Publisher
Yale University: School of Management: Yale Program on Financial Stability (YPFS)
Media Date
7-26-2019
Media Type
Document
Content Type
Working Paper
Country/Region
Slovenia
Language
English
Crisis
European Sovereign Debt Crisis (2008 - 2012)
Case Series
2020 YPFS Preliminary Discussion Drafts
Intervention
Asset Purchase Program; Bad Bank; Broad-Based Asset Management Program
Additional Information
Slovenia weathered the initial shock of the Global Financial Crisis (GFC) of 2008 well enough to return to growth in 2010 (IMF 2012, 1-2) (Markovic-Hribernik and Tomec 2015, 128-129). However, non-performing loans continued mounting, banks experienced significant losses, and credit growth turned negative in a credit crunch (IMF 2012, 1-2) (Markovic-Hribernik and Tomec 2015, 128-129). In 2011, Slovenia entered a recession, experiencing the second largest GDP decline in the euro area (Damijan 2012, PDF Page 13). 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) (Bardutzky 2016, 11) (Slovene Press Agency 2012b). Delays imposed by the European Commission meant that the BAMC did not start purchasing assets until December 2013 (Bank of Slovenia 2013, 105-106). However, the BAMC eventually purchased assets (largely related to Slovenia's large corporate sector) with a face value ofGBP5.8 billion forGBP2.0 billion (Balogh 2018, PDF Page 4) (Lehmann 2017, 7). The European Commission was highly involved in the BAMC's implementation and the organization's design left it vulnerable to government interference (EIU 2013-11-05) (Sila 2015, 9). It was initially dominated by a group of international experts who were extremely unpopular with the public and the government, and it did not have sufficient powers to demand collection from well-connected corporate debtors, many of them state-owned (EIU 2014a) (BAMC 2014, 9-10) (Lehmann 2017, 7) (BAMC Press Release 2014-12-18a) (BAMC Press Release 2015-07-13).
Recommended Citation
Nye, Alexander, "The Bank Assets Management Company (BAMC) in Slovenia" (2019). Documents. 4021.
https://elischolar.library.yale.edu/ypfs-documents/4021