due to inflows of household deposits, which remain a key source of funding for Slovenian banks, accounting for 50.0% of the balance sheet total. Household deposits increased by 3.0% or EUR 795 million, which is comparable to the increase in the previous year. The monthly inflows of household deposits were relatively modest last year, with the exception of the spring, when leave allowance was paid, and at the end of the year, when Christmas bonuses were paid. In contrast to households, deposits by non-financial corporations declined slightly last year, with firms with large savings likely choosing to finance their investments with internal resources in preference to loans. The stock of deposits by non-financial corporations declined by 0.3% over the course of the year to EUR 10.9 billion, equivalent to a fifth of the balance sheet total. Despite the decline in deposits, firms still hold solid savings at banks, which they could direct into investment or use to cover current operations. With interest rates on deposits, particularly long-term deposits, falling, savers are opting less often to fix their savings. Despite a slight decline, the stock of sight deposits remained large (accounting for 85% of all household deposits).

Deposits by the non-banking sector remained stable, and are still the most important source of funding for Slovenian banks.

Slovenian banks again enjoyed record profits last year, thanks to the high level of income, net interest income in particular, and the low level of net impairments and provisions. Pre-tax ROE was above average.

Pre-tax profit in the Slovenian banking system amounted to EUR 1,200 million in 2024, up 5.5% on the previous year. The banks recorded ROE of 18.9%, down slightly on the previous year (20.6%) owing to the increase in equity, but it was still well above average compared with the past, and compared with other banks in the euro area and the EU. The high profits were attributable to the extremely high net interest income in the banking system, which is a result of the difference between the interest rates on bank assets and bank funding, thanks overwhelmingly to the very low interest rates on sight deposits by the non-banking sector.

Growth in net interest income began to slow when the first interest rate cuts were made, and stood at 8.6% at the end of the year. The banks thus recorded their highest ever net interest income. The net interest margin stood at 3.09%, its highest level of the last two decades. Net non-interest income increased by fully a third (34.5%), which was mainly attributable to an increase in dividend income at one of the largest banks. Even without this one-off effect, year-on-year growth would still be solid at more than 10%, having strengthened compared with the previous year. Net fees and commission, the most important component of net non-interest income, increased by 8.6% last year, significantly outpacing growth in the balance sheet total.

Growth in gross income in the banking system stood at 15.6% last year, down on the previous year as expected, owing to the slowdown in growth in net interest income amid high base effects. Growth in operating costs strengthened to 22.3%, primarily as a result of the accrual of the tax on total assets, which was introduced last year. Without the costs of this tax, growth in operating costs would be more than a half lower, and similar to the previous year. Net income last year thus exceeded the previous year by 10.7%. Another factor in the banks’ high profits was the small net creation of impairments and provisions: at EUR 70.5 million, they accounted for just 3.1% of the banks’ gross income.

In light of the growing number of cyberattacks on critical national infrastructure in 2024, the banking sector's exposure to cyber risk has also increased. The banks did not report an increase in the number of critical cyber incidents in 2024 compared to 2023.

We assess that the number of critical cyber incidents in the banking sector has remained stable. The number of reported phishing attacks in the banking sector fell significantly in 2024, likely due to a decrease in phishing attacks and other online fraud. This could be due to growing cyber hygiene among the public, which is being reflected in the quicker recognition of fraud attempts. Recipients recognize and delete dubious messages without reporting the incidents.

The number of cyberattacks on SMEs increased in the second quarter of 2024. They often lack sufficient resources to ensure resilience to cyber risks. They are frequently exposed to attacks by ransomware, which usually penetrates the information system and encrypts all accessible files, which can then only be unlocked after payment of a ransom.

In July 2024, the CrowdStrike incident occurred due to an operating error in the software produced by a company of that same name. The incident caused an IT outage that affected the operations of certain Slovenian firms, including banks. The Slovenian banks that use CrowdStrike solutions resolved the issue the same day, so the incident did not significantly impact their operations.

As supervisors of the banking system, we regularly use tools to monitor and identify cyber risks at the system level. We use a cyber risk dashboard to monitor systemic cyber risk. This dashboard's indicators allow us to monitor risk at the level of the banking system and perform cyber mapping (for more information on the tools for monitoring systemic cyber risk, see Box 1).

The general level of systemic risks improved further in 2024.

The general level of systemic risks further, despite the increase in geopolitical risks, particularly in the second half of last year. Amid persistently favourable indicators, the credit risk assessment was lowered to low in the first half of the year, while the interest rate risk assessment was lowered to moderate, as the trend in the repricing gap improved. The cyber risk assessment was raised to elevated last year, due to more frequent DDoS attacks, particularly in the first half of the year. However, the banks did not report any significant rise in the number of critical cyber incidents. The remaining risks continued to be assessed as either low or moderate. The banking system’s resilience from the perspective of liquidity remained assessed as high, while resilience from the perspective of solvency and profitability was raised to high. This was driven by the ongoing favourable developments in net interest income, which were reflected in high profitability.

3The Work of Banka Slovenije

3.1Banka Slovenije’s mandate and institutional framework

Banka Slovenije fulfils its mandate independently and within the framework of the European System of Central Banks, based on four pillars of activity:

Monetary policy relates to the central bank decisions that exert an influence on prices and the availability of money in the economy, thereby exerting an effect on the chosen target of the monetary policy. Under the Banka Slovenije Act, price stability is Banka Slovenije’s fundamental objective, and it is also the primary objective of the European System of Central Banks, of which Banka Slovenije is part. Maintaining price stability is monetary policy’s greatest contribution to economic growth and job creation. The Eurosystem target is to maintain growth in prices of goods and services (i.e. inflation) at around 2% over the medium term.[10]

Microprudential supervision is part of Banka Slovenije’s mandate relating to the maintenance of financial stability. The objective of the supervisory activities is identifying risks in all areas of the operations of banks and savings banks (credit risk, liquidity risk, operational risk, capital risk, interest rate risk, profitability risk, internal controls, corporate governance, reputation, anti-money laundering) in timely fashion, and ensuring the stability of credit institutions and the financial system through effective action.

Macroprudential policy aims to mitigate the effects of financial cycles, and to increase the resilience of the financial system to disruptions. Macroprudential policy identifies, monitors and assesses systemic risks to financial stability, and adopts the requisite measures to prevent and mitigate systemic risks. The ultimate objective of macroprudential policy is to contribute to safeguarding the stability of the financial system as a whole, including strengthening the resilience of the financial system, and preventing and mitigating the build-up of systemic risks, thereby ensuring a viable and sustained contribution to economic growth from the financial sector.

Bank resolution and deposit guarantee scheme: Banka Slovenije’s basic mission in this context is ensuring the orderly resolution of a bank or banks in (serious) difficulties, while minimising the consequences to the economy and the public finances. The aim in establishing a resolution mechanism is transferring the burden of any bank resolution to the banking sector (and not to the public finances), thereby reducing the moral hazard and increasing confidence in banks on the part of the public and investors. At the same time Banka Slovenije is the operator of the deposit guarantee scheme, whose basic objective is to protect depositors and to maintain their confidence in the banking system. A sound and effective deposit guarantee scheme is one of the vital conditions for the maintenance of financial stability in a country.

We also perform certain other tasks as part of our legal mandate, such as issuing cash, operating payment systems, managing the official foreign exchange reserves and other Banka Slovenije assets, acting as the payment and/or fiscal agent of the state or as a representative of the state at international monetary organisations, managing accounts for the state, government bodies and public-sector entities, attending to financial, monetary, banking and balance of payments statistics, and managing the central credit register. A number of our tasks relate to the operation of critical national infrastructure under the Critical Infrastructure Act.

Banka Slovenije’s actions in 2024 were again fixed within an institutional framework at the European level.

In managing the Eurosystem and the European System of Central Banks, a key part of which is the implementation of monetary policy and the pursuit of the Eurosystem’s primary objective (i.e. price stability), we worked with the ECB’s decision-making bodies in the manner set out in the Treaty on the Functioning of the European Union, the Statute of the European System of Central Banks (ESCB) and of the ECB, and the Rules of Procedure of the Governing Council, the General Council and the Executive Board of the ECB. The Governor of Banka Slovenije is, by function, one of the members of the Governing Council, which is the main decision-making body of the ECB and is responsible for taking the most important strategic decisions that are key to the functioning of the Eurosystem.

In the area of microprudential supervision and the setting of rules for banks and other supervised entities, we actively worked within the framework of the Single Supervisory Mechanism and the European Banking Authority. The Single Supervisory Mechanism (SSM) is one of the three pillars of the banking union, whose task is carrying out direct supervision of significant banks and bank groups in the euro area, and is also responsible for carrying out indirect supervision of less significant banks through the introduction of standard rules for conducting supervision in participating countries. The EBA is an independent EU authority whose purpose is ensuring effective and consistent prudential regulation and supervision in the European banking sector by putting in place a single European banking rulebook. The deputy-governor of Banka Slovenije is a member of the most senior decision-making bodies of the SSM and the EBA.

In the area of macroprudential supervision, we worked within the institutional framework of the ECB and the European Systemic Risk Board (ESRB), which is responsible for the macroprudential supervision of the financial system in the EU. The objective of the ESRB’s work is preventing and mitigating systemic risks to financial stability in the EU, while its tasks include defining risks on the basis of which it may issue recommendations for remedial measures. The Governor of Banka Slovenije (by function) and one of the vice-governors are members of the General Board.

In the area of bank resolution, Banka Slovenije works within the framework of the Single Resolution Mechanism (SRM), which is responsible for drawing up resolution plans and analysing the resolvability of systemically important banks or groups, and for using the resolution fund. Our objective is to put in place a single European rulebook and standardised resolution processes, and to minimise the resolution costs and asset devaluation if a bank failure occurs. Like the SSM, the SRM operates at the pan-European national level by working with the national competent authorities, in this case the national resolution authorities. The centralised application of resolution powers has been assigned to the Single Resolution Board, whose membership includes representatives of each of the national resolution authorities (one of the vice-governors in the case of Banka Slovenije), and to the national resolution authorities, where the rules on the establishment and operation of the SRM in Member States are applied directly.

Our work also encompasses collaboration with other authorities and institutions in Slovenia, the EU and further afield.

Under the ECB framework, the senior management of Banka Slovenije attended meetings of the Governing Council and the General Council of the ECB in 2024, sat on 19 committees and 109 working bodies, and attended meetings of the supervisory board of the SSM and meetings of 26 SSM working bodies. Within the framework of the banking union, in addition to attending plenary sessions of the SRB, we also sat on three of its committees and ten of its working bodies. Within the European system of financial supervision, we participate in the board of supervisors, seven committees and 42 working bodies at the EBA, and also have representatives on the general board and five working bodies of the ESRB. Banka Slovenije representatives attended meetings of committees, working groups and other bodies that are active within other institutions of the EU with a focus on financial and monetary matters. The Governor attended two meetings of the informal ECOFIN. We attended meetings of the Economic and Financial Committee and its subcommittees, and participated in several other bodies working under the aegis of the Council of the European Union, the European Commission and a number of other institutions.

Banka Slovenije is also responsible for representing Slovenia in certain other international institutions. Slovenia is a member of the IMF, and the Governor of Banka Slovenije is a member of the IMF Board of Governors. Slovenia’s quota at the IMF stood at SDR 586.5 million[11] at the end of 2024, or 0.12% of the total IMF quota. A Banka Slovenije delegation attended the annual and spring meetings of the IMF and the World Bank Group in Washington in 2024. The main themes of the meetings were current developments in the global economy and on international financial markets, the economic fragmentation resulting from geopolitical tensions, support for the IMF in providing financial assistance for countries with balance of payments difficulties, a strengthening of the role of the Bretton Woods institutions, the conclusion of the 16th general review of IMF quotas, approaches to the allocation of IMF quotas in the upcoming 17th general review of IMF quotas, the further strengthening of the assets held by IMF funds, and progress made within the joint framework of the G20 and the Paris Club on debt management and transparency.

The majority of EU Member States, Slovenia among them, had given their consent by the end of 2024 to a rise in their share of the quota increase in line with the conclusion of the 16th general review of IMF quotas, whereby the quotas rise by 50% evenly. Owing to delays in the national procedures in certain IMF members, the deadline for consent was extended to 15 May 2025. The extension of the existing bilateral loan agreements from 2020 was recognised as the most pragmatic temporary arrangement for maintaining the IMF’s lending capacity until the increase in IMF quotas takes effect. On this basis Slovenia also extended its current agreement until the increase in quotas takes effect or by the end of 2027, whichever is the earlier.

On the basis of the funding strategy for strengthening the IMF’s Poverty Reduction and Growth Trust (PRGT), Banka Slovenije also took the decision to participate in the light of solidarity and fair burden-sharing.

Slovenia also participated in the implementation of the IMF’s Financial Transactions Plan (FTP). Slovenia’s reserve tranche at the IMF declined to SDR 141 million last year, Slovenia having received refunds in the amount of SDR 22.2 million from its participation in the FTP.

The annual consultations under Article IV of the IMF Statute took place in Slovenia in January 2024. During the consultations the IMF delegation headed by Donal McGettigan met representatives of Banka Slovenije, the Ministry of Finance, other ministries, the IMAD, the Fiscal Council, the Slovenian-German Chamber of Commerce, the Chamber of Commerce and Industry, the PDII, the National Assembly, the Bank Association of Slovenia, and selected commercial banks and trade unions, and also met representatives of firms in the insurance sector. The purpose of the consultation was to review the latest economic developments, outlook and risks, fiscal policy, structural policy, the functioning of the financial sector, and future challenges.

A brief advisory visit by an IMF delegation was made in November 2024, where the main aim was to be briefed on the latest developments in the macroeconomic field, the evolution of Slovenia’s financial sector, and the implementation of reforms.

A joint high-level conference was held between Banka Slovenije and the IMF in May 2024 on financial systems in the region of central, eastern and south-eastern Europe (for more, see Box 10 in Section 7.4).

The Governor of Banka Slovenije attends meetings of central bank governors of BIS members, which are held every two months. The meetings discuss developments in the global economy and on the financial markets. The governors’ meetings are also an opportunity to exchange opinions on various central banking subjects. The most notable in 2024 were AI in central banking, the criteria for financial inclusion and financial stability, the challenges and opportunities in using central bank data in a fast-changing world, the future of the financial system, and the globalisation of services trade. A Banka Slovenije representative also attended the regular meeting of the BIS Working Party on Monetary Policy in Central and Eastern Europe in 2024. Banka Slovenije is a shareholder in the BIS, and the Governor of Banka Slovenije attended the annual general meeting of the BIS in June 2024.

In December Banka Slovenije organised the 14th workshop on exchange rates and monetary policy in conjunction with the BIS, the ECB and the central banks of Italy and Belgium. The workshop was held in Brussels, and featured high-profile international researchers presenting their papers and their analytical projects.

Banka Slovenije representatives attended sessions of certain committees and working groups of the Organisation for Economic Co-operation and Development. They participated in meetings of the Economic Policy Committee, the Committee on Financial Markets, the Working Group on International Investment Statistics, the Working Party on Financial Statistics, and the Working Party on International Trade in Goods and Services, and provided information for the Working Party on SMEs and Entrepreneurship.

Strategy of Banka Slovenije 2021 to 2026

Banka Slovenije’s activities are framed by the mandate conferred on us by the Banka Slovenije Act and other national regulations. The performance of tasks where the focus is on development is set out in the Strategy of Banka Slovenije, which for the period of 2021 to 2026 was adopted at the end of 2021 and began to be implemented in 2022.

The fundamental building blocks of the strategy are:

1. Mission: helping to create a stable economic environment for a successful Slovenia, and the wellbeing of this generation and future generations.

2. Values: professionalism, responsibility and transparency.

3. Vision: a progressive, connective, sustainability-focused central bank.

4. Strategic guidelines:

   • developing a connective organisational culture;

   • supporting our employees to develop and thrive;

   • working efficiently and effectively;

   • co-creating the digital environment;

   • focusing on sustainability and social responsibility.

The strategy is being realised through 12 strategic objectives, which are substantively aligned with the strategic guidelines. Steering the strategic objectives is the responsibility of their sponsors (members of the Governing Board of Banka Slovenije and the secretary-general), while implementing them is the responsibility of the owners of the strategic objectives (directors of departments) and members of working groups. A total of 99 people were involved in implementing the strategic objectives in 2024, slightly more than a fifth of all the bank’s employees.

Two objectives were set within the framework of the first strategic guideline. The first focuses on developing a connective culture at the bank. Through dialogue established with employees, we are working to increase the number of activities that ensure greater connectivity between employees, with an emphasis on interdepartmental connecting and connecting along the hierarchy. The second strategic objective addresses an external aspect of developing a connective culture, which is based on Banka Slovenije’s transparency and accessibility in formulating and performing its tasks in relation to various stakeholders and the public, and on strengthening its connective role in Slovenia.

In the awareness that highly qualified and motivated employees are a key factor in our ongoing development and success, under the second strategic guideline we also committed to objectives of building the concept of developing the potential of employees. Within the framework of the objective we focus on professional and personal development in all life and career phases.

The third strategic guideline addresses effectiveness and efficiency, and is pursued via two strategic objectives. The first addresses business processes, with a focus on optimising selected horizontal business processes and upgrading key performance indicators in their implementation. The second strategic objective relates to a simplification of the system of bylaws, which aims to more clearly define the properties, types and hierarchy of bylaws, and the procedures and powers for drafting and adopting bylaws, with a focus on the user experience.

Co-creating the digital environment is being realised via four strategic objectives. Through an objective that addresses the modern digital work environment, we are responding to the latest trends and opportunities brought by technological progress, with a focus on the effective and safe use of AI. Alongside the objective targeting an improvement in our own cyber resilience, there is also an objective focusing on the digitalisation of our operations, which aims to put in place the targeted data architecture and data management. The fourth strategic objective in this package relates to the Eurosystem’s digital euro project. The ambition of the strategic objective is for Banka Slovenije to take a proactive approach and, by participating in the project, to contribute its own knowledge to a final design of the digital euro that is aligned with its own views and that realises its expectations.

The final strategic guideline – focusing on sustainability and social responsibility – is being pursued via three strategic objectives. Two objectives show our commitment to the transition to a decarbonised society. The first relates to restructuring our portfolio of financial assets, with a focus on increasing holdings of green, social and sustainable bonds. The second objective pursues a reduction in our adverse environmental impact by modernising equipment, obtaining energy from renewables, and taking measures to ensure that the bank and its actions are efficient, with the minimum possible impact on the environment. A number of activities relating to social responsibility are being carried out via the strategic objective of financial literacy. The objective and the activities are presented in detail below.

