LJUBLJANA, May 19 (Reuters) - The Slovenian banking sector could post “a big loss” in the event that the country’s GDP falls 16% this year due to the coronavirus epidemic, the Bank of Slovenia said in a report on Tuesday.
It said the banking sector was likely to break even if GDP only fell by about 6%, adding the banks had entered the coronavirus crisis in a good condition.
The central bank said in March Slovenia’s GDP could fall by 6% to 16% this year, depending on the longevity of the coronavirus outbreak and the effectiveness of measures taken to cushion its consequences.
“Due to the size of the shock and the large fall of the economic activity the liquidity position of the banking system will worsen in time while pressure on lowering capital adequacy will increase,” the cetral bank said.
Slovenia has so far reported 1,467 coronavirus cases and 104 deaths. On Thursday it became the first EU country to officially call an end to its coronavirus epidemic.
From the middle of March it closed all shools, bars, restaurants, hotels, shops, apart from food and drug stores, sports and cultural institutions and cancelled public transport.
It started lifting restrictions from April 20. Last week public transport resumed while on Monday some pupils were able to return to schools. All restaurants and bars, as well as small hotels, were also allowed to open on Monday.
The central bank called for further measures in Slovenia and globally, including fiscal and monetary measures, to ease the economic crisis. It did not say what measures were needed.
The government controls about 12% of the Slovenian banking system. Other banks are mostly owned by foreign banks and investors, including U.S. investment firm Apollo Global Management, Italy’s Unicredit and Intesa Sanpaolo, Hungary’s OTP bank, Serbia’s AIK bank, Russia’s Sberbank and Austria’s Sparkasse and Addiko Bank.
In the first quarter of 2020 the combined net profit of the Slovenian banks dropped by 55% to 59.2 million euros ($64.8 million), driven down in part by the coronavirus crisis, the central bank said last week. ($1 = 0.9138 euros) (Reporting By Marja Novak; editing by David Evans)