•  
  •  
 

Document Type

Case Study

Case Series

Broad-Based Asset Management Programs

JEL Codes

G01, G28

Abstract

Slovenia weathered the initial shock of the Global Financial Crisis (GFC) of 2008 well enough to return to growth in 2010. However, non-performing loans continued mounting, banks experienced significant losses, and credit growth turned negative in a credit crunch. Slovenia entered a recession in 2011, experiencing the second largest GDP decline in the euro area. It was not certain whether Slovenia had the fiscal space to resolve these problems without requesting a Troika bailout from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF). In late 2012 the government tried to prevent such a program by combining capital injections with a public asset management company (AMC) called the Bank Assets Management Company (BAMC). The BAMC did not start purchasing assets until December 2013. The EC believed that BAMC’s asset valuation process did not fit their standards and delayed approval for the purchases accordingly. However, the BAMC eventually purchased assets (largely related to Slovenia’s large corporate sector) with a face value of €5.8 billion for €2.0 billion. The European Commission was highly involved in the BAMC’s implementation. The organization’s design left it vulnerable to government interference. Management was initially dominated by a group of international experts who were extremely unpopular with the public and the government, and the organization did not have sufficient powers to demand collection from well-connected corporate debtors, many of them state-owned.

Date Revised

2021-06-30

Download

Share

COinS