3.2Monetary policy

The Eurosystem maintained the restrictiveness of its monetary policy at the same level over the first half of 2024. The key interest rates were left unchanged at their levels of September 2023, to ensure the restoration of inflation to its medium-term target rate of 2%. The restrictive monetary policy was transmitted into the financing conditions. Households and firms saw their borrowing costs rise, and demand for loans was curtailed. The price pressures weakened, and the short-term and long-term inflation expectations also declined. The latter was a major factor in the slowdown in inflation, which fell by more than 2.5 percentage points between August 2023 and June 2024.

The slowdown in inflation strengthened our confidence in meeting the 2% medium-term target rate, and so in June we began reducing the restrictiveness of monetary policy.

June saw the onset of interest rate cuts, and thus the reduction of the restrictiveness of monetary policy. The slowdown in core inflation and the inflation outlook, and the good functioning of monetary policy transmission strengthened our confidence that inflation would fall sustainably towards its target rate. The interest rate cuts continued in September, October and December. The interest rate on the deposit facility was cut last year by 100 basis points in all to 3%, while the interest rates on main refinancing operations and the marginal lending facility were cut by 135 basis points in all.

We remain committed to ensuring that inflation stabilises sustainably at 2% over the medium term. The monetary policy stance will be determined by the Governing Council, which remains fully committed to a data-dependent and meeting-by-meeting approach, taking account of assessments of the inflation outlook, incoming financial and economic data, the dynamics in core inflation, and the intensity of monetary policy transmission. There is no precommitment to the level that key interest rates will reach in the future.

The final TLTRO-III matured in full in December, and reinvestments under the PEPP were fully discontinued at the end of the year.

We continued the gradual and predictable downsizing of the portfolio of securities purchased for monetary policy. The portfolio under the asset purchase programme (APP), where reinvestments were fully discontinued in July 2023, had been reduced by EUR 352 billion by the end of the year to stand at EUR 2,677 billion measured at amortised cost. Securities of public-sector issuers accounted for almost 79% of the total holdings at the end of the year. Under the pandemic emergency purchase programme (PEPP), the principal payments from maturing securities were fully reinvested in the first half of the year, but from July on the portfolio was reduced by EUR 7.5 billion per month on average. The embedded flexibility in reinvesting redemptions of maturing securities of the programme was retained and the reinvestments were smoothed across time, financial asset classes and across jurisdictions. Reinvestments under the PEPP were fully discontinued at the end of 2024. The stock of the PEPP portfolio amounted to EUR 1,612 billion at amortised cost at the end of the year, with public-sector issuers accounting for 97% of the holdings.

Eurosystem credit operations declined as a result of the maturing of the third series of targeted longer-term refinancing operations (TLTRO-III). The total stock of credit operations amounted to EUR 34 billion at the end of the year, down EUR 376 billion on the previous year. Banks made early repayments of borrowings under the TLTRO-III in the amount of EUR 58 billion over the course of the year, with four operations in the amount of EUR 334 billion also maturing. Banks replaced their funding at the Eurosystem with market funding. In Slovenia the banks fully repaid the outstanding disbursement of the TLTRO-III in the amount of EUR 74 million in March 2024, and did not participate in standard refinancing operations during the year.

Participation in the Eurosystem’s standard refinancing operations, i.e. the one-week main refinancing operations and the three-month longer-term refinancing operations, remained low. The stock of main refinancing operations averaged EUR 5.5 billion in 2024, while the stock of longer-term refinancing operations averaged EUR 3.7 billion. Bank demand for borrowing in US dollars was similarly modest: the stock of the seven-day operations averaged USD 0.2 billion.

With the aim of maintaining bond and repo market liquidity, thereby ensuring the smooth functioning of the markets, securities purchased under the APP and the PEPP remain available for lending. Given the continuing significant increase in the availability of securities compared with previous years, as a result of additional primary issuances and the Eurosystem’s reduced purchases, the volume of lending declined. In addition to other securities, cash was also accepted as collateral for loans of this type.

The Eurosystem's monetary policy operational framework was adjusted.

The Eurosystem announced changes to the monetary policy operational framework in March 2024, which will affect how central bank liquidity will be provided in the future as the excess liquidity in the banking system gradually declines. The key attributes of the new framework are as follows:

1. The monetary policy stance will continue being determined by adjustments to the interest rate on the deposit facility. Our aim is for very short-term market interest rates to stay close to this interest rate, although we tolerate their volatility, provided that the volatility does not cloud the signal that we want to send by setting the stance.

2. Liquidity will be provided via a broad range of instruments.

3. The main refinancing operations and the three-month longer-term refinancing operations will remain in the form of fixed-rate tenders with full allotment. They will play a central role in meeting the liquidity needs of banks.

4. In September 2024 we reduced the spread between the interest rates on main refinancing operations and the deposit facility from 50 basis points to 15 basis points, and the spread between the interest rates on the marginal lending facility and the deposit facility from 75 basis points to 40 basis points. By reducing the spreads, we aim to encourage banks to participate in main refinancing operations, and to limit volatility in very short-term interest rates. The spread between the interest rates on the marginal lending facility and main refinancing operations was left unchanged at 25 basis points.

5. In the subsequent phase, to cover the banking sector’s structural liquidity needs, we will introduce new structural longer-term credit operations and a structural securities portfolio.

6. The minimum reserve requirement rate was maintained at 1%. The remuneration of minimum reserves was also left unchanged at zero.

7. A broad set of financial assets eligible as collateral for Eurosystem operations is being maintained.

The first experience of working under the new operational framework was positive, and showed short-term interest rates on the money market to be tracking the interest rate on the deposit facility rate and not to be displaying high volatility (see Figure 18). Trading volume on the euro money market gradually increased. Banks replaced the maturing funding from the TLTRO-III with market funding. Since 2022 banks have issued a record quantity of covered and unsecured bonds to replace the maturing TLTRO-III, with numerous issuers returning to the market after a long absence. The increase in repo rates reflected the increased availability of securities, and also the decline in purchases by the Eurosystem. Excess liquidity in the euro area remained significant, which reduced bank demand for Eurosystem credit operations. The demand for Eurosystem credit operations was modest, because market funding of comparable maturities was cheaper.

Our expectation is that the narrower spread between the main refinancing operations and the deposit facility rates will have limited any rise in money-market interest rates that might otherwise have occurred in the wake of a further reduction in excess liquidity. The expectation is that the narrower spread will encourage banks to participate in weekly operations, while also leaving room for banks to act in the money market. We will carefully monitor the evolution and distribution of excess liquidity, the formation of interest rates in the money market, and the functioning of the money market and broader financial markets. Based on the experience acquired, we will re-examine the concept and the key parameters of the operational framework in 2026, adjusting them as necessary.

The gradual reduction of the Eurosystem balance sheet begun in 2022 and continued in 2024.

The Eurosystem’s total assets declined for the third consecutive year, by EUR 508 billion to EUR 6,429 billion at the end the year (see Figure 19). While the main factor in the balance sheet contraction in 2023 were early repayments and maturities of the TLTRO-III, in 2024 approximately equal contributions came from maturing of securities in the APP and PEPP portfolios, and maturities and early repayments of the TLTRO-III. APP, PEPP and credit operations together accounted for 67% of the Eurosystem’s total assets at the end of the year (compared with 74% at the end of 2023), of which 1% were monetary policy credit operations (6% at the end of 2023).

Excess liquidity[12] in the euro area continued to decline, in 2024 it declined by EUR 519 billion to EUR 2,827 billion. Excess liquidity was also in 2024 reduced by the contraction in the APP and PEPP portfolios and early repayments of the TLTRO-III, but was increased by a decline in net autonomous factors, most notably lower deposits by non-banking customers in the Eurosystem. The latter were reduced gradually and in controlled fashion, which was achieved via their remuneration. The majority of deposits were remunerated at below market interest rates, mostly at the €STR minus 20 basis points. Excess liquidity also declined in the Slovenian banking system, by EUR 4 billion to EUR 7 billion, with banks investing some of the liquidity in securities.

The decline in excess liquidity in the euro area has reduced use of the deposit facility and banks’ excess reserves. Throughout the year Banks directed the majority of the excess liquidity into the deposit facility, which was remunerated, while the remainder was held in accounts at the Eurosystem in the form of excess reserves, which were not remunerated. Use of the deposit facility averaged EUR 3,168 billion in 2024, EUR 657 billion less than in 2023. Comparing the final minimum reserve maintenance periods in 2023 and 2024,[13] banks’ excess reserves declined by EUR 3 billion to EUR 5 billion, equivalent to 3% of the minimum reserve requirement. Slovenian banks reduced their average use of the deposit facility by EUR 0.8 billion over the same period to EUR 8.7 billion, while their excess reserves increased by EUR 14 million to EUR 26 million, equivalent to 7% of the reserve requirement.

The decline in the amount of eligible assets mobilised for Eurosystem monetary policy credit operations continued. This coincided with the decline in the TLTRO-III, and was particularly evident after a major maturing of one of the operations in March 2024. The eligible assets at the Eurosystem amounted to EUR 1,524 billion at the end of the year, down 15% on the previous year. The most common types of eligible assets mobilised by banks were bank loans, covered bonds, and asset-backed securities. 7% of the mobilised eligible assets were being used to secure Eurosystem monetary policy credit operations at the end of the year (the average for the year was 13%). The eligible assets of banks in Slovenia mobilised with Banka Slovenije amounted to EUR 2.4 billion at the end of the year, down 36% on the previous year. Until the repayment of the TLTRO-III in March 2024, only 2% of these eligible assets have been used to secure monetary policy credit operations.

The Eurosystem decided on the gradual incorporation of certain measures of the temporary collateral framework into the general collateral framework, and on the phase-out of other temporary measures.

With the aim of maintaining a broad but harmonised range of eligible assets in all euro area countries, the Governing Council of the ECB announced certain changes in November 2024. The purpose of these changes is to maintain a broad range of eligible assets in line with the requirements of the new monetary policy operational framework. Such a collateral framework will continue granting banks access to Eurosystem monetary policy credit operations in the future, which is a condition for the smooth implementation of monetary policy.

Ever since the global financial crisis in 2008, and even more so during the time of the Covid-19 pandemic, the framework has been divided into the general collateral framework and an additional temporary collateral framework. The focus of the latter was on overcoming crisis conditions, and it was dependent on specific types of collateral available in the banking systems of individual countries.

The Governing Council decided to incorporate some of the temporary measures into the general collateral framework, namely securities in foreign currency, asset-backed securities rated BBB/Baa, and the use of national central banks’ statistical in-house credit assessment systems as an additional credit assessment source. These changes will enter into force with the next regular update of the applicable legal framework, but no earlier than in the final quarter of 2025. Preparatory work on the incorporation of pools of credit claims against non-financial corporations into the general framework will also begin. The remaining additional credit claims from the temporary framework will be phased out, tentatively by the end of 2026.

The introduction of the single system for managing eligible collateral was postponed from November 2024 to June 2025. The single system, the Eurosystem Collateral Management System or ECMS, will replace the existing systems of the national central banks. The postponement will give stakeholders more time for testing ECMS functionalities in a stable environment.

3.3Banking supervision

The supervisory activities in 2024 focused on the following priorities: credit risk and bank exposure to geopolitical tensions in particular, banks’ IT and cyber resilience, internal governance and risk management, and management of climate-related and environmental risks.

Banka Slovenije is a member of the SSM, which is responsible for supervising significant banks and institutions (SIs) in the European banking union. The ECB is responsible for supervising SIs, with Banka Slovenije participating in the supervision and the supervisory decisions as an equal partner. The supervision of banks and savings banks that do not meet the criteria for definition as SIs, i.e. the less significant institutions (LSIs), is conducted by Banka Slovenije.

The list of significant and less significant banks changed slightly in 2024. SKB Banka d.d., Ljubljana and Nova KBM d.d., Maribor merged in August 2024. The merged bank was renamed OTP banka d.d., with a registered office in Ljubljana. The merger of the two banks was a major milestone in the creation of the second-largest banking group in Slovenia. The merger process was completed successfully.

Two branches of banks and banking groups of Member States (BKS Bank AG, bančna podružnica, and RCI Banque Societe Anonyme, bančna podružnica Ljubljana) were also operating in Slovenia at the end of the year.

Microprudential supervision

We set the following supervisory priorities in 2024, which also formed the starting point for the supervision of Slovenian banks:

• credit risk management:

  • adequacy of credit risk management (improvement of IFRS 9 models, adequacy of credit approval processes, timely identification of unlikeliness to pay, adequate creation of impairments);

  • timely identification of an adverse impact on asset quality from geopolitical tensions;

• management of information and communication technologies (ICT);

  • response to cyber risk and outsourcing risk;

  • implementation of the digitalisation strategy;

• strengthened internal governance:

  • effectiveness of management bodies and control functions;

• identification and management of climate-related risks and environmental risks.

The results of the 2024 SREP were positive in general, the risk assessment having improved, and the Pillar 2 capital requirements having declined slightly. Despite the uncertain geopolitical and trade situation, and the weakened economic environment, the banks are continuing to disclose resilience, with stable capital and liquidity positions. The majority of the qualitative measures within the framework of the SREP addressed deficiencies in the area of internal governance and risk management, and in the area of capital.

At Banka Slovenije we continually assess and monitor the changing nature of the risks and vulnerabilities that banks face, and tailor our supervisory activities accordingly. The key supervisory priorities in 2024 included monitoring the strengthening of bank resilience to macroeconomic factors that had begun to deteriorate, and geopolitical tensions caused by military conflicts and political uncertainty. The supervisory priorities in the previous year had also included cyber risks and risks related to climate change.

In the area of credit risk we focused particular attention of rectifying deficiencies in credit risk management, particularly in the area of the timely identification of a deterioration in portfolio quality. Given the increased macroeconomic uncertainty and the geopolitical tensions, early warning of a deterioration in credit factors in portfolios is of key importance. This is particularly true of the more vulnerable portfolio segments, such as those exposed to the car industry and the steel industry.

An in-depth inspection was conducted at several significant banks in the area of approval of housing loans, consumer loans and loans to SMEs. Loan approval is one of the key elements of credit risk management at banks, and is increasingly the subject of attention from supervisors, as the approval of high-quality loans can help to prevent non-performing loans in the future.

In line with the supervisory priorities, with regard to credit risk management and the adequate creation of impairments a targeted inspection was conducted at two significant banks in 2024 in connection with the creation of impairments in accordance with IFRS 9 and the capacity to manage new risks for which the bank does not yet have relevant data to be able to incorporate them into its models (energy crisis, disruption to supply chains, elevated inflation, rising interest rates, climate risks). Our finding was that more and more banks are using adjustments when they add the additional impairments for the aforementioned new risks that are not captured by the historical data and therefore cannot be modelled to the impairments calculated by model. The adjustments are vital for ensuring that the bank has sufficient impairments at its disposal should the new risks for which there is no adequate historical data be realised. This approach to creating additional impairments needs to be transparent, and responsive to changes, and must include clear criteria of when and how the bank adds to the volume of impairments calculated by model. The identified deficiencies were addressed to the banks in the form of recommendations, with a follow-up in 2024. Some of the deficiencies will not be rectified until 2025.

In light of the growing cyber risks caused by the increasing digitalisation of processes, the banks’ awareness of these risks and the ability to successfully defend against them are of key importance. To review cyber resilience at banks, cyber stress tests were conducted in 2024, with all Slovenian banks participating. One significant bank was also included in the thematic inspection of cyber resilience conducted by the ECB in 2024. The purpose of the thematic inspection was to review the implementation of basic security measures to protect against cyber risks at the bank, and the findings were sent to banks in the form of a follow-up letter.

Banking is becoming increasingly digital. This means that there is a need to devote even greater attention to supervisory strategies for the digital transformation and the requisite risk management capacities. This includes oversight of risks related to the use of innovative technologies, and risks related to the operational resilience frameworks, such as dependency on third parties and cyber risks. In its banking supervision Banka Slovenije addresses the aforementioned risks in the form of regular inspections, and in the form of various targeted questionnaires and analyses.

The significant banks were also required to report to the outsourcing register in 2024. The use of outsourced services is a very important issue for supervised entities, particularly in the area of information and communication technologies. The less significant banks will also be required to report on the use of outsourcing in 2025 in accordance with the Digital Operational Resilience Act (DORA).

Two scheduled prudential inspections were conducted at significant banks in 2024, while a third is due to be completed in the early part of 2025. All the inspections are in the area of ICT, with a focus on the adequacy of data management systems, digitalisation processes, the introduction of IT changes, cyber resilience, and outsourcing.

Seven scheduled prudential inspections were conducted at less significant banks, in the area of credit risk, interest rate risk and liquidity risk, and in the area of the ICAAP.

Two supervisors were also involved in inspections of significant banks outside Slovenia within the framework of JSTs inside the SSM.

As part of its prudential supervision Banka Slovenije granted several different authorisations in connection with the inclusion of interim profit in equity, the inclusion of capital instruments in the calculation of Tier 2 capital, and the purchase/cancellation of capital instruments. It also granted authorisations for a bank merger and for the purchase of equity investments.

In 2024 the largest number of supervisory findings – which are an important product of scheduled supervisory activities, and reflect the deficiencies that banks need to rectify – again related to irregularities identified in the area of credit risk. This was to be expected, given that credit risk was the key supervisory priority in previous years, and in 2024 was the focus of even more activity; consequently more measures were imposed in this area. More measures were also imposed in 2024 in the area of interest rate risk, again on account of the prudential inspections conducted in 2023 and concluded in 2024.

Our supervision of significant banks in 2024 identified 137 irregularities and deficiencies, with most in the area of credit risk, followed by measures in the area of interest rate risk, operational risk and recovery plans (see Figure 20). The majority of the findings have a low or medium impact on the financial position, the level of capital, internal governance and controls, and risk management at banks, for which reason we mostly imposed measures on the banks in question in the form of a letter with recommendations (see Table 3).

Our supervision of less significant banks identified 144 irregularities and deficiencies, with most in the area of interest rate risk and liquidity risk. A number of the identified irregularities were rectified in 2024, and we will follow up on the rectification of the others in 2025. The majority of the findings have a low or medium impact on the financial position of the banks in question.

Supervisory measures are imposed on significant banks by the ECB. The most common forms of measures are the operational act and the letter with recommendations. The more important measures are imposed in the form of a decision, which is a legally binding act. Two measures in the form of decisions were imposed on significant banks in 2024.

