Bank Calls for Review of New Loan Restrictions After Dramatic Fall in Mortgages, Consumer Lending

By , 22 Jan 2020, 09:55 AM Business
Bank Calls for Review of New Loan Restrictions After Dramatic Fall in Mortgages, Consumer Lending pxfuel CC-by-0

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STA, 21 January 2020 - Bank NLB has asked the Constitutional Court to review tighter restrictions on lending imposed by the central bank in November. After filing the request on Tuesday, the bank expressed belief that its request would be a matter of priority for the court because of the "radical effect" the measures had on the quality of Slovenians' lives.

The bank believes that the measures were introduced too hastily and were too radical, and that they have to be abolished. Any anomalies detected in "individual market players" should instead be addressed with targeted and not systemic measures.

NLB says Banka Slovenije imposed the measures virtually overnight and triggered "an excessive drop in volume of loans and accessibility of loans by Slovenians within the strictly regulated and controlled system of commercial and savings banks, whereas there are no restrictions imposed on more expensive and more risky third loan providers".

The bank argues that the measures have already produced a radical effect with virtually total stop in growth in loan volume. What is more, the number of loans given out in the recent months has dropped dramatically.

The restrictions were introduced to protect the taxpayer, says the bank, adding, however, that Slovenian population is already among the least indebted in relevant global comparisons, while banks are highly liquid, which means that they are capable of absorbing any potential major shocks.

Moreover, Slovenia has the fresh experience of an extremely tough crisis, but in the 2009-2015 period there was no excessive increase in default among the population, the bank said.

Saying the measures were introduced overnight, the bank says the "legal unpredictability" makes it extremely hard to make business plans and evaluate companies.

The move by NLB comes a day after the Bank Association released data showing that the number of consumer loans had dropped by 60% compared to October and housing loans by 40%.

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