Slovenia: next stop bankruptcy?

Following a pattern that has become familiar in the eurozone, Slovenia has edged towards bail-out territory thanks to its broken banking system.

As Cyprus received the first tranche of its bail-out money this week, investors wondered which might be the sixth eurozone country to require a rescue. Enter Slovenia, with an annual GDP of €35bn, around 4% of eurozone output. As in Cyprus and Ireland, it's a case of a bust banking system potentially bankrupting the country too.

Overall debt is 53% of GDP, among the lowest in the European Union. But it has doubled since 2008, partly because of cash injections into the increasingly damaged banking sector, and could rocket further if the government has to recapitalise the banks. A property boom and bust, along with the downturn in neighbouring states, has left the largely state-owned banks with bad debts of about €7.5bn. A double-dip recession is threatening to increase this figure.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.