Supervisory measures are imposed on less significant banks by Banka Slovenije. The more important measures imposed on banks and savings banks, members of their management bodies, and shareholders are issued in the form of the binding legal acts set out by the Banking Act, i.e. in the form of orders and decisions.

Supervision of the two branches of foreign banks and banking groups of Member States (one from Austria and one from France) is conducted via regular reports, requests for additional clarifications, and monitoring of the liquidity position. No measures were imposed on the branches in 2024.

Supervision of compliance and AML/CFT

In contrast to prudential supervision, non-prudential supervision is exclusively the responsibility of Banka Slovenije. The central focus is anti-money laundering and countering the financing of terrorism (AML/CFT), which in addition to banks and savings banks covers other entities supervised by Banka Slovenije in accordance with the Prevention of Money Laundering and Terrorist Financing Act (ZPPDFT-2), namely payment institutions, electronic money institutions, currency exchange operators, and entities engaged in virtual currency activities. Alongside the AML/CFT activities, other supervisory activities in 2024 were conducted in connection with consumer lending in accordance with the Consumer Credit Act (ZPotK-2), having regard for the Act Governing Restrictive Measures Introduced or Implemented by the Republic of Slovenia in Compliance with Legal Instruments and Decisions Adopted by International Organisations (ZOUPAMO) and the relevant EU regulations. In accordance with Article 269 of the ZBan-3, Banka Slovenije operates a whistleblowing system.

The following activities were carried out in the area of AML/CFT:

• inspections:
  In accordance with the guidelines of the European supervisory authorities in favour of risk-based supervision, Banka Slovenije conducted ten inspections and packages of supervisory activity in 2024, and participated in seven supervisory colleges in the area of AML/CFT. A good deal of attention continued to be devoted to various supervisory activities in connection with entities engaged in virtual currency activities.

• drafting of regulations:
  A new EU legislative package was adopted in 2024 (AMLR, AMLD, AMLAR), and we are therefore involved in intensive activity for its implementation, including the preparation of the relevant secondary EU legislation and national laws. We also provided numerous opinions and clarifications in 2024 regarding the legal requirements and Banka Slovenije guidelines on the assessment of money laundering and terrorist financing (ML/TF) risks, and adopted the updated EBA regulations (Guidelines on ML/TF risk factors, Guidelines on information requirements in relation to transfers of funds and certain cryptoassets transfers).

• international cooperation:
  Our international cooperation in 2024 saw us again step up our attention to AML/CFT issues, which has been reflected in a rise in the number of international events in which Banka Slovenije participates via various bodies (EBA [AML/CFT standing committee], ECB, European Commission, Council of Europe [Moneyval], OECD). There was a notable strengthening of activity to switch over to the new EU regime in the area of AML/CFT, including the creation of a new EU AML/CFT body (the AMLA), which will also be responsible for conducting direct supervision of certain supervised entities in the future. Within the framework of our remit we regularly exchange information with foreign supervisors, and in 2024 we began activities for the sixth round of assessment for Slovenia’s AML/CFT system, which is being conducted by Moneyval.

• other activities:
  Banka Slovenije’s other activities include actively participating in the update of the national assessment of ML/TF risks for Slovenia, and addressing the unwanted deviations on the market. As a supervisor in the AML/CFT area, we regularly cooperate with prudential supervisors, and the information exchanged within the framework of AML/CFT is included in the assessments in licensing procedures and in the F&P assessment of the members of management bodies. After the completion of an international development project, within the framework of which we developed a platform up to the pilot phase in conjunction with the Jožef Stefan Institute for more effective implementation of supervisory activities in the area of AML/CFT, including via technology for processing large quantities of data, we are moving ahead with activity aimed at moving the pilot into regular use (for more on this project, see Box 9 in the Annual Report 2023).

In the area of bank compliance with the ZPotK-2, which governs consumer credit, four inspections and packages of supervisory activity were conducted in 2024, and a good deal of activity was focused on enforcing further changes at banks and savings banks with regard to refunding of early repayment charges paid in the past. Banka Slovenije is continuing to collaborate with the Ministry of the Economy, Tourism and Sport, the Market Inspectorate, the Slovenian Consumers’ Association, the European Commission and the EBA.

Owing to the ongoing war in Ukraine, and other crisis points around the world, 2024 again saw numerous international restrictive measures in place, which continues to be reflected in Banka Slovenije’s activity in this area. We are continuing to devote most attention to our preventive and advisory function, and to the coordination of reporting.

Inspections at supervised entities are still mostly conducted within the framework of comprehensive inspections in the area of AML/CFT (the area of restrictive measures was inspected at eight supervised entities in 2024), but additional supervisory activities were also introduced because of the elevated risk of potential breaches of applicable restrictive measures and the need for a comprehensive overview of the situation. We were involved in the drafting of EBA guidelines on internal policies, procedures and controls to ensure the implementation of restrictive measures, and the reformulation of the guidelines for the effective implementation of restrictive measures issued by the permanent restrictive measures coordinating group (SKSOU), which is headed by the foreign ministry. Mutual cooperation between the competent national bodies within the framework of SKSOU strengthened further in 2024, and we are continuing to provide relevant data on the implementation of financial restrictive measures to the European Commission.

Licensing and notification procedures

Banka Slovenije grants authorisations in accordance with Slovenian legislation and EU legal acts, namely the Banking Act (ZBan-3), the Payment Services, Electronic Money Issuance Services and Payment Systems Act (ZPlaSSIED), Commission Delegated Regulation (EU) 2018/389, the Foreign Exchange Act (ZDP-2), the CRR, the EMIR, and the Consumer Credit Act (ZPotK-2). In accordance with ZBan-3 and ZPlaSSIED we also process notifications of direct provisioning of services in Slovenia by member state institutions.

In 2024, we conducted 61 procedures in accordance with the aforementioned regulations. Of these, 47 procedures concluded with the granting of an authorisation, with half relating to members of the management body of a bank or savings bank, while 14 procedures were refused, halted or withdrawn, or were pending at the end of the year and thus deferred to 2025. We issued 22 decisions to withdraw authorisations in accordance with the ZBan-3 in 2024, all for performing the function of a member of the management body of a bank. One bank was removed from the register of banks holding an authorisation to provide banking services, mutually recognised financial services and ancillary financial services in 2024, following its merger with another bank, while one payment institution was removed from the register of payment institutions because it ceased to provide payment services.

Banka Slovenije is also responsible for processing notifications under the ZBan-3, the ZPotK-2 and the ZPlaSSIED. Last year we received six new notifications of the direct provision of services in Slovenia by banks of EU and EEA Member States, and 64 new notifications of the provision of payment services by payment institutions of Member States and of the provision of electronic money issuance services and payment services by electronic money institutions. No bank established in Slovenia newly notified the direct provision of services in another Member State in 2024.

3.4Macroprudential policy

Macroprudential policy is used to identify, monitor, assess and reduce or prevent systemic risks to financial stability with the aim of safeguarding the stability of the entire financial system. The ultimate objective of macroprudential policy is ensuring that the financial sector makes a lasting contribution to economic growth. EU Member States have a number of macroprudential instruments at their disposal that can be used and tailored with regard to the systemic risks identified and the resilience of the financial system. The macroprudential instruments can be broadly classified into three main groups: liquidity-based measures, capital-based measures and borrower-based measures. The capital-based measures are designed to build the banking system’s resilience, while the borrower-based measures put minimum credit standards in place and can limit excessive credit growth. Certain macroprudential instruments are implemented in a harmonised manner across EU Member States, whereas others are designed to reflect the specific features of individual banking systems or the particular systemic risks they face.

Banka Slovenije is responsible for the development and implementation of macroprudential measures for the banking sector and for leasing companies. The legal basis for the implementation of macroprudential policy consists of the Capital Requirements Regulation (CRR), the Banking Act (ZBan-3) and the Macroprudential Supervision of the Financial System Act (ZMbNFS).

The process of drawing up and implementing macroprudential policy can be divided into four interconnected phases:

1. identification and assessment of systemic risks,

2. selection and formulation (calibration) of macroprudential instruments,

3. implementation of macroprudential instruments,

4. evaluation of macroprudential policy and instruments.

Banka Slovenije assesses the level of systemic risks on the basis of a number of tools for monitoring financial stability. Systemic risk is defined as the risk of disruptions in the financial system that could have serious adverse effects on the functioning of the financial system and the real sector. There are two dimensions to systemic risk: cyclical and structural. The cyclical dimension relates to the evolution of risks in the financial system over time, while the structural dimension relates to the distribution of risks across the financial system. Banka Slovenije regularly publishes its risk and resilience dashboard for the financial system in the Financial Stability Review and in other publications. Banka Slovenije has developed a suite of indicators to monitor the evolution of systemic risks and to evaluate the attainment of individual intermediate macroprudential policy objectives. They include:

• to mitigate and prevent excessive credit growth and excessive leverage,

• to mitigate and prevent excessive maturity mismatch and market illiquidity,

• to limit direct and indirect exposure concentrations,

• to limit the systemic impact of misaligned incentives with a view to reducing moral hazard,

• to strengthen the resilience of financial infrastructures and the operations of institutions.

If the level of systemic risk is assessed as elevated and the resilience of the financial system is reduced, or there is a risk of the intermediate macroprudential policy objectives not being attained, Banka Slovenije can opt to impose macroprudential measures. The selection and calibration depend on the level and source of risks, and follow the principles described in the Strategic Framework for Macroprudential Policy.

Once selected and calibrated, the instrument is implemented and subjected to the assessment of its effectiveness. A macroprudential instrument is successful if it contributes to the attainment of the intermediate macroprudential policy objectives, and indirectly helps to reduce systemic risks.

Implemented macroprudential instruments may also have adverse cross-border effects, and can be the subject of avoidance. This makes cross-border cooperation extremely important. The ESRB is involved in the coordination of macroprudential policy at the European level. It is also responsible for issuing recommendations on the reciprocity of macroprudential measures. It can issue recommendations and warnings to national macroprudential authorities and other European bodies.

In 2024, macroprudential policy remained preventive in nature and focused primarily on maintaining the resilience of the financial system.

In light of the assessments of systemic risks and the resilience of the financial system, last year we continued making adjustments to a minor part of the macroprudential toolkit. Given the situation, we maintained a preventive macroprudential policy stance, which remained focused on maintaining the resilience of the financial system.

As part of the annual review of systemic importance, adjustments to the O-SII buffer were made for individual institutions where justified by the updated scores. Certain banks are classed as systemically important because of their size, their interconnectedness with other financial institutions and the real sector, the complexity of their business model, and the size of their cross-border activity. These institutions are required to meet the O-SII buffer with the aim of increasing resilience. The buffer rate is determined once a year with regard to the aforementioned attributes. Banks are granted a transitional period to build up to any changes in the buffer rate.

Table 5 illustrates the estimated systemic importance scores for individual O-SIIs, and the corresponding buffer rates that banks are required to meet in 2025. The merger of two banks meant that five institutions were identified as O-SIIs in 2024.

Under the Regulation amending the Regulation on the exercise of options and discretions under European Union law (Official Gazette of the Republic of Slovenia, No. 108/24), the use of discretions under Article 124 of the CRR is being abandoned. As of 1 January 2025 the stricter criterion previously in force is no longer relevant to banks. It had stipulated that the part of an exposure secured by residential real estate that may be weighted more favourably was 60% of the value of the residential real estate (the CRR3 lowers this threshold to 55%).

Our assessment was that no adjustments to the macroprudential restrictions on consumer loans were necessary in 2024. The most recent adjustment to the macroprudential instrument related to restrictions on consumer lending was made at the end of the first half of 2023. On that occasion the lower creditworthiness limit was tied to the minimum cost of living (plus an amount for any family dependants), which is adjusted as necessary for the general level of inflation and for other factors. We introduced a single cap on DSTI of 50%, and reduced the level of allowable deviations from the cap on DSTI. Based on an assessment of the attributes of consumer loans made in 2024, our opinion is that no particular risks are being posed by household lending. Consequently the calibration of the macroprudential restrictions on consumer lending is still adequate.

A positive neutral countercyclical capital buffer rate of 1% was maintained in 2024. Last year saw the introduction of the positive neutral rate, which aims to ensure that the banking system has sufficient capital at its disposal for release in the event of unforeseeable shocks not necessarily related to excessive credit growth and the build-up of domestic imbalances. Banks have been required to meet the increased buffer requirement as of 1 January 2025. The buffer rate of 1.0% represents a positive neutral countercyclical capital buffer rate, which entails a buffer rate of 1.0% in a neutral environment. The neutral environment is one where cyclical risks are neither excessively high nor excessively low, and are being maintained at stable levels. To assess the phase of the financial cycle and a neutral risk environment, we use the existing set of individual risk indicators, a composite indicator and the newly introduced indicator of a neutral environment. Each quarter we publish an assessment of cyclical systemic risks and the countercyclical capital buffer rate on our website.

Last year we also made no change to the two sectoral systemic risk buffers, which entered into force on 1 January 2023 with the aim of addressing the risks inherent in the real estate market and the increase in household lending, and covering the exemptions deriving from the Regulation on macroprudential restrictions on consumer lending. The sectoral systemic risk buffers were thus introduced for: (i) all retail exposures to natural persons secured by residential real estate, with a rate of 1.0%, and (ii) all other exposures to natural persons other than the aforementioned, with a rate of 0.5%.

The decision was made in November 2023 to lower the sectoral buffer for exposures secured by residential real estate from 1.0% to 0.5% of the total risk-weighted exposure amount, which banks have been able to apply as of 1 January 2025. The recalibration of the buffer was the result of our regular assessments of systemic risks, which found that the situation in the Slovenian real estate market had eased, which reduced the need to use this buffer.

Macroprudential policy in Slovenia is developed and carried out by the Financial Stability Board in close cooperation with the sectoral supervisory authorities.

Slovenia's Financial Stability Board (FSB) continued its regular discussions on systemic risks in 2024 and received updates on supervisors' macroprudential measures and the implementation of ESRB recommendations. Detailed information on the FSB's activities is available in its annual reports, published by the end of June each year.

As part of the FSB working group for fintech and cybersecurity, we devoted particular attention in 2024 to regulating cryptoassets, and analysing the potential tokenisation of the broader financial system. Due to the rapid advances in fintech and cybersecurity, we also identified new opportunities for cooperation between the working group members. In the area of cyber security we presented the results of the targeted cyber stress tests for the banking sector, which were conducted in the first half of last year. A cyber mapping tool designed to monitor systemic cyber risk was also presented. The tool illustrates the key financial and technological connections between financial institutions and firms providing high-tech services. The working group was briefed on the activities of the ESRB’s cybersecurity working group and on the inter-supervisor project on systemic cyber risk.

In 2024 as part of the FSB working group for climate risk we assessed the transition risks and physical risks in the banking system and at insurance corporations, and monitored the evolution of regulations in the area of sustainable financing. The current assessments of climate risk indicate that it is low to moderate at insurance corporations and in the banking system. The realisation of physical risks (floods) in 2023 had a major impact on the insurance sector as expected, while its impact on the banking system was relatively limited.

3.5Bank resolution and deposit guarantee scheme

The area of bank resolution and deposit insurance is regulated by several EU legal acts. Directive 2001/24/EC of the European Parliament and of the Council on the reorganisation and winding up of credit institutions was adopted on 4 April 2001, and Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms was adopted on 15 May 2014. A key role in bank resolution is played by the resolution authorities responsible for using resolution tools and exercising resolution powers. An important innovation within this framework came with Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund. The key EU legal act in the area of deposit insurance is Directive 2014/49/EU of 16 April 2014, which sets out the rules and procedures in connection with the establishment and functioning of deposit guarantee schemes.

Bank resolution

Under the Resolution and Compulsory Winding Up of Banks Act[14] (the ZRPPB-1), we exercise the powers and tasks of the designated national resolution authority. The aforementioned law transposes Directive 2001/24/EC and Directive 2014/59/EU into Slovenian legislation. The ZRPPB-1 regulates the responsibilities and procedures implemented by Banka Slovenije in exercising the powers and tasks of the bank resolution authority, bank resolution planning, the resolution procedure and powers in connection with the use of resolution measures, and procedures for the compulsory winding-up of banks (compulsory liquidation and bankruptcy). The objectives of bank resolution are, through the use of resolution measures, to ensure the continuing implementation of critical functions, to prevent a serious adverse impact on financial stability, to protect public funds, to protect depositors whose deposits are covered, and investors in terms of guaranteed claims, and to protect the assets and resources of customers. The Single Resolution Board (SRB) was established by Regulation 806/2014/EU. Under the ZRPPB-1 and Regulation 806/2014/EU, Banka Slovenije exercises powers and tasks in connection with resolution, other than the powers and tasks for which the SRB is responsible in accordance with Regulation 806/2014/EU.

Banka Slovenije exercises the powers and tasks of the designated national resolution authority.

In 2024 Banka Slovenije focused on updating the resolution plans setting out measures for resolution or compulsory wind-up that could be implemented at banks should they fail. To this end Banka Slovenije independently draws up resolution plans for all banks under our remit, and participates in the SRB’s internal resolution taskforces in creating and updating the resolution plans of systemically important banks and international banking groups operating in Slovenia. The SRB is responsible for drawing up resolution plans for banks and banking groups that are under the direct supervision of the ECB, and for all banking groups that pursue cross-border activities. The drafting of the resolution plans for banks under the remit of the SRB is undertaken by internal resolution taskforces in cooperation with all the national resolution authorities of the countries of the banking union where individual members of the banking group have a presence. Participation in internal resolution taskforces is via document exchange, regular teleconferences and meetings. Banka Slovenije is responsible for drawing up resolution plans for all banks that do not fall under the remit of the SRB.

The bank resolution fund, which was established in March 2015 on the basis of the Bank Resolution Authority and Fund Act, and was supposed to cease operating on 31 December 2024, is continuing to operate as the bank liquidation fund, whose purpose is financing compulsory liquidation measures[15] under the ZRPPB-1. The basis for this is the amended ZRPPB-1, which entered into force in December 2024. The target level of assets is 3.0% of the total amount of covered deposits in Slovenia as at 30 September 2014. Assets in the amount of 1.3% of the total amount of covered deposits were provided by the transfer of the founding contributions paid into the bank resolution fund in March 2015,[16] while assets in the amount of 1.7% of the total amount of covered deposits are being provided by banks in the form of pledged liquid assets to cover extraordinary cash payments. Banks paid founding contributions to the bank resolution fund in the amount of EUR 191.1 million in March 2015.

Banka Slovenije manages Slovenia’s bank liquidation fund.

