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17 December 2013, Austria Trend Hotel Ljubljana

The results of the stress tests are known, the figures revealed. The guests at the AmCham Business Breakfast were trying to find solutions to the following issues – the three HOW questions

  • how will the Slovenian banking system recovery proceed;
  • how will the necessary capital increase of banks affect the Slovenian public finances;
  • how to mitigate the adjustment, stimulate the economic growth and keep the jobs in present situation;

were answered by distinguished Slovenians and guests from abroad at the final AmCham Business Breakfast before New Year holidays.


  • Michael Doran, Partner, White & Case, Capital Markets Group, London
  • Torbjörn Mansson, CEO, Družba za upravljanje terjatev bank (DUTB) – Company for Managing Non-performing Assets of Banks
  • Janko Medja, Chairman of the Board and CEO, Nova Ljubljanska banka d.d.
  • Nick Smith, Partner, KPMG, Restructuring group, London

The discussion was led by Nevenka Črešnar Pergar, Director of NP Consulting and izr. prof.dr. Marko Košak, Head of the Department of Money and Finance, Faculty of Economics in Ljubljana.

Mansson: Bad Bank will operate 10 to 15 Years

“We have been already in June ready for the assets transfer, now we are even better prepared. The situation is not an easy one, the banking financial statements are weak. I assume that the process will last from 10 to 15 years. Such period is necessary to most effectively capitalize the state assets. We have the support of the government,” said Torbjörn Mansson, CEO, Družba za upravljanje terjatev bank (DUTB) – Company for Managing Non-performing Assets of Banks.

“We will have a complete freedom from political influence. None of executive and non-executive directors is linked to the political network,” Torbjörn Mansson commented the professionalism and integrity of own team. The team will consist of 40 people. »The situation of the Slovenian banking system is complex – but we know how to »clean up« the banks to ensure that they will continue to operate without disturbances«. In the first place, we wish to establish which banks are capable of undisturbed operations.

To the question raised by Nevenka Črešnar Pergar, why they were convinced that they would be a better asset manager than the banks, he replied: » I do not want to judge the processes of banks in the past. Now we have the mandate and since we do not perform banking operations, we can actually keep the focus on it and do what we need to do, based on quick and reliable decisions – quickly and effectively. Also, we are politically independent since our administration does not have any links with the Slovenian policy, we have our own protocol and own internal processes. We will make our decisions based on the facts of each individual case and determine what is actually best to do – without any compromises.

Realistic, yet Optimistic Janko Medja

Janko Medja, President of the Management Board of NLB, has revealed how eagerly he had anticipated the announcement of the results of the stress tests. “It was like I were at home and my wife would not talk to me. I would know that something was wrong, but would not know what it was about. Whereas on the fifth day, when she would finally talk to me, I would not care what she would say, only that she finally said something. I am so relieved now,” he said.

Nevenka Črešnar Pergar reminded him that exactly one year ago he at the AmCham Business Breakfast stated, that all we needed was – the truth. Medja was determined, that he did not change his beliefs. He explained that there have been many discussions regarding the methodology of stress tests and added that if the bank itself would calculate the bank minus, the result would be higher or lesser only for 10 to 15 percent. “However, it is time to cease dealing with the past and to focus on the future and to continue with our work instead”.

He pointed out that since the beginning of his engagement as the President of the Management Board of NLB he and his team are focused predominantly on cooperation and working with companies: »We listen to their needs and the feedback expressed as their confidence, tells us that we have been in the last year on the right path«.

He as well pointed out that for Slovenia the privatization is essential: »We need privatization to achieve the critical mass of capital, the change of mindset in Slovenia is needed«.

To the question raised whether NLB was ready for assets transfer, he replied that it is and that NLB has its list ready.

Medja: Credit Crunch is a Construct! Slovenia has a Capital Crunch.

