Because of their available capital the five largest banks in Slovakia, which provide two thirds of all company loans, could increase the volume of such loans by 37 percent, or €5.6 billion, stated the Finance Ministry and Slovak central bank (NBS) in a joint report on loan options in Slovakia, the TASR newswire reported.
The Report on Loan Options in the Banking Sector for the Business Sector was submitted to the government on April 1 and cites data available as of December 31, 2008 which show that banking sector capital exceeds loan requirements by 39 percent. Banks began to be more cautious in providing loans in the second half of last year, especially due to uncertain economic developments and more expensive inter-bank lending, TASR wrote. The banks' attitude became apparent when they began demanding that developers share costs and have contracts for property they want to develop.
According to the report, it can be expected that banks will now hold onto their resources in order to cover possible losses from existing loans and won't use all of their available capital.
“The ability of Slovak banks to provide further loans will, to a certain extent, depend on the willingness of their mother institutions to provide Slovak banks with sufficient resources to cover the risk ensuing from these loans,” concludes the analysis. TASR
Compiled by Zuzana Vilikovská from press reports
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