To reduce management costs, the assets of the bank liquidation fund are managed by Banka Slovenije together with the assets of the deposit guarantee fund. The bank liquidation fund and the deposit guarantee fund each have a share of the joint fund (the bank liquidation and deposit guarantee fund) that is proportional to their respective holdings of the pooled assets.

The joint fund invested in highly liquid sovereign, supranational, regional, agency and corporate debt instruments in 2024, generally restricting its investments to those with an internal Banka Slovenije rating of at least A-. Assets were also placed in short-term deposits at commercial banks, as these offered higher interest rates compared to the remuneration on the Banka Slovenije's account. Higher bond yields allowed for the interest rate exposure (modified duration) to be maintained close to its maximum level in 2024. The maturity breakdown is as follows: 60% of the joint fund’s assets are in the bucket of up to one year, 9% in the bucket of one to three years, and 31% in the bucket of more than three years.

The bank liquidation fund’s assets under management amounted to EUR 197.0 million at the end of 2024, while the value of the joint fund was EUR 437.5 million. The bank liquidation fund’s operating result was a net profit of EUR 6,743,413.43 in 2024, while the joint fund recorded a net profit of EUR 14,659,175.56, on account of a fall in the market yields of short-term German government bonds and a general fall in credit spreads during the year. Performance is disclosed in greater detail in the bank liquidation fund’s annual report.

In accordance with Article 216n of the ZRPPB-1, the bank liquidation fund will cease operations on 31 December 2030. Since the establishment of the bank liquidation fund, no measures that would require the use of its assets have been imposed on banks.

Deposit guarantee scheme

As the deposit guarantee authority, Banka Slovenije exercises powers and tasks in connection with the deposit guarantee scheme in Slovenia in accordance with the Deposit Guarantee Scheme Act (ZSJV).[17] This law transposed Directive 2014/49/EU into Slovenian law. The ZSJV stipulates that Banka Slovenije should establish and operate a deposit guarantee scheme to guarantee a depositor’s deposits in the event of the unavailability of deposits at a bank. The deposit guarantee is enforced by means of the repayment of covered deposits to depositors, or through other measures by which depositors’ access to covered deposits is maintained in the event of the bank’s resolution or compulsory wind-up. Deposits at each bank or savings bank established in Slovenia are covered up to the value of EUR 100,000 on the basis of the ZSJV. The deadline for the repayment of covered deposits is seven working days from the publication of the Banka Slovenije decision on deposit unavailability.

Banka Slovenije exercises the powers and tasks of the national deposit guarantee authority.

In 2024 Banka Slovenije continued its periodic testing of the capture of data on covered deposits at banks in Slovenia. We continued our dialogue with the Ministry of Finance on the financial capacity of the deposit guarantee scheme and the envisaged procedures in the event of the payout of covered deposits.

Banka Slovenije established the deposit guarantee fund in 2016 as part of its operation of the deposit guarantee scheme. The fund may be used to make repayments of covered deposits, and to finance resolution or compulsory wind-up measures by means of which access to covered deposits is maintained for depositors. The fund is primarily financed via regular contributions by banks. Directive 2014/49/EU required the fund to reach its target level by 3 July 2024, in the amount of 0.8% of the total covered deposits in Slovenia. Additional contributions by the banks in 2024 ensured that this target was met. Should the fund’s available assets not suffice for paying out covered deposits or for repaying the fund’s other liabilities, banks will be ordered to make extraordinary contributions to the fund. The fund is also financed via income from its asset holdings, borrowing on the market, and loans obtained from other sources in accordance with the ZSJV. The ZSJV additionally envisages the possibility of an emergency liquidity loan from Banka Slovenije and a short-term loan from the state, if the fund is unable to secure sufficient funds in time from the aforementioned sources to meet its obligations.

The deposit guarantee fund’s assets under management amounted to EUR 240.5 million at the end of 2024. The banks made total contributions of EUR 37.8 million to the deposit guarantee fund in 2024. The deposit guarantee fund’s operating result was a net profit of EUR 7,910,638.13 in 2024. Its performance is disclosed in detail in its annual report.

A new ZSJV entered into force in January 2025, and raises the target value of the deposit guarantee fund’s assets under management to 1.5% of covered deposits in Slovenia. The fund is required to reach the new target value by 31 December 2030.

The deposit guarantee fund has not been activated since its establishment.

Deposits at banks from EEA countries that provide banking services in Slovenia via a branch or directly are covered by the deposit guarantee scheme in the country in which the bank is established. The deposit guarantee scheme in Slovenia pays out coverage for deposits at a branch of a Member State bank in Slovenia at the request of and on behalf of the deposit guarantee scheme in the country in question. The deposit guarantee scheme of the aforementioned country provides funds in the amount of the covered deposits that will be paid out in Slovenia, and all necessary information and instructions for paying out the covered deposits of the branch.

Banka Slovenije is a signatory to the multilateral cooperation agreement of the European Forum of Deposit Insurers (EFDI), which regulates cooperation between deposit guarantee schemes.

3.6Banknotes and coins

[18] Banka Slovenije also minted euro coins in 2024, in the form of general circulation 1-cent, 2-cent, 5-cent, 10-cent, 20-cent, 50-cent and 2-euro coins.[19] In addition to the general circulation coins, Banka Slovenije also issues Slovenian commemorative coins, and its own numismatic products. We inform and educate professional audiences and the general public with regard to fit and authentic euro banknotes and coins. Supplying fit and authentic cash to the market is one of Banka Slovenije’s key tasks. To ensure that it has the right quantities of banknotes and coins at its disposal and that the market is kept smoothly supplied with cash, each year Banka Slovenije is involved in the printing of euro banknotes at Eurosystem level; in 2024 it was 50-euro notes that were printed.

A net total of EUR 17.9 billion of cash was issued into circulation by Banka Slovenije between the introduction of the euro on 1 January 2007 and 31 December 2024. Banka Slovenije issued a net total of EUR 1.5 billion of cash in 2024, comparable to the previous year’s figure of EUR 1.7 billion. The total net cash issuance of EUR 17.9 billion consists of EUR 17.8 billion in banknotes (577.1 million banknotes) and EUR 160.4 million in coins (623.0 million coins). In terms of quantity, the 20-euro note was the most heavily issued (310.2 million banknotes), followed by the 50-euro note (171.6 million banknotes), and the 10-euro note (121.9 million banknotes). Net issuance of the 500-euro, 100-euro and 5-euro notes since the introduction of the euro is negative (the number of banknotes issued by Banka Slovenije is less than the total number of banknotes returned to Banka Slovenije). The coins that were issued most heavily in terms of net quantity were the 1-cent (197.0 million coins) and 2-cent (132.0 million coins), while the lowest net quantity of issued coins was recorded by the 1-euro (18.5 million coins).

A net total of EUR 17.9 billion of cash was issued into circulation by Banka Slovenije between 1 January 2007 and 31 December 2024, of which EUR 1.5 billion was in 2024.

The cash processing unit sorted 138.5 million banknotes and coins returned from circulation in 2024, up 5% on the previous year. This consisted of 138.4 million banknotes, and 0.1 million coins. A total of 19.6 million euro banknotes were withdrawn from circulation and destroyed in order to maintain the general quality of banknotes in circulation, up 4% on the previous year.

Last year Banka Slovenije made 458 exchanges of tolar banknotes and payment notes, down 24% on the previous year. A total of EUR 95.7 thousand worth of tolar banknotes and payment notes were returned from circulation in 2024 (up 32% on 2023). The total value of the tolar banknotes and payment notes still in circulation as at 31 December 2024 was EUR 31.4 million. Payment notes and tolar banknotes are exchangeable at Banka Slovenije counters with no time limit, while the exchange of tolar coins ended on 3 January 2017 in accordance with the Introduction of the Euro Act.

The total value of the tolar banknotes and payment notes still in circulation at the end of 2024 was EUR 31.4 million.

The likelihood of receiving counterfeit euro cash remains low. By monitoring the functioning of our cash processing machines and providing training in checking the fitness and authenticity of cash, Banka Slovenije ensures that machines and employees are able to identify counterfeits, and thus ensures that all counterfeit banknotes and coins are withdrawn from circulation. According to the figures of the National Analysis Centre and the Coin National Analysis Centre, a total of 1,181 counterfeit banknotes were withdrawn from circulation in 2024, up approximately 7% on 2023. The most frequently detected counterfeits were 20-euro, 50-euro and 200-euro notes, which together accounted for 72% of all counterfeits seized in circulation in Slovenia in 2024. The total value of counterfeit euro cash detected in Slovenia amounted to EUR 110,240 in 2024,[20] up approximately 11% on the previous year. Despite the increase, the number of seized counterfeits in circulation in Slovenia remains low, placing Slovenia in the bottom half of the euro area countries in terms of the number of counterfeits detected. A total of 6,665 counterfeit euro coins were also withdrawn from circulation in Slovenia in 2024, down 13% on 2023. The most common counterfeit remains the 2-euro coin (92% of the total number). Given the size of the net issuance of authentic euro banknotes and coins, the share of counterfeits in circulation in Slovenia is very low.

Banka Slovenije organises the issuance, distribution and storage of general circulation and occasional coins for the Republic of Slovenia on the basis of the Occasional Coins Act.[21] Banka Slovenije issued a commemorative 2-euro coin into circulation to mark the 250th anniversary of the National and University Library (1 million coins were minted), and collector coins to mark the 150th anniversary of the birth of Rudolf Maister (750 gold, 1,250 silver and 68,000 bimetallic 3-euro coins). For the collector market we also issued a collection of euro coins minted in 2024 in ordinary and proof versions, and a 2-euro commemorative coin and 3-euro collector coin, both proof-quality. The numismatic products can be purchased at the Banka Slovenije counters, and at selected branches of our two agents for numismatic products, Deželna banka Slovenije d.d. and Moro & Kunst d.o.o. A list of the numismatic products and selling prices can also be found on the Banka Slovenije website, with those marked in red no longer available.

In 2024 Banka Slovenije issued collector coins marking the 150th anniversary of the birth of Rudolf Maister and a commemorative coin marking the 250th anniversary of the National and University Library.

3.7Payment and settlement systems

Payment and settlement systems are financial market infrastructure that facilitates the transfer of cash and securities, and are a fundamental component of the financial system. By ensuring the effective, uninterrupted and secure execution of a large number and high value of financial transactions (i.e. the exchange and settlement of payments and securities), they make a significant contribution to the smooth functioning of financial markets, and thereby to general economic stability and efficiency.

As the (joint) operator of market infrastructure owned and operated by the Eurosystem, Banka Slovenije provides market participants with settlement in risk-free central bank money. We are also involved in making decisions on the direction of the development of this infrastructure. Under the TARGET-Slovenija payment system, we manage cash accounts for the settlement of (primarily) large-value payments in T2, cash accounts for the settlement of securities transactions in TARGET2-Securities (T2S), and cash accounts for the settlement of instant payments in TARGET Instant Payment Settlement (TIPS). Additionaly, we enable access to pan-European retail payment systems for Slovenian banks and savings banks. As the supervisor we ensure the compliance of payment and settlement systems, providers of payment services and electronic money issuance services, and currency exchange operators with the regulatory requirements. We also act as a guide (i.e. catalyst) for the activities of market participants in the area of payments and market infrastructure for payments and securities.

Besides our ordinary tasks in the area of payment and settlement systems that were carried out in line with plans in 2024, we were also actively involved in the Eurosystem's digital euro project and exploratory work on new technologies for wholesale central bank money settlement.

Management of payment infrastructure

Banka Slovenije was managing main cash accounts and dedicated cash accounts in the T2 payment system for 16 Slovenian market participants at the end of 2024, who during the course of the year settled a total of 1,182,616 transactions (up 1.8% on 2023) with a total value of EUR 480.47 billion (up 5.0% on 2023). We managed 23 dedicated cash accounts for settling securities transactions on the T2S platform for 10 Slovenian participants, who settled 51,223 transactions over the course of the year (up 18.8% on 2023) in the total amount of EUR 12.47 billion (down 4.7% on 2023). For the settlement of instant payments in TIPS we managed one dedicated cash account for each of the 13 Slovenian participants, via which 1,939,067 transactions (up 46.8% on 2023) in the total amount of EUR 2.15 billion (up 41.1% on 2023) were settled in 2024.

Slovenian participants settled 1,182,616 transactions in the total amount of EUR 480.47 billion in T2, 51,223 transactions in the total amount of EUR 12.47 billion in cash accounts in T2S, and 1,939,067 transactions in the total amount of EUR 2.15 billion in cash accounts in TIPS in 2024.

In the cross-border retail payments segment, we enabled Slovenian banks and savings banks to exchange SEPA credit transfers with more than 3,500 payment service providers and to exchange SEPA direct debits with more than 2,800 payment service providers across the EU.

Last year we were involved in the further development of market infrastructures owned and managed by the Eurosystem, where the activities mostly focused on improving the functionality of the infrastructures and ensuring greater (cyber) resilience and availability.

Supervision of payment and settlement systems and of payment service providers

With the aim of ensuring efficient, continuous and secure operation of payment and settlement systems and payment service providers, Banka Slovenije monitors and analyses their operation and issues supervisory measures. As part of its supervision of payments under the Payment Services, Electronic Money Issuance Services and Payment Systems Act (ZPlaSSIED), Banka Slovenije supervises payment systems, credit institutions, payment institutions and electronic money institutions. Under the Act Implementing the Markets in Cryptoassets Regulation (ZIUTK), Banka Slovenije is also competent for supervising electronic money institutions and credit institutions that issue e-money tokens, and, in conjunction with Securities Market Agency (SMA), for supervising credit institutions that issue asset-referenced tokens and provide cryptoasset services. We are also competent for supervising currency exchange operators under the Foreign Exchange Act (ZDP-2). Under the Decree implementing Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories, Banka Slovenije shares supervisory powers with the SMA in supervising a settlement system operator. Last year we deleted one provider of account information services from the register of payment institutions because it ceased to provide these payment services. No new authorisations were granted under the ZPlaSSIED.

To examine compliance with the ZPlaSSIED in the area of payment services, we conducted inspections at one bank and two electronic money institutions in 2024. Inspections were also conducted at three currency exchange operators in accordance with the ZDP-2. In conjunction with the SMA we concluded an inspection of a central depository under Regulation 909/2014/EU, and an inspection of a payment system operator in accordance with the ZPlaSSIED.

Guiding and encouraging the actions of market participants

In 2024 we continued to guide the activities of market participants with the aim of improving competition and accelerating the development of payment and securities markets in line with the Eurosystem policy. In doing so, we act collaboratively, with the aim of finding synergies among market participants. We focus on the objectives that participants in the aforementioned markets are unable to attain alone, or that require the coordination of various interests. Playing the role of catalyst demands a system-wide view of the market, knowledge, reputation and awareness that we are not acting on the market as a competitor to other participants.

Our regular activities include promoting harmonisation with pan-European (and global) practices and standards in the area of payments and financial collateral management, and efforts to raise the level of cyber resilience and business continuity in market infrastructure for payments and securities. In this regard we guided the activities of market participants within the framework of the National Payments Council (NPC), the National Group of Participants for Market Infrastructure for Securities and Financial Collateral, and the National Group of Participants for Market Infrastructure for Payments.

The majority of the NPC’s activities in 2024 addressed the first three strategic initiatives of the Strategy for the development of the payments market in Slovenia for the period of 2024 to 2028: (1) developing simple payment solutions with a good user experience in line with the needs and expectations of users, including vulnerable groups; (2) addressing the security aspects of electronic payments; and (3) ensuring the phased acceptance of electronic payments at point of interaction (POI). Three working groups were established, with a task of proposing activities to address the relevant strategic initiative. Of the issues discussed by the NPC, there was a particular focus on instant payments and the EU’s Instant Payments Regulation.

The subjects discussed within the framework of the National Group of Participants for Market Infrastructure for Securities and Financial Collateral, and the National Group of Participants for Market Infrastructure for Payments in 2024 mostly related to encouraging the harmonisation of activities in the domestic environment in the area of securities settlement and financial collateral management, and to the further development of market infrastructures managed by the Eurosystem.

Via the Banka Slovenije fintech innovation hub we also provide clarifications in connection with regulatory requirements falling under our remit to market entities whose financial services are based on advanced technologies. The majority of the questions received at the hub in 2024 from domestic and foreign innovative businesses related to cryptoasset services and payment services. We are also active at international level in the area of innovations in financial services, where we participate in the European Forum for Innovation Facilitators and in the BIS Innovation Hub. We are also active participants in the European blockchain regulatory sandbox, the aim of which is to put in place a pan-European framework for regulatory dialogue and to increase legal certainty for innovative solutions in the aforementioned area. In two phases of the sandbox we participated in analysis of innovative business models in the area of payments with cryptoassets in 2024.

Digital euro

We are actively involved in the Eurosystem’s digital euro project, within which the preparation phase continued in 2024. One of the key activities in this phase was the ongoing cooperation between the Eurosystem and market participants on the technical rulebook of the payment scheme for the digital euro. This will set out the rules, procedures and processes for exchanging and processing payments with the digital euro between relevant participants. The Eurosystem also began the process of selecting providers to develop the digital euro ecosystem, continued experiments and performed in-depth analysis of technologies for making payments without an internet connection and to improve privacy. The first part of the preparation phase will end in October 2025, but the decision to issue a digital euro has not yet been taken. The Governing Council will only take such a decision after the legal basis has been put in place at EU level.

We strengthened cooperation with the key Slovenian participants via the National Participants Group on a Digital Euro (NSGDE). We hosted meetings of the NSGDE in April, September and December 2024, which discussed key themes and the progress on the digital euro project.

3.8Joint management of the ECB’s foreign reserves

Banka Slovenije manages part of the ECB’s foreign exchange reserves. The value of the foreign exchange reserves transferred to the ECB when Slovenia introduced the euro was EUR 200.5 million as at 31 December 2024. The main purpose of the ECB’s foreign exchange reserves is to ensure adequate liquidity in the Eurosystem for interventions on the foreign exchange market. They are managed collectively by the national central banks of the Eurosystem.

Banka Slovenije manages just over EUR 200 million of the ECB’s foreign exchange reserves.

Banka Slovenije manages the reserves in conjunction with the central bank of Luxembourg. In addition to the foreign exchange reserves transferred to the ECB, Banka Slovenije also holds a portion of its investments in foreign currency in case the ECB calls for additional foreign exchange reserves, in accordance with Article 30 of the Protocol on the Statute of the ESCB and the ECB.