To the question raised by Nevenka Črešnar Pergaron how much time is needed and what can we expect from the bank, Medja presented two steps: »We are facing an easier and a more difficult part of the task. The easy part is that we have decided to continue with raising financing. We have a new product for good companies, which are based on trust, as they have so far proved to do good business and for them we can accept more risk. The difficult part lies in the fact that there is a non-competitive part of the economy – companies that are mostly involved in lobbying at banks in order to prolong the funding instead of privatizing and restructuring. We do not want more to repeat the mistakes the banks were making in the last 10 years and we will no longer lend money, for which we know in advance that we will never get back.” »People are afraid because of bad loans and past mistakes. Therefore we have to change things from the top downwards. We must listen to the people and decide whom to support and whom not to. Credit crunch in Slovenia is a construct! Believe me! We have many good banks and those companies which do not get credit, probably did not prove to be creditworthy. In general, bankers have the knowledge where one can afford to risk and where not. The only crunch that Slovenia has is the capital crunch. We need capital. We need foreign investors«, was Medja direct.

Smith: Valuation of Stress Tests is Realistic and Fair

Nick Smith, Partner, KPMG, Restructuring group, London, positively evaluated the work of Medja` s managing of NLB and the steps that have been made and added that the important steps of Company for Managing Non-performing Assets of Banks: »Some improvements were made in short time – which is essential. The worst scenario for business or economic environment is when there are no right tools for solving the situation quickly and effectively. The success of Mansson` s “Machinery” is the key«.

Smith is convinced that the valuation of stress tests is realistic and fair. »Of course, the current economic outcome remains difficult and one has still quite some work. I would also like to warn you of the potential danger in the asset management, which lies in the fact that banks can fall into the trap, i.e. that they focus too much on rescuing companies and not enough on their core business«, advised Smith.

»Go back to the basics and complete them correctly! It is tedious – but it pays off«, concluded Smith.

Smith believes: »The environment must be changed, which is the responsibility of everyone in the economy. You must accept the decisions, which contain compromises and give proper part of the credit for the company. But be attentive to downside risks in the transition«.

Doran: The Economy can not exist Without Credit

Michael Doran, Partner, White & Case, Capital Markets Group, London, advises: »Follow the example of foreign countries and observe what they did well and what not.

»Let us look at how horrifying experiences for the country and people have occurred in Ireland after their 3 -year program, as they instead of solving even increased the problems. The biggest problem occurred due to the lack of liquidity and credits which businesses and individuals could no longer obtain.

The economy can not exist without credits and we should be aware of this. Banks need to work their main business which is lending money«, was direct Doran.

»For us, foreign investors, the highest risk for Slovenia can be seen in the fact that we are not sure whether we can get things carried out as agreed. For us it is important that there is a political will and “political appetite” for positive changes. 6 months ago we have not seen them yet, however, now I have to say that things are changing for the better. You started to solve the problems and you should next year examine closely what you did well and what went bad and build on it«, was Doran concrete.

»Privatization is the first step. Companies are faced with the European competition. If you are restricted and can not invest, you will not reach the true potential – you will not be competitive in the international market«, said Doran.

Doran: Do what you do well also in the Future

»In Europe, the funding model is slowly approaching the American model. It is positive that there is in the international market a lot of money, however, it is necessary to observe the international rules (transparency, integrity, …) At the moment it is bad that global investors are not too familiar with Slovenia and Slovenian companies, therefore Slovenia is facing a difficult task to present itself to the world and show what it has good. Slovenia is in front of really big challenges, but you still have an advantage over many countries that have large problems. In Slovenia, you have an excellent education, you focus a lot on export… Therefore do what you do well also in the future«!

To the question raised by prof. dr. Mark Košak, Head of the Department of Money and Finance, on how to stimulate foreign investors to come to Slovenia, Doran was direct: » Foreign investors love transparency and transparency and transparency. They want to know what actually happens to their money. This means that the tax system must be simple and predictable and that you have a stable policy. At this moment it is extremely important that the policy and the economy enter vision and hope into our environment«.

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