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A "bad bank" should be establish in Slovenia as soon as possible but the government should at the same time work on reviving the real sector of the economy, the Bank of Slovenia said, Reuters reported.
The government plans to establish the "bad bank" by April in order to take off the balance sheets of state banks the bad loans worth some EUR7bn (or 20% of GDP) that are crippling the sector and preventing any reform of it.
But the central bank warned that the worsening of the banks' portfolio will only stop when the economy recovers so that companies will be able to repay loans.
"The recovery of the real sector of the economy is truly a problem that has to be solved by the economy and the state before or at least at the same time as the recovery of the banks," the central bank said in a statement on Thursday.
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