3.9Management of Banka Slovenije’s financial assets

Banka Slovenije manages its own financial assets with the aim of strengthening its capital over the medium term, thereby helping to ensure its financial independence in performing its central banking tasks. In addition to pursuing this primary objective, we also strive for socially responsible and sustainable investing. Banka Slovenije’s financial assets that are not related to the implementation of Eurosystem monetary policy amounted to EUR 5.7 billion at the end of 2024, up EUR 1.4 billion on 2023.

Banka Slovenije’s financial assets amounted to EUR 5.7 billion at the end of 2024.

The asset breakdown is determined on the basis of the strategic asset allocation, which is updated once a year, having regard for all constraints, by optimising the expected return while keeping quantitatively expressed financial risks to an acceptable level. The strategic asset allocation is approved annually by the Governing Board of Banka Slovenije at the proposal of the Investment Committee. Under the strategic asset allocation, Banka Slovenije’s financial assets are spread across several portfolios, which differ either in terms of currency or asset class breakdown. Approximately 40% of Banka Slovenije’s financial assets are actively managed against benchmark portfolios. Banka Slovenije’s financial assets encompass holdings of sovereign, supranational, agency, regional, covered, and corporate debt (financial and non-financial). In addition, with the aim of diversifying risks and attaining higher potential long-term returns we invest a portion of our financial assets in exchange-traded funds (ETFs), which match the movements of a global equity index that is diversified in terms of geographical region, currency and sector. Monetary gold also constitutes part of our financial assets.

Investments in debt instruments are generally restricted to those with an internal Banka Slovenije rating of at least A-. Furthermore, investments in different types of debt are additionally limited by the maximum allowable aggregate exposure to an individual type of debt, and are limited to a list of eligible issuers. There is also an upper exposure limit per individual entity or group of connected entities, which depends on the internal Banka Slovenije rating. Any deviations from the aforementioned limits are approved by the Governing Board of Banka Slovenije, or by the Investment Committee under the Governing Board’s guidelines. The Investment Committee also monitors the asset management process on a monthly basis.

The vast majority of our financial assets are denominated in euros (EUR 4.1 billion), with the remainder in foreign currencies and gold. The appreciation of the US dollar in 2024 led to a slight increase in the share of assets denominated in this currency (21%), while the share denominated in euros declined (73%). In the breakdown of Banka Slovenije’s financial assets by investment class there was a slight decline in the share of sovereign debt (28%) and the share of supranational, agency and regional debt (7% in total), in favour of increases in the shares of corporate debt (39%) and equity ETFs (9%). The shares of covered debt (13%) and gold (4%) remained unchanged. There was no significant change in the breakdown of the financial assets in terms of maturity in 2024. The largest component consists of financial assets in the maturity bucket of more than three years (52%, including holdings in the BIS fund and of equity ETFs, which have no maturity), followed by the buckets of up to one year (29%) and one to three years (19%). The share of assets rated AAA amounted to 29%, those rated AA amounted to 25%, and the remainder were rated below AA (including holdings of equity ETFs, which are not rated).

3.10Central credit register

Banka Slovenije is authorized by law to manage the central credit register, the main national database about the indebtedness of individuals and business entities. The register was established with the aim of increasing efficiency in the exercise of Banka Slovenije’s key powers and tasks, and with the aim of providing data for a system for exchanging information about the indebtedness of individuals (SISBON) and business entities (SISBIZ). The information exchange system allows for improvements to be made to the process of assessing and managing credit risk at lenders. Furthermore it promotes policies and measures for responsible lending and sustainable borrowing by individuals and business entities, thereby preventing over-indebtedness.

At the end of 2024 the SISBON system held data on 1,564,651 individuals and their 3,115,461 different credit operations.

The database of individual indebtedness, SISBON, held processed data on the credit operations[27] of 1,564,651 individuals as at 31 December 2024, down 0.04% on a year earlier. There were 58 different creditors at the end of 2024 with access to the data in the SISBON system. Of these, 38 were members (entities referred to in Article 15 of the Central Credit Register Act), who have access to all data in the SISBON system, and 20 were included creditors, who have access to a limited amount of data only, as set out by the third paragraph of Article 19 of the aforementioned law. Data on 3,115,461 credit operations was held in the SISBON system on 31 December 2024, down 0.8% on the previous year. They consisted of 1,138,596 personal account overdrafts (down 1.5% on 2023), 832,998 credit card limits (down 2.0%), 496,049 consumer loans (up 3.1%), 305,069 limits on other payment instruments (down 0.4%), 179,296 housing loans (down 2.9%), and 163,453 finance leases (up 0.8%).

The SISBON system was managed in accordance with the Central Credit Register Act, while the identification options for logging onto the Moj SISBON app were expanded, to make it easier for individuals to access their own data. System members and other creditors enjoyed system functionality without disruption throughout the year, with the system operating 24 hours a day, every day. Individuals whose data is held in the system were allowed to exercise their legal rights with regard to their own data, and were given full technical and substantive support. We actively highlighted the benefits of various digital options for viewing data, which helped to further raise the share of digital transcripts compared with hard copy. The increase in the share of digital transcripts was also attributable to two new approaches to identification when logging onto the Moj SISBON app that were offered to individuals in 2024, namely via the SI-PASS service and with the new chipped personal ID card. A total of 16,628 data transcripts were sent to individuals in 2024, of which 11,725 were digital and 4,903 were hard copy. The share of digital transcripts was 11.2 percentage points higher than in 2023. We also gave individuals 2,236 clarifications regarding queries in connection with the SISBON system by phone or by email.

In the SISBON system we focused in particular on monitoring the members and included creditors regarding compliance with membership and data access requirements, system security, and the accuracy of data reporting. To verify compliance with the regulations governing the information exchange system, we conducted 23 audits of SISBON members, which identified 77 instances of non-compliance. These non-compliances were rectified by the members by the deadlines set with regard to the nature of each instance of non-compliance. One indicator of members’ compliance with regard to the accuracy of data reporting is the number of complaints by individuals, in particular substantiated complaints. A total of 1,833 complaints covering 38 members were submitted in 2024 in connection with the accuracy of the data in the SISBON system, up 45% on the previous year. The level of complaints is still low: it was equivalent to 0.12% of all individuals whose data is managed in the system. Despite the rise in complaints, the share of substantiated complaints remained unchanged from the previous year, at 37%. There was no significant change in the reasons for the complaints compared with the previous year: most are the result of the incorrect reporting of the status of completion of enforcement and of transactions in connection with personal bankruptcy proceedings.

The SISBIZ system held data on 276,383 credit operations for 138,150 business entities at the end of 2024.

The database of business entities’ indebtedness, SISBIZ, held processed data on the credit operations[28] of 138,150 business entities as at 31 December 2024, up 7.7% on a year earlier. Sole traders and other self-employed individuals accounted for 53% of the total, capital and personal corporations for 40%, and other forms of business entity (societies, institutes, chambers, interest associations, etc.) for 7%. The share accounted for by sole traders and other self-employed individuals was up 2 percentage points on 2023, while the share accounted for by capital and personal corporations declined by 2 percentage points. The share accounted for by other forms of business entity remained the same. A total of 36 creditors with the status of system member (entities referred to in Article 15 of the Central Credit Register Act) were able to access data in the SISBIZ system in 2023. As at 31 December 2024 the SISBIZ system held data on 276,383 credit operations, of which 102,704 were loans (up 12% on 2023), 36,974 were loans and receivables under payment cards and credit cards (down 53%), 67,297 were finance leases (up 1%), 20,538 were sureties (down 18%), 27,146 were factoring operations (up 14%) and 21,724 were financial guarantees and other contingent liabilities (down 7%).

We were effective in managing the SISBIZ system over the course of the year, in that it was available uninterrupted, 24 hours a day, every day of the year, to system members and also to business entities whose data is held in the system. Business entities were able to smoothly exercise their legal rights in connection with their own data, and were provided with technical and substantive support. Business entities viewed their own data 1,711 times, in digital form via the Moj SISBIZ online app. We also gave business entities 1,705 clarifications regarding queries in connection with the SISBIZ system by phone or by email.

A major priority was ensuring SISBIZ members’ compliance with the requirements of the Central Credit Register Act. To verify compliance with the conditions of membership and for access to data in the system, system security and the accuracy of data reporting, a total of 17 audits were conducted at SISBIZ members, which identified 43 instances of non-compliance. The majority of the non-compliance related to inaccuracies in data reporting, and was rectified by members by the deadlines set with regard to the nature of the particular breach. One indicator of members’ compliance with regard to the accuracy of data reporting is the number of complaints by business entities. Business entities submitted a total of 95 complaints in 2024, down 8% on 2023, which covered just 0.07% of all business entities whose data is held in the system. The share of substantiated complaints was also down on the previous year: it stood at 48%, 31 percentage points less than in 2023. The reasons for the complaints were unchanged from previous years: the main issue was the reporting of the past-due debt and credit rating of the business entity.

Banka Slovenije again acted with the diligence of a good expert and good manager in executing the legal task of managing the central credit register and the SISBON and SISBIZ information exchange systems in 2024. Further evidence comes indirectly from the following figures: a total of 120 irregularities identified during supervision of SISBON and SISBIZ users, 29.9 million data records processed in the central credit register, and 67,287 viewings of their own data by individuals and business entities, who requested 18,339 data reports.

A significant benefit of the central credit register and the data processed within it is evidenced in the exercise of Banka Slovenije’s core tasks and powers, particularly in the area of macroprudential supervision and in the exercise of supervisory powers and tasks at banks.

3.11Payment services for Banka Slovenije’s clients

Banka Slovenije is a payment service provider and manages accounts for clients, of whom the largest group are budget spending units. Banka Slovenije administers the government’s single treasury account and the single municipal treasury accounts for some municipalities. The accounts of direct and indirect spending units of the state budget and municipal budgets, which include the Health Insurance Institute and the Pension and Disability Insurance Institute, were opened as sub-accounts of the single government or municipal treasury accounts. The sub-accounts are administered by the Public Payments Administration of the Republic of Slovenia.

Banka Slovenije manages purpose-specific current accounts for the Ministry of Finance, and provides payment bank services on its behalf. For this purpose, Banka Slovenije maintains a cash account in TARGET2 Securities to provide these services for the Ministry of Finance. The KDD holds a transaction account with Banka Slovenije for its own resources. Banka Slovenije’s clients also include foreign financial institutions and EU institutions.

The number of Banka Slovenije’s clients fell to 132 in 2024; they held 138 accounts. Three municipalities closed their single municipal treasury accounts, and transferred, together with their budget spending units, their payments transactions to new sub-accounts opened under the government’s single treasury account. KDD’s account for the guarantee fund and its fiduciary account for custody services were transferred to the TARGET system.

Banka Slovenije allows its clients to execute (instant) credit transfers and direct debits.

There were 55.57 million payments executed in 2024, up by 0.26 million or 0.5% on 2023. To make payments, we participate in various payment systems and other systems, and have put in place a network of correspondent accounts abroad. We thereby ensure that our clients are able to smoothly make payments to their counterparties and receive payments from them. The payment services are provided with a high degree of automation: only 0.04% of the transactions were processed manually.

For Banka Slovenije in its role as a payment service provider, instant payments were again the focus of much of our activity in 2024. Consequently 14.6 million of our domestic SEPA credit transfers, almost 60% of the total, were executed as instant payments. This made a significant contribution to meeting the commitment by the Slovenian banking community to migrate all domestic SEPA credit transfers to instant payments by February 2027.

Banka Slovenije regularly updates and upgrades its software with the aim of ensuring that its clients are able to execute payments securely and effectively. We focused much activity on adapting software to the new standards in the area of SEPA payments. We also made adaptations to software to enforce the ISO20022 standard for exchanging payment and other messages in the area of correspondent banking.

We have legal documentation in place with our clients to regulate mutual rights and obligations in the provision of payment services. A significant amount of activity went on updating these agreements to ensure their compliance with the ECB requirements that entered into force in 2024.

3.12Statistics

In 2024 Banka Slovenije successfully carried out all regular tasks in connection with monetary and financial statistics, external statistics, national financial accounts statistics, supervisory data and other statistics, including publications and the comprehensive provision of statistics to users. We were also successful in expanding the set of data and information for our users.

Financial institutions and markets

The monthly reporting by monetary financial institutions (PORFI) also proceeded successfully in 2024, providing key statistical, financial and accounting data, including data on loans, that is of great importance in supporting the implementation of macroprudential supervision, analysis of financial stability, and banking supervision.

The research phase of the Integrated Reporting Framework (IReF) project for the integration of statistical data requirements into a standardised framework is also continuing under the aegis of the ESCB. The requirements for statistical reporting will be harmonised early in the project, followed by the requirements for bank supervision and resolution. This development will proceed under the aegis of the joint bank reporting committee (JBRC). The main purpose of harmonising the reporting in the euro area is to reduce the reporting workload on banks and to improve data quality. Cost-benefit analysis conducted over the last two years showed support for the IReF project from the banking sector and central banks. The determination of the business and IT aspects of the reporting framework was undertaken at ESCB level. The key objective of this phase is drafting a detailed plan for the implementation of the IReF, under which the first reporting is scheduled for the final quarter of 2029. To make the transition and the technical preparations as easy as possible, and to increase the effectiveness for banks and the ESCB, a one-year pilot phase will temporarily be carried out. We participate in the project on working bodies of the ESCB, where we strive for continuity in important time series while optimising reporting requirements. At the national level the majority of the coordinating activities with banks are carried out via the mixed working group for reporting under the aegis of the Bank Association of Slovenia.

Data reporting to the Register of Institutions and Affiliates Database (RIAD) within the framework of the ESCB was also carried out regularly last year in accordance with Guideline (EU) 2020/497 for supervisory needs and for data for the EBA (EUCLID). Intensive preparations continued for the use of reference data of business entities collected at the RIAD for the needs of the IReF, including preparation of an appropriate legal basis at EU level for the sharing of basic data with banks. By the end of the year the system was ready to receive sectors under the code in use as of 2025.

We succeeded in maintaining the data quality for Slovenian reporting entities at a high level in the multi-purpose AnaCredit database on credit and credit risk for loans approved by credit institutions to legal persons, where the exposure from credit operations exceeds EUR 25,000 at the observed undertaking. The AnaCredit data model serves as a starting point for the development of the IReF.

In the area of investment fund statistics, alongside regular reporting by the SMA and the submission of aggregate data to the ECB, there were also activities to introduce reporting by alternative investment funds with the SMA and the ECB. The guidance for this reporting is in the final phase.

We also provided payments statistics covering data from payment service providers and other residential payment providers. The data provides oversight of the number and value of payments made in each payment instrument.

Statistics of international economic relations

In 2024 Banka Slovenije made a benchmark revision of its statistics on the balance of payments, the international investment position and the external debt for the period of 2009 to 2023. This revision reconciled the data of the national accounts, the financial accounts and the balance of payments to the greatest possible extent.

The Direct Investment 2023 publication was released in October 2024. The publication discloses data on inward and outward foreign direct investment by country and by sector, and also data on the origin of foreign direct investment in Slovenia. Banka Slovenije also reached out to users of FDI data by organising a roundtable on this subject in November 2024.

As part of the development of data sources, we partly eased the burden on reporters of direct investments by linking existing databases. The agreement with the Financial Administration of the Republic of Slovenia (FARS) on the exchange of data in the area of VAT, which will provisionally be used as an additional source in the capture of services trade with the rest of the world, was updated and expanded.

Banka Slovenije worked with the Statistical Office of the Republic of Slovenia (SORS) on meeting the new requirements for business statistics under Regulation (EU) 2019/2152 on European Business Statistics. This entailed the augmentation of the requirements for international services trade, with additional itemisation with regard to size, affiliation and mode of supply (STEC and MoS data), where it is vital that institutions liaise with each other. Banka Slovenije prepared the STEC data and some of the MoS data, which the SORS augmented with its own data, before running the procedures to ensure confidentiality and then reporting to Eurostat. A description of the methodology for STEC and MoS was also drawn up in cooperation with the SORS.

Financial accounts statistics

A benchmark revision of the financial accounts data was made in 2024 for the period from 1995 to the first quarter of 2024 with the aim of achieving greater conformity with other statistics and data comparability over time and between countries. The revision had a major impact on data in the period between 2012 and 2023. In the government sector it is necessary even in the process of compiling the financial accounts to ensure complete consistency with the non-financial accounts. Major revisions were made in 2013 and 2014, on account of changes to the recording of bank resolution.

All the expanded reporting requirements introduced gradually by the implementation of Guideline ECB/2013/24 of 25 July 2013 and amended by Guidelines ECB/2020/51 of 14 October 2020 and ECB/20121/20 of 29 April 2021 were met. From the perspective of future changes in international statistical standards, discussions began on the preparation of a new medium-term strategy.

The main focus in the area of the government sector financial accounts was on monitoring the use of funding from the Recovery and Resilience Mechanism. Eurostat’s working group for government sector accounts began preparations for the revision of the existing methodological basis of the European System of National and Regional Accounts. Cooperation continued between Banka Slovenije, the SORS and the Ministry of Finance on resolving the methodological issues and ensuring consistency between the financial and non-financial accounts for the government sector. A Eurostat dialogue visit also took place in July 2024.

Supervisory reporting and statistics

Within the framework of the supervisory reporting requirements changes were made in 2024 in the EBA reporting package with regard to the reporting of data on remuneration and interest rate risk, and ESG reporting. An upgrade to the EBA DPM version (3.4 and 3.5) was made as part of an update to the implementing technical standards (ITS) for the reporting package. At the same time updated EBA controls of reporting were incorporated and additional ECB and Banka Slovenije controls were built in to improve the quality of reporting.

For future reporting packages we have coordinated updates to the reporting requirements in connection with the CRR3 and the CRD6 within the framework of the EBA. We also took part in the EBA’s annual exercise to assess the impact of the implementation of the Basel III standards.

Preparations were made for the collation of registers of third-party ICT service providers, which will be put in place in 2025 for the needs of carrying out the tasks required by the Digital Operational Resilience Act (DORA). There is a broad set of reporting entities, which also includes all credit institutions. During the preparatory period the EBA conducted test reporting in conjunction with the national supervisors, where it checked the basic technical readiness of all those involved (reporters, national supervisory authorities and the EBA itself) for mandatory reporting in April 2025. In connection with the DORA we also made preparations for the reporting of major incidents, within the framework of which institutions are required to put in place procedures to manage incidents in connection with ICT, including the assessment and classification of incidents and the reporting of major incidents to Banka Slovenije.

