Slovenia had been struggling to avoid an economic bailout but this has resulted to the liquidation of two small banks. The move to liquidate Factor Banka and Probanka was to ensure financial stability of its banking systems, said the country's officials last Friday.
According to a statement issued by the Finance Ministry and the Central Bank of the country, its government had provided guarantees to ensure repayment of their depositors. The said guarantees had amounted to EUR645 million for Probanka and USD540 million for Factor Banka respectively.
Local banks in Slovenia had struggled with EUR7.5 billion of bad loans. This was worth more than one-fifth of the national output. This had raised speculations that the country would follow other troubled EU members. Slovenia had sought international bailout in the next few months.
The two banks are privately owned and are among the smallest financial lenders in the country. Together, the banks represented around 4.5% of the whole banking system in the Slovenia.
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