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Country Commercial Guides for FY 2000: Slovenia Report prepared by U.S. Embassy Ljubljana, Released July, 1999 Note*

p>Chapter VIII Trade and Project Financing

The banking sector in Slovenia remains fairly rudimentary. Unlike many of the transition economies' banking industries, Slovenian banks have rather strong capital bases and robust loan portfolios. The prime weakness of Slovenian banking is a lack of dynamism. Banks are limited to a narrow range of traditional activities, disregarding areas such as new consumer services, investment banking, and management of more complex financial instruments. Nevertheless, the financial statements of Slovenian banks are in compliance with international standards and audited by internationally recognized auditors. In practice, this means that identifying financing for domestic projects will be problematic. Banks typically seek 100 percent collateral in most lending.

With the entry into force of Slovenia's Europe agreement and the intensification of discussions in Brussels over EU membership early 1999, Slovenia has taken some important steps to free up its financial markets. A combination of market forces and changes in Bank of Slovenia regulations and national legislation are moving this sector increasingly in a more globally oriented direction. In the future, it will become easier and more transparent to make both portfolio and direct investments in Slovenia and to conduct many financial operations, including banking, securities brokering, and undertaking various credit transactions. The banking sector is also showing signs of stirring from its relative torpor, as pressures to consolidate its myriad banks build and privatization of two of Slovenia's largest banks gradually gets underway.

There are no referential interest rates in Slovenia such as, for example, LIBOR. Banks set the interest rate in the form of TOM plus real interest. TOM is calculated as the arithmetical average of the past twelve months and is determined once a month. In 1999 it is estimated to be around twelve percent per annum. Real interest rates for loans amount to five percent or more, while real interest rates for savings are between two and six percent per annum.

There are other sources of financing available, although on a limited range of activities. The U.S. Export-Import Bank provides medium-term and long-term loans and guarantees, and OPIC offers loan guarantees and direct loans. The European Investment Bank and the International Finance Corporation are involved in funding large infrastructure projects, while the European Bank for Reconstruction and Development provides financing for banking sector privatization.

In July 1999 the Slovenian Export Corporation (SEC) and US EXIMBank signed a memorandum on cooperation in financing, insuring, and reinsuring exports to Southeast European countries.