We were also involved in setting up the joint bank reporting committee (JBRC) in connection with the EBA’s integrated reporting initiative. As part of the work to standardise the supervisory, resolution and statistical reporting for banking institutions, there was activity at the ECB and the EBA in the area of semantic standardisation between statistical and supervisory reporting in the direction of a common data glossary. Activity is also underway to standardise syntaxes (data structures, forms and rules). In parallel with the integrated reporting initiative, the EBA is working to reduce the workload for banks with regard to the ITS reporting requirements as part of its proportionality approach.

The requirements of Directive (EU) 2021/2167 on credit servicers and credit purchasers were transposed into Slovenian law. On the basis of Banka Slovenije regulations that require semi-annual reporting, credit institutions and credit purchasers submitted information for the first time about non-performing loans transferred to credit purchasers (and new credit purchasers).

Other statistics and technical support

Banka Slovenije collaborated at the ESCB level on developing data and indicators for analysing the risks posed by climate change. The ESCB is systematically developing and organising data to calculate indicators that will allow for a transparent and standardised view of sustainable financing: sustainable finance indicators, CO2 emissions indicators and indicators for physical risks. The source of data for the indicators, where possible, is publicly accessible databases, while the methodology for calculations is still being developed. The published indicators are therefore designated experimental, and expanded and improved CO2 emissions indicators and indicators for physical risks were published in 2024.

Banka Slovenije conducted a survey on access to financing of enterprises in collaboration with SID banka, and included a question about the impact of the green transition on firms. The results were due to be released in February 2025. The survey gives us insight into the availability of external financing for firms.

We are importing and managing a wide range of databases for Banka Slovenije users, and make regular improvements to the descriptions of our data. In 2024 we made preparations for the changeover to the 2025 Standard Classification of Economic Activities in the register of business entities. The set of data time series available to all users was also expanded. We additionally released time series for direct investments by sector and statistical region, and new series for services trade by enterprise characteristics (STEC) and FATS (firms in the rest of the world controlled by Slovenian investors). We began publishing time series of interest rates on household loans by loan type and loans to non-financial corporations by corporate size on the website. As part of the ECB’s medium-term strategy in the area of quarterly financial accounts, detailed financial accounts data for the subsectors of other financial institutions were prepared and published, and are now also available vis-à-vis counterpart institutional sectors.

The final fieldwork for the three-yearly Household Finance and Consumption Survey (HFCS) was completed in 2024, which allowed us to make a first submission of data to the ECB. Completely new guidelines for this survey have also been drawn up, and are on the brink of being adopted. The aim is to commit central banks to the mandatory collection and submission of data.

When providing some of the data, we also successfully coordinated the national implementation of the IMF’s Statistical Data Dissemination Standard Plus with the Ministry of Finance and the SORS. The SDDS Plus represents the highest level of the provision and publication of (macroeconomic) statistical data. In June 2024 we took part in an SDDS workshop in Kosovo, detailing our experience in introducing and upholding this standard.

3.13Banka Slovenije as the lender of last resort

One of our key objectives under the Banka Slovenije Act is ensuring financial stability. Within this framework we may act as a lender of last resort, i.e. in exchange for collateral we lend to a solvent bank or savings bank in liquidity difficulties.

There was no demand for loans of this type in 2024.

4Sustainability and environmental activity at Banka Slovenije

Banka Slovenije is continuing its sustainability-related work from past years, and expanded on it in 2024 by adopting a climate plan for the 2024 to 2026 period. The climate plan has five pillars:

• resilience of the banking system,

• macroeconomic analysis and monetary policy,

• statistics and indicators,

• asset management,

• own carbon footprint.

Within the framework of banking supervision our aim is for banks to adequately identify, manage and disclose the risks posed by climate change and environmental degradation. In this way we are strengthening the banks’ resilience to these risks, and contributing to the security and stability of the banking system. Given that exposure to climate-related and environmental risks is one of the key vulnerabilities for banks, addressing these risks is one of Banka Slovenije’s supervisory priorities.

We use macroeconomic analysis to examine the impact of climate change and the green transition on the macroeconomic environment, and the results of this analysis are taken into account in our work and policymaking. Within the framework of our mandate in the Eurosystem, and where it does not contravene our basic objective of price stability in monetary policy implementation, we try to take account of climate change.

The foundation of high-quality analysis is well-organised and transparent data and indicators in connection with climate change. Within the framework of the ESCB, Banka Slovenije participates in the development of in-house indicators for assessing the impact of climate change on financial stability and monetary policy in the Eurosystem.

Banka Slovenije manages its portfolio of assets by taking a socially responsible and sustainable approach to investing, while strengthening its capital to help ensure financial independence in the performance of central banking tasks. Our target is to get as close as possible to net zero greenhouse gas emissions in our portfolio of financial assets by 2050.

Alongside the aforementioned measures, we are also attentive to our own environmental impact. We monitor the direct and indirect greenhouse gas emissions generated by Banka Slovenije’s actions, and are endeavouring to further reduce the carbon footprint of banknotes, even though their environmental impact is small (e.g. reducing energy consumption by ATMs, reducing the use of packaging in cash operations).

4.1Monetary policy in light of climate change

We are continuing to strive to take account of climate risks in monetary policy, within the scope of our mandate. The disclosure of climate-related information for financial assets in the monetary policy portfolios has been expanded. In June 2024 we made our first publication of climate disclosures for public-sector bonds and covered bonds alongside corporate bonds. By providing climate disclosures about the portfolios, we aim to improve transparency and to support wider efforts to fill the gap in climate data and reporting. In line with the guidelines from 2023, by the end of 2024 (when reinvestment was discontinued) we had adjusted the portfolio of corporate bonds under the PEPP to increase holdings of issuers with better climate performance. We also continued preparations for the measures regarding financial assets as collateral for credit operations.

4.2Socially responsible and sustainable investing

In accordance with the EU climate neutrality strategy, in support of the Paris Agreement it is our long-term environmental target to come as close as possible within our own financial investments to net zero greenhouse gas emissions by 2050. To reach this objective ,we are pursuing two medium-term targets, which we aim to meet by the end of 2025 at the latest. The first medium-term target is to increase our holdings of green, social and sustainable bonds to at least EUR 600 million by the end of 2025 (the target value was raised from the previous EUR 400 million in 2024). We increased investments of this kind by almost EUR 180 million in 2024 to EUR 625 million, thus already exceeding the medium-term target. Since in the future we wish to continue to provide additional financing of projects that contribute to the decarbonisation of the economy and to the general improvement of the socioeconomic position of people, we anticipate raising the target value of our holdings of green, social and sustainable bonds.

In the context of the second medium-term target we continued actively reducing the carbon footprint of our investments in issuers from the private sector in 2024. The significant tightening of the criteria for excluding companies from the list of eligible non-financial corporate bond issuers again made a major contribution in 2024 to reducing the greenhouse gas emissions of our investments in issuers of non-financial debt. The climate indicators of the weighted average carbon intensity and carbon footprint of our investments in the debt of non-financial companies improved (fell) in 2024 by a further 22% and 27% respectively. This left the aforementioned indicators approximately 60% to 70% below the level of the general index of investment-grade non-financial corporate bonds. Within the framework of this target we also began switching in 2024 from globally diversified equity ETFs into low-carbon alternatives, thereby reducing the weighted average carbon intensity of our equity investments by 40%. The aim for 2025 is to further reduce the carbon footprint of our investments, and we also intend to set new medium-term environmental targets to be pursued over the period to the end of 2030. Depending on the availability of environmental data and the establishment of good market practice, strategies to reduce greenhouse gas emissions within the framework of our other holdings in private-sector issuers might also be elaborated in future years.

Detailed climate-related information on our entire financial investments is published as part of our annual report on socially responsible and sustainable investing. By publishing this report we aim to provide transparency regarding climate risks and opportunities within the framework of our own investments. The framework for disclosure of climate information is upgraded each year in close cooperation with all the members of the Eurosystem and taking into account the recommendations of various initiatives such as Partnership for Carbon Accounting Financials (PCAF) and the Network for Greening the Financial System (NGFS).

4.3Climate risks in the legislative framework

Legislation in the area of ESG risks has recently moved into the implementation phase. Of the general EU legislation, the most relevant in the last year was the CSRD,[29] which introduces requirements in connection with sustainability reporting, which are now gradually beginning to be applied.[30] We played an active role in the public consultation on drafting of the new ZGD-1M, which was published in November 2024 and transposes the requirements of the CSRD into Slovenian law. June 2024 saw the adoption of the EU’s corporate sustainability due diligence directive (CSDDD[31]), which aims to strengthen sustainable and responsible corporate behaviour in companies’ operations and across their global value chains. Following a period of intensive development of sustainability legislation, in its new mandate the European Commission announced[32] the scrutiny and consolidation of the current requirements, particularly with the aim of reducing the reporting burden for obliged entities. Omnibus legislation is under preparation, the aim of which is to standardise the reporting and disclosure requirements prescribed by the CSRD, the CSDDD and the Taxonomy Regulation.[33]

In the area of banking legislation in connection with ESG risks, which is also the basis for our supervisory activities, we participate in the EBA’s working group, which is tasked with drawing up the expert basis for incorporating ESG risks into the CRR and the CRD as well as with drafting technical standards and guidelines to set out and implement new requirements in this area in greater detail.

The new CRR3 and CRD6 were adopted in May 2024, bringing important progress in the treatment of ESG risks, which are now included in supervisory reporting and disclosures for all banks. The CRR3, which entered into force in January 2025, also introduces requirements to take into account ESG factors in certain elements of the existing calculation of capital requirements, although this stage primarily involves the explicit emphasising of ESG factors as part of approaches that are already enabled by the current legislation, especially where there is a material impact from these risks (e.g. in valuation of collateral or in certain elements of model approaches).

Some important new dimensions in addressing ESG risks will also be introduced in 2026 by the CRD6, which requires considerations of ESG factors in shaping strategies and policies, and in all other important governance processes and systems at banks, while applying the principle of proportionality. The time horizon of the risk management framework will be extended for ESG content to at least ten years, and banks will have to implement ESG stress tests and draw up special plans for addressing ESG risks. ESG risks will also be included in the supervisory processes (SREP) and supervisory stress testing, and there is explicitly expressed the possibility of using the systemic risk buffer to manage macroeconomic and systemic risks associated with ESG factors.

We participate in EBA’s activities in the drafting of technical standards, guidelines and other products related to the requirements of banking legislation. In January 2025, new Guidelines on the management of ESG risks[34] were published, which set out implementation details for the majority of the requirements under the CRD6. Technical standards for ESG disclosures and reporting as well as some additional guidelines from ESG area are in the process of preparation, including guidelines on scenario analysis and updates of SREP guidelines, guidelines on internal governance, on remuneration, on FAP, on calculation of the systemic risk buffer and on product oversight and governance. Additionally the EBA is preparing various reports for the European Commission, which form the expert basis for the further development of banking regulations in the area of ESG risks.

4.4Climate risks in the macroprudential area

In the macroprudential area we continued to develop the framework for monitoring climate risks, with the monitoring and addressing of climate risks depending on the data availability and methodology development. A physical risk analysis was conducted in 2024 on the basis of a composite risk indicator that includes six physical risk indicators (chronic and acute).[35] This will be the basis for incorporating physical risks in the banking system’s risk and resilience dashboard, tentatively in 2025.

The materialisation of climate risks in 2023 did not have a significant impact in terms of increasing risks in the banking system, transition risks were still assessed as moderate in 2024, while physical risks were assessed as low to moderate. The floods of 2023 raised a number of additional uncertainties regarding the outlook for economic growth and consequently bank performance, while the impact on bank credit portfolios was relatively limited. Transition risks remained moderate and several indicators improved further with the reversal in the credit cycle. The banking portfolio remained tilted towards financing polluting sectors, though the tilt continued to decrease in 2024. The deterioration in the economic growth outlook, especially the weaknesses in manufacturing, resulted in an increase in the NPE ratio in climate-sensitive sectors. Credit risk across banks, including from climate risks, nevertheless remained low. Physical risks were assessed as low to moderate, with the majority of the banks’ exposure to non-financial corporations and households located in municipalities with low to moderate physical risks. Chronic physical risks currently contribute the most to the composite indicator of physical risks, but the importance of acute physical risks will increase in the future.[36] The assumptions regarding the climate scenario have a major impact on risk assessments. By the end of the century the majority of exposures would be located in municipalities with high physical risks under the most severe scenario. This shows further the importance of climate risk mitigation.

Stress tests show that the impact of transition climate risks on the European financial system is manageable, but also highlight the importance of a timely identification and management of climate risks. An intersectoral climate stress test exercise was carried out for the first time in 2024 among the initiatives at the international level, under the aegis of European supervisory institutions. The purpose of the exercise was to assess the preparedness of the European financial sector (banks, insurers and capital markets) for the transition to a low-carbon economy (Fit for 55). The results show that the impact of transition climate risks on the financial system would be relatively limited, but at the same time the deterioration in the macrofinancial conditions could significantly worsen the adverse impact on the financial system. Similar results can be observed at the level of the banking system.

4.5Monitoring of environmental risk at banks

One focus of supervisory activities in 2024 was again ensuring the adequate management of climate-related and environmental risks at banks. Our finding based on the monitoring of progress is that last year banks further strengthened their internal governance processes, included climate risks in their business strategies, and strengthened the governance frameworks from the perspective of climate-related and environmental risks. More challenges lie ahead for the banks in strengthening the processes of identifying, monitoring, assessing and managing environmental risks (in addition to climate risks). We issued recommendations to the banks where the expected compliance with the ECB Guide has not yet been achieved. In line with the recommendations issued after a thematic inspection in 2022, the banks were required by the end of 2024 to put in place a comprehensive framework for stress testing, and to include climate-related and environmental risks in the ICAAP. The recommendations will be followed up in 2025. The supervisory priorities in the upcoming period of 2025 to 2027 will be the complete meeting of the supervisory expectations under the ECB Guide, the timely addressing of the issued recommendations, and the fulfilment of obligations in connection with disclosure and the drafting of transition plans as required by the new CRR3/CRD6 banking legislation package.

4.6Own carbon footprint

Banka Slovenije is actively pursuing the strategic objective of reducing our own carbon footprint set out within the framework of the Banka Slovenije strategy for 2021 to 2026 and geared towards a focus on sustainability in our operations. We are taking steps in the areas of indirect and direct greenhouse gas emissions, whereby we are reducing our own negative environmental impact. In the medium term we are focused on meeting stage-by-stage targets for each period, and in so doing reducing our own carbon footprint.

Last year we set targets and took measures to reduce indirect emissions. Thus we took action to shorten supply transport paths, upheld the provisions on green public procurement, conducted an in-depth energy audit of office buildings, and drew up a plan for rectifying losses and uncontrolled venting of gases into the environment at large consumers. With the aim of taking action in connection with energy efficiency, in 2024 we worked to organise a measurement point on one of our own buildings, which is a prerequisite for the installation of a solar power plant. We also conducted analysis of the mild hybrids market with the aim of replacing company cars with electric vehicles, and the replacement of air conditioning and cooling systems for the IT centre. Activities targeting a reduction in the adverse environmental impact were also carried out as part of our promotion of sustainability among the staff.

For 2024 we made a measurement of our own carbon footprint based on the requirements of the GHG Protocol Corporate Standard. This standard classifies emissions into three scopes, meaning that in calculating greenhouse gas emissions we covered all direct and indirect emissions generated through our operations. The measurements included all the locations at which business processes take place. For direct emissions we measured fuel consumption emissions for company cars, generator emissions and similar direct emissions. For indirect emissions the carbon footprint calculation included the consumption of electricity and thermal energy, the footprint of employees caused by emissions in travelling to work, business travel emissions, and the use of paper and waste. The total emissions in 2024 amounted to 5,195.4 t CO2 equivalent.

In the coming years the focus will be on setting and meeting targets that will drive us in the direction of net zero over the long term.

5Financial education at Banka Slovenije

Banka Slovenije has been involved in providing financial education since 2017, and in recent years we have stepped up efforts in this area. We are fulfilling the aims by expanding and presenting technical and professional content to the public, we are strengthening our presence on social media, and we are more open to the general public. We also invest a good deal of effort into financial education with a focus on children and young people. In various ways we are seeking to make financial and central banking issues more accessible to the general public, so in May 2021 we opened the Banka Slovenije museum, whose primary purpose is education. In the strategy for 2021 to 2026 we defined financial literacy as one of the strategic objectives.

Boosting financial literacy is one of Banka Slovenije’s strategic objectives for the period of 2021 to 2026.

To meet the set targets as far as possible, we are linking up within Slovenia and further afield with other important stakeholders in financial literacy. Since 2021 we have initiated a series of informal interinstitutional meetings, which are attended by representatives of the finance ministry, the education ministry, the education institute, the vocational education centre and the financial administration. Since 2023 we have also been a member of an official interinstitutional group headed by the finance ministry, which drew up the national financial literacy programme in 2024. Under the aegis of the Slovenian Institute for Adult Education, we participated in a research group that formulated formal and informal financial literacy programmes for adults, and drew up material for programme providers. We held a series of seminars for teachers and managers of education institutions as part of our nationwide education projects and further afield. Each year we also run joint projects with other non-governmental institutions, such as EU House and the Association of Friends of Youth, and we are continuing to collaborate with the office of the president of Slovenia on the Masters of the Digital Future debate project. We are working even more closely with the finance ministry, with whom we run the Bodi FIN financial education project for primary schools, and are preparing other content to give better insight into financial literacy in Slovenia and to ensure more targeted education in the future.

Together with the finance ministry we applied to a European Commission tender for technical support instrument (TSI) in the area of financial literacy, which entered a more active phase in late 2024. Nationwide research into financial literacy is envisaged, following the criteria and indicators used by the OECD, but it will also be tailored to conditions in Slovenia. As part of the TSI we also envisaged the creation of interactive tools for a financial education website to be set up by Banka Slovenije in 2025, and a digital update for the Banka Slovenije museum to ensure a better user experience. The project is scheduled to conclude in 2026.

Internationally we are members of working groups at the ECB and EBA dealing with financial literacy and consumer protection, we also monitor the work of the OECD/INFE, and each year through various initiatives we are involved in marking Global Money Week, which is held under the auspices of the OECD. We have bilateral ties with other central banks in the area of financial literacy, and share our experience and knowledge at meetings.

5.1Education programmes

More than 6,000 participants of different ages took part in our various educational programs in 2024 (education days, holiday days, seminars, workshops). This was up from a figure of approximately 4,000 in the previous year.

