Yes the fall of another Europeon country seems obvious. Slovenia, which has been affected by boom burst cycle, added by reform backlogs and the euro-zone sovereign debt crisis, is facing a severe banking crisis, because of excessive risk taking, weak corporate governance of state-owned banks and insufficiently effective supervision tools.
Though the creation of the Bank Asset Management Company to ring-fence impaired assets is glad, but lack of transparency and potential political interference pose risks. The non performing loans of the banks are higher in number. Although Slovenia is only 0.4% of the European domino but as soon as possible it need to be taken care to head off the risks of a further downturn and constrained access to the financial markets will restore confidence.
Organization of Economic Co operation and Development (OECD) recently said that the Slovenia has completely under estimated the cost of fixing their bad banks, which has almost $9Billion bad loans- which is the fifth of its Gross Domestic Product.
OECD has also said in its report that the economy of this 2 billion population country is expected to decelerate by 2.1% indicating a risk prolonged downturn in future.
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