OECD: Slovenia at risk of a severe banking crisis

FXstreet.com (Barcelona) - The OECD released a report on Tuesday in which it analyzes the state of Slovenia’s financial sector and warns that the country, already in recession, is at risk of a severe banking crisis. With bad loans stacking up in Slovenian banks, which heavily rely on ECB financing, the possibility of the country asking international lenders for help is increasing.

In the report the OECD suggests that “excessive risk-taking, weak corporate governance of state-owned banks and insufficiently effective supervision tools” could result in a “severe banking crisis” and push Slovenia to ask for a bailout. That is why the country should quickly begin recapitalizing its financial institutions.

The OECD also said that it expects Slovenian GDP to drop by 2.1% this year and that “Slovenia faces risks of a prolonged downturn and constrained access to financial markets.”