The Banka Slovenije education days were started in 2017. They are intended in particular for primary and secondary school students, and in recent years we have expanded them to preschool children, students and pensioners. A two-hour programme features presentation of Banka Slovenije’s main tasks, our participation in the Eurosystem, and a number of special themes in the banking field. The level of difficulty is adjusted to the level of knowledge and understanding of the participants, who can add a tour of the Banka Slovenije museum to their immersion in the educational content and workshops. More than 5,000 people of all ages took part in education days in 2024.

Banka Slovenije’s educational programmes reached more than 6,000 children, young people and adults in 2024.

The Banka Slovenije holiday day was launched in 2022, and is aimed at primary school students. They can spend a day with us and get to know the main tasks of Banka Slovenije, other central bank topics, they can connect with peers who have similar interests, tour our museum, learn all about the function of money and saving in workshops, be creative and thoroughly enjoy a day off. We held six holiday days in 2024, which were attended by over 130 children.

Each year we join the Slovenia-wide marking of Global Money Week, which is held under the auspices of the OECD/INFE. In conjunction with the National Education Institute, we organised an introductory financial literacy seminar in 2024, which was attended by teachers and mentors providing financial education programmes. The Banka Slovenije representatives took part in numerous roundtables and meetings, where we discussed the importance of financial literacy with representatives of other financial and education institutions. Through various workshops at the Banka Slovenije museum and online banking lessons we were able to reach more than 250 children, young people and adults. Some of them took part successfully in our online prize quiz via social media. Approximately 200 children and 15 different primary schools and kindergartens took part in an art competition entitled Quarter Century of the Euro, creating greetings cards for the people and nations of the euro area to mark its 25th birthday.

We held a full-day seminar for 200 primary and secondary school headmasters in January, and for 100 kindergarten headmasters in March of last year. They heard about themes such as the main pillars of central banking, inflation and the management of price stability, monetary policy, cash, modern payments and trends, and consumer protection, and learned about Banka Slovenije’s financial education and teaching content.

The first winners of the Masters of the Digital Future debate project were found in May. The final tournament, where patrons of the project, President Nataša Pirc Musar and Governor Boštjan Vasle also played an active role , saw the best primary and secondary school teams debate. The first winners were the teams from Bežigrad High School, and Domžale Primary School. The prize for the best debaters was a special reception at the presidential palace, and a trip to Frankfurt, Europe’s financial capital, to see the workings of the ECB.

In the 2024/25 school year the Masters of the Digital Future project remains tied to the theme of digitalisation, with a focus on online fraud (in banking) on this occasion. The young competitors have the opportunity to discuss the dangers of false information and how to defend against it, the right to privacy and protection of personal data, and the degree to which these are the responsibility of the individual. They also consider the possibility of additional protection for vulnerable groups, and excessive use of the internet. In this school year we held 25 workshops at primary and secondary schools, involving 600 students from 60 different schools. January 2025 saw the two selection tournaments, which identified the finalists of the experienced debaters and the winners of the inexperienced debaters, with the grand final held in Ljubljana on 15 May to find the winners among the experienced debaters.

5.2Banka Slovenije Museum

The Banka Slovenije Museum had more visitors in 2024 than in previous years, attracted by interesting new content and a number of special events. On certain special days (Prešeren Day, museum day, museum night, family week, children’s week, Merry Day of Culture) visitors were able to take part in a variety of programmes aimed at all age groups: interactive tours for families, creative workshops, interactive game Atlas’s Secret, guided tours, and digital game the Hunt for Lost Money. The last takes place in the open air, but is related to the museum, in that players use an interactive map to explore various points in the city with ties to the images used on the tolar, Slovenia’s first independent currency, which is featured at the museum. The museum is open every third Thursday of the month, and also at other times for groups by appointment.

The museum welcomed more than 5,000 visitors in 2024, who took part in a variety of educational and special programmes. The museum was also visited by numerous foreign and Slovenian dignitaries, and expert groups from other financial institutions in Slovenia were also given guided tours.

Every second Thursday of the month we publish the e-newsletter of the Banka Slovenije museum, featuring news from the museum and from the central bank world, educational games, quizzes, interesting links, photographs and an upcoming calendar of events to which we invite the general public. We also have an active presence on Instagram and Facebook.

In the autumn we embarked on the renovation of several sections of the museum, which was completed in early 2025. A new temporary installation was Seven Yellow Gold Coins, which illustrates money in everyday and festive life. Visitors were also able to learn about some of the less obvious functions of money, whether as jewellery, games, a central motif in literature, etc. We also launched Payments Through Time, which illustrates the different forms of money and payments: cash, book money, POS terminals, payment cards, cheques, etc.

6Banka Slovenije’s reporting to the National Assembly

Under Article 26 of the ZBS-1, Banka Slovenije reports on its work to the National Assembly of the Republic of Slovenia, and attends meetings of other National Assembly bodies when invited to do so. In 2024 Banka Slovenije representatives reported to the National Assembly’s finance and monetary policy committee during the presentation of Banka Slovenije’s 2023 Annual Report and the Financial Stability Board’s 2023 Annual Report. We also presented the Banka Slovenije Annual Report to the National Council’s committee on economics, small businesses, tourism and finance.

Under Article 33 of the Banka Slovenije Act, the representative of the National Assembly’s finance and monetary policy committee and the finance minister are regularly invited to meetings of the Governing Board of Banka Slovenije, but they do not hold voting rights. To this end and in accordance with the level of confidentiality, they receive all the material and proposed decisions drawn up by Banka Slovenije staff that are being decided on at the meeting. This ensures that the executive and legislative branches of government are briefed promptly on matters under the remit of the Governing Board.

Another integral part of Banka Slovenije’s reporting to the National Assembly is its financial statements, which are audited by an independent international auditor selected for a three-year period (Article 52 of the ZBS-1) in accordance with Article 27(1) of the Statute of the ESCB and of the ECB. The statute lays down that the accounts of the ECB and national central banks must be audited by independent external auditors recommended by the Governing Council of the ECB and confirmed by the Governing Board of Banka Slovenije. The auditors have the power to examine all books and accounts of the ECB and national central banks, and to obtain complete information about their transactions. The Governing Board of Banka Slovenije selects and proposes a candidate to go forward to the final selection procedure following the prior collection of tenders at least six months before the expiry of the contract signed with the previous auditor.

7Report on the work of Banka Slovenije

7.1Decision-making bodies

Under the Banka Slovenije Act, Banka Slovenije’s decision-making bodies are the Governor and the Governing Board of Banka Slovenije. The Governing Board comprises five members: the Governor and four vice-governors. The Governor presides over the Governing Board. The Governor of Banka Slovenije acts as its statutory representative, directs its business, organises its work, executes the decisions of the Governing Board, and issues individual and general bylaws of Banka Slovenije that are not the responsibility of the Governing Board. The Governor may also issue guidelines for implementing resolutions by the Governing Board.

Banka Slovenije’s decision-making bodies are the Governor of Banka Slovenije and the Governing Board of Banka Slovenije.

The Governing Board of Banka Slovenije comprised the following as at 31 December 2024:

• Boštjan Vasle, Governor;

• Dr Primož Dolenc, vice-governor and deputy-governor;

• Tina Žumer, vice-governor;

• Milan Martin Cvikl, vice-governor;

• Dr Marko Pahor, vice-governor.

Banka Slovenije was headed by Boštjan Vasle as Governor until 8 January 2025, and thenceforth by its deputy-governor, Dr Primož Dolenc.

The members of the Governing Board of Banka Slovenije are independent in performing their duties set out by the Banka Slovenije Act, and are not bound by the resolutions, positions or instructions of government bodies or any other bodies, and may not seek the guidance or instructions of such bodies. Since the introduction of the euro on 1 January 2007 the members of the Governing Board of Banka Slovenije have upheld the Statute of the ESCB and of the ECB in performing their duties.

7.2Work of the Governing Board of Banka Slovenije in 2024

The Governing Board decides upon matters falling under the remit of Banka Slovenije. This remit is set out by the Banka Slovenije Act and other laws governing banking, bank resolution and compulsory winding-up of banks, payment services and payment systems, macroprudential supervision, the deposit guarantee scheme, AML/CFT, consumer credit and foreign exchange operations.

Within this framework the Governing Board takes decisions on the adoption of secondary legislation and other general regulations under its remit. It also takes positions on draft laws, secondary legislation and other general regulations governing matters falling under Banka Slovenije’s remit but not adopted by it.

The Governing Board grants and revokes authorisations and imposes measures in the supervision of banks, savings banks and other entities. It grants authorisations to provide banking services, financial services and ancillary financial services to banks and financial institutions.

Under the Banka Slovenije Act, the Governing Board also has the right to take decisions on other matters affecting Banka Slovenije’s operations, and may propose an external international auditor, regulate employment rights and obligations for members of the Governing Board, identify any incompatibility of functions for members of the Governing Board, and take a position on Banka Slovenije’s internal administrative issues.

The Governing Board’s rules of procedure define the tasks that are vital to Banka Slovenije’s functioning. The Governing Board decides on the strategic allocation of Banka Slovenije’s financial assets, an increase in its share capital from the general reserves, and the distribution of the surplus of income over expenses within the limits and in the scope set out by the Banka Slovenije Act, and adopts the annual report and the financial and business plan. These decisions ensure Banka Slovenije’s independence in conducting its monetary policy.

The Governing Board is also responsible for regulating internal organisational matters, such as the appointment and dismissal of staff with special authorisations, and it functions as an appeals body in objections to individual legal acts issued by the Governor, when so envisaged by law. It adopts bylaws on the rights, obligations and responsibilities of staff in accordance with the Banka Slovenije Act, and secondary legislation setting out the method and scope of the recording, collection, processing, disclosure and transfer of data and information required for the functioning of Banka Slovenije’s information system. In addition it is regularly briefed on reports on the implementation of important tasks submitted by working bodies and staff.

The Governing Board decides on relevant matters at meetings, where a decision is passed if at least three members vote in favour.

The members of the Governing Board convened at 19 ordinary meetings and four correspondence sessions in 2024. The timetable of meetings is set in advance for the current calendar year. In drawing up the timetable, account is taken primarily of the meetings of various working bodies in the euro area. To ensure maximum attendance, it is sometimes necessary on rare occasions to postpone a meeting date. As part of the preparations for a meeting the members of the Governing Board, as heads of division, pay particular attention to the preparation of materials, and the clarification and coordination of positions with other board members and staff, which is reflected in the proposed decisions that are generally adopted unanimously, and very rarely with a majority vote or abstention.

The Governing Board discussed a total of 372 agenda items in 2024, most often in the area of banking supervision and licensing, as is the case every year, with somewhat fewer items in the areas of financial stability, bank resolution, cash operations, and payment and settlement systems. Items concerning economic and monetary policy were tied to the timeframe of ECB Governing Council meetings and the availability of data.

7.3Banka Slovenije’s performance in 2024

The results presented in Banka Slovenije’s financial statements reflect the financial effect of the performance of its tasks and objectives.

Balance sheet developments in 2024

The balance sheet total stood at EUR 35.9 billion as at 31 December 2024, down significantly on the end of 2023 (EUR 38.0 billion).

The decline on the liability side was driven by deposits by commercial banks (EUR 3.7 billion). There was an increase of EUR 1.2 billion in liabilities to the Eurosystem from adjustments in euro banknotes. This liability represents the difference between the value of banknotes belonging to Banka Slovenije as the legal issuer of 0.45% of all banknotes in circulation in the Eurosystem, and the value of banknotes actually placed into circulation by Banka Slovenije. The amount of banknotes in circulation according to the capital key increased by EUR 0.3 billion.

On the asset side, while Banka Slovenije’s own portfolio holdings in euros and foreign currencies increased by EUR 1.2 billion, the discontinuation of reinvestment of the APP and PEPP portfolios meant that holdings of securities for monetary policy purposes declined by EUR 0.8 billion, where the largest exposure is still Slovenian government bonds (EUR 14.1 billion). Another major factor in the contraction on the asset side was a decline in Banka Slovenije’s claims under cross-border transactions with other national central banks and the ECB via the TARGET system (by EUR 2.5 billion), which was a reflection of the other aforementioned developments.

Financial performance in 2024

The main source of Banka Slovenije’s income is interest on monetary policy instruments and portfolios, and on its own holdings of securities. Net interest income in 2024 was negative in the amount of EUR 165.1 million. The main reason was the rise in key interest rates with the objective of monetary policy normalisation during 2022 and 2023, which was still having an adverse impact on financial performance in 2024 owing to asset-liability mismatch, despite the gradual fall in key interest rates. This means that we are paying higher interest on a large part of our current liabilities, while a large part of our longer-term assets are remunerated at significantly lower interest rates.

The net gain realised on the sale of securities and foreign exchange positions amounted to EUR 87.7 million. Banka Slovenije marks its positions to market at the end of the year, disclosing the negative revaluation effects as an expense. These expenses amounted to EUR 5.0 million in 2024, and were the result of market prices of securities at the end of the year being lower than the average price of the positions. The net result of pooling Eurosystem monetary income was an expense of EUR 69.9 million in 2024. Net fees and commission (EUR 13.7 million), income from participating interests (EUR 9.8 million), and other income (EUR 3.5 million) amounted to EUR 27.0 million. Operating costs amounted to EUR 54.2 million in 2024.

Provisions in the net amount of EUR 180.8 million were released in 2024 for the coverage of expenses arising from exposure to financial risks. In light of Banka Slovenije’s exposure to financial risks, general provisions can be created to cover expenses from changes in interest rates, exchange rates, prices and credit developments. Banka Slovenije held EUR 303 million of general provisions at the beginning of the year on the basis of past operations, part of which it released.

Banka Slovenije thus generated a surplus of income over expenses in the amount of EUR 1.2 million. The distribution of the surplus will be undertaken in line with applicable legislation.

Operating costs

Banka Slovenije’s operating costs are the result of the implementation of its tasks set out by law. Figure 37 shows the allocation of costs by task. In addition to direct costs, these include the imputed indirect costs of support functions (information technology, accounting, legal services and similar internal services).

Operating costs amounted to EUR 54.2 million in 2024, up EUR 6.2 million on the previous year. Labour costs make up the majority (65%) of Banka Slovenije’s operating costs. They include costs of wages and salaries and other labour costs together with the corresponding taxes and social security contributions. They amounted to EUR 35.2 million in 2024 (EUR 33.1 million in 2023). The increase was the result of a rise in the basic wage in accordance with the Agreement on the Indexation of the Basic Wage, the introduction of organisational changes, and changes in staff qualifications structure caused by turnover and promotions. The change in provisions for employees is included in labour costs in accordance with IAS 19 (Employee Benefits). Other operating costs, banknote printing costs, amortisation and depreciation of non-current assets, and other costs amounted to EUR 19.0 million, up EUR 4.1 million on 2023.

Human resources

In the area of HR and organisation we continued our established good practice, and also introduced several new approaches. Banka Slovenije has held full Family-Friendly Company certification for several years now. In 2024 we continued to introduce new measures to give our employees better opportunities for work-life balance. We again organised the Santa Claus for a Day campaign, where employees can volunteer to help prepare and give presents to children and the elderly.

We advertised 46 vacancies, to which a total of 1,217 candidates applied. The greatest interest from jobseekers came in the areas of banking operations, HR and information technology. We hired 18 new staff members, while two returned from temporary assignments at the ECB. In the past year 22 staff members left, ten of whom retired, while 12 continued their careers outside Banka Slovenije. The average age of staff members at Banka Slovenije was 46 and 11 months last year, up two months on the previous year. There are more women employees (53%) than men (47%). Of the management positions, 42% are occupied by women. Some 81% of staff members at Banka Slovenije hold at least a Level VII qualification.

Banka Slovenije had an effective headcount of 456 as at 31 December 2024.[38]

7.4Public relations

At Banka Slovenije we endeavour to communicate with all audiences in a clear, substantive and effective manner. In this way we make sure that our message reaches the right audience at the right time. Our transparent communications help to raise Banka Slovenije’s profile, and to build our reputation in the domestic and foreign environments.

Media and other public communications

In 2024 we fielded and answered a total of more than 550 questions from journalists, and issued 90 press releases, 75 Banka Slovenije publications and four ECB publications. Our representatives took part in numerous major interviews, gave 18 statements to TV or radio, and organised five full press conferences and numerous informal briefings for journalists. We also organised four major panel discussions involving representatives of the profession and the media.

Journalists frequently asked about the state of the Slovenian banking system, our forecasts – especially for inflation – and about interest rate trends. They sought information about the volume of lending and about supervisory measures. The process of appointing a new governor was also a focus of interest in the second half of the year.

More than 1,990 stories in connection with Banka Slovenije were published in the media in 2024. These appeared for the most part in online media, most notably Sta.si, Bloombergadria.si and Delo.si, with print media, radio and television the next most common outlets.

In addition to media questions, in 2024 Banka Slovenije received and responded to more than 1,350 questions from the general public, individuals and businesses alike. We also dealt with a large number of complaints from consumers, and responded to multiple questions regarding numismatic products, licensing, and other banking regulations.

Publications

The following periodical publications were issued in 2024:

• Eight issues of the Review of macroeconomic developments were released. In it we analysed key macroeconomic trends. The medium-term macroeconomic projections for Slovenia made up the centrepiece of the June and December issues.

• The Financial Stability Review came out in May and October. In it we analysed and explained the systemic risks in the Slovenian financial system.

• The Report on bank performance with commentary contained key balance sheet data for the banking system, current data on interest rates and non-performing loans, and data on the performance of leasing companies. It was released in June and December.

The regular statistical publications were the Bulletin (monthly), Slovenia’s International Economic Relations (monthly), the Financial Accounts of Slovenia (quarterly), Services Trade by Enterprise Characteristics (annual) and Direct Investment (annual).

Various periodical research papers, surveys and reports can be found on the Banka Slovenije website, such as the Survey on access to finance of enterprises (annual), the Retail banking service price comparison (annual) and Socially responsible and sustainable investing (annual).

Original publications make up a special category of their own. In these Banka Slovenije analysts and specialists provide a detailed discussion of various areas of banking that are currently attracting interest and fall under the wider framework of the works and tasks of the central bank, with a focus on monetary policy analysis, the banking system, the financial markets and the balance of payments. Last year saw the release of three papers in the Banka Slovenije Working Papers collection, six in the Discussion Papers collection, and eleven in the Short Economic and Financial Analyses series.

Prizes, public events, conferences and seminars

In May of last year we organised an international conference in conjunction with the IMF entitled Financial Systems in the Region of Central, Eastern and South-eastern Europe in Portorož (for more, see Box 10). As part of the event we hosted a regional governors meeting, which was attended by nine governors and two vice-governors of the invited central banks. Before the conference, Alfred Kammer, director of the European department at the IMF, shared the latest experiences in macroeconomic forecasting with Banka Slovenije.

Banka Slovenije hosted several bilateral meetings with senior representatives of central banks and international institutions, during which we organised a number of events. Thus we were able to hear a talk by Pierre Wunsch, governor of the Belgian central bank, on the green agenda and its impact on monetary policy and macroeconomic policy. He examined the technological feasibility and cost of climate neutrality, with a focus on the realm of fiscal and monetary policy.

In 2024 we once again awarded prizes to the best doctoral and master’s dissertations in the fields of economics, banking, insurance, finance and financial law. Dr Ivan Ribnikar prizes were awarded to the three best master’s dissertations and the best doctoral dissertation. In cooperation with the University of Ljubljana School of Economics and Business we held ten seminars intended mainly for professional circles.

A roundtable entitled Foreign Direct Investment is Rising: Do We Know How to Take Advantage of the Opportunities? examined the current data in the field, and with guests looked at the evolution of capital markets, the business conditions, and aspects of the relative advantages of certain markets.

Banka Slovenije library

The Banka Slovenije library is a specialist library, whose range of informative resources and literature provides support for the work process of its host organisation. The material is scanned into Cobiss, and is thus available for borrowing by external users. Our external users are mostly specific, and use the library as a research source for a variety of economics material that cannot be obtained elsewhere, most notably various reports and financial data from global monetary institutions and banks (IMF, OECD, Fed).

The library is home to around 16,000 bibliographic units, primarily in the areas of banking and central banking, finance, economics, legislation and information technology. We released 75 Banka Slovenije publications and four ECB publications in 2024, and forwarded 23 online professional papers and reports issued by various financial institutions that we monitor. We purchased six print versions of books and 172 serial publications (financial journals and foreign dailies specialising in economics and finance). For our staff we borrowed 45 books under inter-library loans. Subscriptions were renewed for 21 different databases used by staff members in their work.

Banka Slovenije’s Mala Galerija

Each year Mala Galerija plans and holds a series of exhibitions featuring artists and creatives from various departments and schools within the University of Ljubljana who work in fine art, sculpture, photography, design, textiles, architecture and landscape architecture, music, computer tech and acting. We participated in a number of high-profile domestic and international art events held in Ljubljana, and in all the major cultural and museum events in the city. Exhibitions are accompanied by a range of talks, roundtables, workshops, literary and music evenings, auctions and similar events.

Eight exhibitions and one independent event were held in 2024, which together with their accompanying events attracted 2,432 visitors.

In cooperation with the University of Ljubljana we staged six exhibitions in 2024 featuring a range of artistic fields, and one drama and storytelling event, and in this way supported the work of young, as yet unestablished artists. Mala Galerija offered a platform for artistic work and projects by students from the University of Ljubljana’s Faculty of Architecture, Academy of Fine Arts and Design, Faculty of Natural Sciences and Engineering, and Academy of Theatre, Radio, Film and Television.

We also hosted an independent exhibition by young artist Jurij Hartman in coproduction with the University of Ljubljana.

In collaboration with the Academy of Theatre, Radio, Film and Television, we organised an artistic drama and storytelling event, where students presented personal and family stories.

The programme was upgraded in collaboration with the Museum of Architecture and Design. Mala Galerija was also one of the exhibition centres in Ljubljana as part of BIO28, the 28th Biennial of Design.

Banka Slovenije has a long tradition of cooperation with key cultural institutions in Slovenia. Banka Slovenije’s annual exhibition was organised in collaboration with the Museum of Modern and Contemporary Art Koroška (KGLU), and featured works by Bogdan Borčić under the title Nowhere from Nowhere. The exhibition attracted 240 visitors.

7.5Risk management

Banka Slovenije manages risks on the basis of a structured systemic approach, which is set out by the overall risk management framework. The overall framework defines the principal types of risk that Banka Slovenije faces and manages.

The actions of the risk management system focus on supporting Banka Slovenije’s decision-making bodies in the risk management process, primarily by providing structured comprehensive information on what the overall risk exposure is at any given moment, and how we can continually actively manage or mitigate the identified risks in full. Risk management at Banka Slovenije does not constitute an independent business process separate from its principal activities and business processes, but instead constitutes an integral part of the senior management’s responsibilities, and an integral part of all business processes, including strategic planning and all change management projects and processes. Activities to ensure that there is an effective risk management process are included in the business plans of all our organisational units.

The risk management system is designed as a model based on three lines of defence against risks, as described by the overall risk management framework. The functioning of the system ensures the identification of risks that could endanger the realisation of Banka Slovenije’s strategic and other objectives. The risk management framework defines the main strategic elements of the risk management system, and represents the starting point for subordinate bylaws, policies, methodologies and guidance for managing the identified types of risk.

The first line of defence consists of the organisational units whose business decisions actively manage the specific identified risks, and who are primarily responsible for implementing the policies in each area for managing individual types of risk.

The second line of defence consists of our committees, the risk management department, and the compliance department. The primary purpose of the committees is supporting the Governor or the Governing Board in regularly monitoring, coordinating and providing information about risk management. On the basis of the standard definition of the system, the risk management department coordinates the functioning of sub-systems for managing financial, operational, strategic, IT, legal, project and other risks, and our various ways of responding to interruptions in business caused by contingencies (business continuity for various periods during contingencies). In the assessment of operational risk, the compliance department provides general opinions of compliance risks and, as necessary, takes a position on self-assessments and plans for managing compliance risks drawn up by business process custodians.

The risk management department is connected to two Banka Slovenije committees holding risk management powers: the Risk Committee and the Investment Committee. The first works principally in the area of non-financial risks, and the second has a mandate from the Governing Board to manage the financial risks of Banka Slovenije’s financial assets. Last year the Risk Committee met eight times to address 57 agenda items, mainly in the area of operational risk and information security risk, while the Investment Committee met 12 times to discuss 111 agenda items, mainly in connection with the management of Banka Slovenije’s portfolio of financial assets.

The third line of defence consists of the Internal Audit Department and the Audit Committee. The Risk Management Department reports to the Audit Committee on the functioning of the integrated risk management system. The Governing Board is committed to putting in place a comprehensive and effective risk management system that reduces the occurrence of unforeseen consequences for Banka Slovenije. Annual reviews of the implementation of the overall framework are conducted by the Governing Board, which also discusses current issues of relevance to risk management.

7.6Compliance and the Banka Slovenije Code of Ethics

Banka Slovenije endeavours to build and maintain public confidence in good governance at the institution in the performance of its public tasks. Banka Slovenije has put a compliance function in place to this end.

The Compliance Department is responsible for implementing an effective internal governance system based on the principles of ethical, responsible and transparent conduct. The Compliance Department acts to complement the system of checks and balances at the bank by monitoring the level of compliance in the bank’s operations and its employees’ conduct with regulations, bylaws, codes of ethics and standards, and is responsible for expanding the culture of compliance to encourage lawful, fair, ethical and transparent conduct on the part of the bank and its employees.

In its functioning the Compliance Department is independent from other organisational units, and answers directly to the Governor. The compliance officer reports on their work once a year to the Governing Board, to the Audit Committee and to the Risk Committee.

The Code of Ethics of Banka Slovenije sets out the rules of ethical conduct for employees at Banka Slovenije and other persons working for or providing services for Banka Slovenije on the basis of a contract or agreement. The Code of Ethics of Banka Slovenije sets out the key principles in the area of internal governance, and upholds the highest standards of ethical conduct on the part of employees, in accordance with joint guidance and values formulated within the framework of the ESCB and the ECB, in relation to employees and Banka Slovenije’s partners. In this the code provides detailed guidelines regarding how to handle conflicts of interest, receiving gifts and benefits, performing activities beyond professional duties and the incompatibility of functions and tasks, public and non-public contacts with external stakeholders, protection of non-public information, concluding financial transactions, the prohibition on abuse of inside information and restrictions regarding the pursuit of gainful activity after ceasing work at Banka Slovenije (cooling off period). The requirements and prohibitions set out by the code strengthen the mechanisms for employees to act impartially and independently in performing the tasks under Banka Slovenije’s remit, and raise the confidence that in their conduct at Banka Slovenije employees are exclusively upholding the public interest.

7.7Internal auditing

Internal auditing is an independent, objective assurance and advisory service designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management, and control processes. 

The aim of the internal audit function is to assist Banka Slovenije’s senior management in making improvements to quality, efficiency and effectiveness within the framework of applicable legislation, and Banka Slovenije’s strategy, business policies and business plans. In its work the Internal Audit Department devotes particular attention to reviewing and assessing the system of internal controls and risk management at Banka Slovenije.

The internal audit department functions independently from other organisational Units and in the organisational structure is directly subordinated and answerable to the Governor. It conducts audits of functions, processes, data/information, projects and systems in all areas of Banka Slovenije operations and in all elements of the operation of the Eurosystem, ESCB and SSM present in Banka Slovenije.

The Internal Audit Department is responsible for:

• drawing up and implementing its annual plan of work;

• reporting on the outcome of audit engagements, which may include an assessment as to whether:

  • the risks associated with attaining the strategic objectives have been properly identified and managed,

  • the conduct of employees and contract-based workers complies with laws, regulations, policies and bylaws,

  • the processes and systems put in place facilitate compliance with laws, regulations, policies and bylaws,

  • the results of activities are aligned with the corresponding objectives,

  • activities are being carried out effectively;

• following up and assessing the implementation of issued recommendations, and reporting on their realisation;

• providing advice with regard to good business practice, corporate governance, internal controls and prevention of fraud;

• coordinating activities in connection with the external auditor of Banka Slovenije’s financial statements, and those of the funds under its management;

• carrying out tasks in connection with the handling of reports of breaches by employees (in connection with Banka Slovenije’s bylaws governing this area).

The Internal Audit Department reports periodically to the Audit Committee, the Governor and the Governing Board on the outcomes of audit engagements, its findings, the follow-up of recommendations, other activities, and its own performance.

7.8Audit Committee

Alongside its internal working bodies, Banka Slovenije has an Audit Committee, which aims to improve governance at Banka Slovenije by means of additional independent oversight alongside the internal and external auditors. Headed by an external expert, it functions as a consultative body for the Governor and the Governing Board in exercising their powers in accordance with the Banka Slovenije Act.

 The Audit Committee provides support to the Governing Board with regard to:

• the integrity and reliability of financial information; and

• the selection of the external auditor, the compilation of the financial statements, and the external auditing of the financial statements.

The Audit Committee provides support to the Governor with regard to:

• the functioning of internal auditing; and

• the procedures and findings of audits by the Court of Audit.

Banka Slovenije’s Audit Committee complements the internal and external control environment already put in place at the bank, with the aim of improving governance by providing additional independent oversight.

The Audit Committee met six times in 2024. It addressed the external auditor’s report on the audited financial statements, and the approach to auditing at Banka Slovenije, the bank resolution fund, the deposit guarantee fund, and the resolution and deposit guarantee fund for 2023. Although Banka Slovenije is not subject to the requirements of Regulation (EU) No 537/2014 and Directive 2014/56/EU, which apply to audits of public-interest entities, after conducting the closing audit and at the request of the Audit Committee the external auditor revised the audit report in accordance with Article 11 of the aforementioned regulation, which prescribes mandatory elements for an additional report to the audit committee.[39]

The Audit Committee was also briefed on reports on the work of the Internal Audit Department, issued opinions with regard to all audit engagements, followed up the implementation of internal audit recommendations and the work of the external auditor, and discussed the reports of the commission for investigating internal breaches at Banka Slovenije.

In 2024 the Audit Committee was also briefed on the Banka Slovenije risk reports compiled by the Risk Management Department, and the report on the Compliance Department’s work completed in the previous year.

7.9Data management

Because data is of strategic importance to Banka Slovenije, and is a vital component of the majority of its business processes, effective data management is therefore the duty of all employees at Banka Slovenije. Data management at Banka Slovenije encompasses numerous aspects: data architecture, data modelling, the data warehouse and business notification tools, metadata, codes, data quality, and data governance.

Organisational changes were made in 2024, and in 2025 processes related to data management were positioned within the Financial Statistics Department. The switch prioritises the objective of an organisational streamlining of the process, but also requires a staffing upgrade. Therefore the priority in 2024 was tasks related to monitoring the data management process and meeting the new and modified data requirements of international institutions. In the preparations for the target upgraded data architecture at Banka Slovenije, the new possibility of using the solution at ECB level was examined, which might be a sensible alternative to the in-house development of data architecture, and perhaps even optimal in certain aspects. Much of the activity also centred on the ESCB’s IReF project, which will drive a large part of Banka Slovenije’s future activity in the area of data management and the creation of the target data architecture and the future reporting framework. The mixed working group for reporting at the Bank Association of Slovenia met twice in 2024, where Banka Slovenije representatives presented the new and modified data requirements to the commercial banks.

7.10Court proceedings

Six administrative disputes were pending at the end of 2024, where Banka Slovenije is an accessory participant in three disputes against a decision by the Information Commissioner, while in three cases Banka Slovenije is the defendant in connection with administrative decisions issued in two supervisory proceedings and one bank resolution proceedings.

Banka Slovenije was involved in 168 pending litigation proceedings at the end of 2024, either as the defendant or co-defendant, or as an accessory participant. All related to compensation claims by holders of qualified bank credit who were subject to extraordinary measures in 2013 and 2014.

Two cases were pending at the end of 2024 with regard to misdemeanours decisions following the lodging of requests for judicial review,while Banka Slovenije was involved in six cases of bankruptcy proceedings as a creditor.  

Two cases were pending at the Constitutional Court as at 31 December 2024: one a petition for a ruling on the constitutionality and legality of a Banka Slovenije Act, and the other a constitutional complaint regarding a final ruling in a labour dispute.

8Financial Statements

Financial statements are available in separate PDF file.

List of abbreviations

AIFs alternative investment funds

AJPES Agency of the Republic of Slovenia for Public Legal Records and Related Services

AnaCredit Analytical Credit Datasets, the database at the European Central Bank containing details on corporate lending and credit risk of credit institutions in the euro area

APP Asset Purchase Programme

SMA Securities Market Agency

ISA Insurance Supervision Agency

GDP gross domestic product

BIS Bank for International Settlements

BLS Bank Lending Survey

cCBA complementary cost benefit analysis

CCyB countercyclical capital buffer

CET1 common equity Tier 1 capital

CPI consumer price index

CRD6 proposal for a Directive of the European Parliament and of the Council amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks, and amending Directive 2014/59/EU

CRR3 proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor

CSDB Centralised Securities Database

CVA credit valuation adjustment risk

DPM data dictionary with structured data layout for EBA supervisory needs (data point model)

DORA Digital Operational Resilience Act

O-SIIs other systemically important institutions

DSTI debt service-to-income ratio

NA National Assembly of the Republic of Slovenia

EBA European Banking Authority

ECB European Central Bank

ECMS Eurosystem Collateral Management System

EFC Economic and Financial Committee

EFDI European Forum of Deposit Insurers

EEA European Economic Area

EIOPA European Insurance and Occupational Pensions Authority

EA euro area

EONIA Euro OverNight Index Average (average interest rate for overnight credit)

ESCB European System of Central Banks

ESG environmental, social and governance risks

ESMA European Securities and Markets Authority

ESRB European Systemic Risk Board

€STR Euro short-term rate

EUR euro

Fed US Federal Reserve System

FTP Financial Transactions Plan

FARS Financial Administration of the Republic of Slovenia

GLTDF gross loans to deposits flows ratio

HFCN Household Finance and Consumption Network of the ESCB

HHI Herfindahl-Hirschman index

HICP harmonised index of consumer prices

ICAAP Internal Capital Adequacy Assessment Process

ILAAP Internal Liquidity Adequacy Assessment Process

IRB internal ratings based

IReF ESCB project to introduce standardised reporting of bank data in the euro area (Integrated Reporting Framework)

JBRC EBA and ESCB Joint Bank Reporting Committee

JST joint supervisory team

KDD Central Securities Clearing Corporation

LCR liquidity coverage ratio

LSIs less significant institutions

LTV ratio of the amount of a housing loan to the value of the real estate pledged as loan collateral (loan-to-value)

IMF International Monetary Fund

MFIs monetary financial institutions

MiCAR Markets in Crypto-Assets Regulation

MOS statistical report on services trade by modes of supply

MREL minimum requirement for own funds and eligible liabilities

IFRS  International Financial Reporting Standards

NFCs non-financial corporations

NGFS Network for Greening the Financial System

NIS2 Directive on measures for a high common level of cybersecurity across the Union

NPEs non-performing exposures

NPLs non-performing loans

NSFR net stable funding ratio

NPC  National Payments Council

OECD Organisation for Economic Co-operation and Development

OFATS outward foreign affiliates statistics

FSB Financial Stability Board

PEPP Pandemic Emergency Purchase Programme

AML/CFT anti-money laundering and countering the financing of terrorism

ML/FT money laundering, financing of terrorism

PSPP Public Sector Purchase Programme

RIAD Register of Institutions and Affiliates Data

ROE return on equity

SDRs special drawing rights (financial instrument used and whose value is published by the IMF)

SEPA Single Euro Payments Area

SI Slovenia

SIs significant institutions

SISBIZ system for the exchange of information on the indebtedness of business entities and credit risks

SISBON system for the exchange of information on personal debt from credit operations

SIUI AI innovations taskforce

SPACE study on the payment attitudes of consumers in the euro area

SRB Single Resolution Board

SREP Supervisory Review and Evaluation Process

SRM Single Resolution Mechanism

SSM Single Supervisory Mechanism

STEC statistical report on services trade by enterprise characteristics

STEP2-T pan-European payment system for executing SEPA credit transfers and SEPA direct debits

SUCH study on the use of cash by households in the euro area

SORS Statistical Office of the Republic of Slovenia

TARGET Trans-European Automated Real-time Gross Settlement Express Transfer System, the Europe-wide payment system for settling (mainly) large-value payments, securities transactions and instant payments in euros

TARGET2 Securities (T2S)

 a service under the TARGET system for settling securities transactions

T2 a service under the TARGET system for settling (mainly) large-value payments in euros that functions according to the principle of real time gross settlement

TIPS TARGET Instant Payment Settlement

TLPT threat-led penetration testing

TLTRO, TLTRO-II and TLTRO-III

 targeted longer-term refinancing operations

TSI technical support instrument

OMLP Office for Money Laundering Prevention

ZDP-2 Foreign Exchange Act

ZMbNFS-A revised Macroprudential Supervision of the Financial System Act

ZPlaSSIED Payment Services, Electronic Money Issuance Services and Payment Systems Act

BAS Bank Association of Slovenia