Slovenia: Bad Bank Going Badder

 In about tweet: Slovenia created a “bad bank” to solve the banking crisis. It hired Scandinavians to run it independently of old boys’ networks. They got too independent and were sacked.

As a measure for saving its failing banking sector, Slovenia in 2013 established a “bad bank”, officially called Bank Assets Management Company (BAMC). The BAMC purchased some 1.6B€ worth of non-performing assets from the banks which were also recapitalized by the government with some 4B€. Total cost of the operation is over 5.5B€ which is a lot of taxpayer money for a country with a population of only 2 million.

In 2013 Slovenian government hired few foreigners – independent of the local business milieu – to manage BAMC. Their independence proved unpleasant, to say the least.

The next government lowered their salaries mid-term, hoping they would quit. They did not. Possibly they found other means to remunerate their work. Possibly not. Then BAMC was investigated by the local Court of Audit and the local Commission for the Prevention of Corruption. Both institutions have been exploited for political battles in the past. Ironically, while having problems with the local watchdogs, the BAMC was certified internationally by Ethic Intelligence for its program to prevent corruption.

In the beginning of October a media campaign was launched that claimed that the foreign executives of the BAMC did not adjust their salaries to the government regulations. All national dailies and TV stations, without exception, played along in unison in a populist exploitation of envy and xenophobia.

Last week the centre-left government fired Chairman of the Management Board Lars Nyberg and CEO Torbjörn Manson claiming it “lost confidence” in them.

Old boys’ privatization

In the root of the matter was the privatization as it unfolded in Slovenia. Often it would have the form of the management buyout – the people who were managing the company would get a loan from the state owned bank to buy the company and then pay back the loan from the profits that the company was making.

There were two problems with this approach. Firstly, many would get the loan simply because they were part of the old boys network that controlled the Slovenian economy and banking ever since Slovenia was still a Socialist Republic.

And secondly, the economic crisis of 2008-2014 did hurt the businesses. They simply did not generate enough profit any more for the repayment of the loans. It could be that the crisis in Slovenia took such a long time precisely because of the unwillingness to admit that the old boys were are about to loose much their wealth and most governments were trying to postpone that.

 

Enters “bad bank”

Many such assets were transferred to the “bad bank” which was trying to make the best of that property; the best for Slovenian taxpayer and not for the owners or managers of the failing companies.

The trigger for the events described seems to have been the case of the Sava Holding Company. A must read is a letter by Lars Nyberg to the Prime Minister. If the reader has failed to look at author’s CV on LinkedIn earlier, now could be the time. This is his conclusion:

In the Sava case, given what I have seen and read, I feel a smell of corruption in every corner. Is this really what you meant in your campaign when you talked about fighting corruption? Is this the direction in which you want to lead Slovenia?

Indeed this seems to be the direction. Old boys seem to be taking over the BAMC to preserve their property and the capture of Slovenian state, economy, media and politics.

The direction got an even sharper image just a three days after the letter. On Thursday police special investigation forces raided the BAMC headquarters looking for “irregularities in salary and consulting contracts”.

The third Scandinavian at the top of BAMC team, Janne Harjunpää, is giving up as well, telling Slovenians to fight their own battles, that he is not their Che Guavara. This interview for Slovenian television is in English and starts at 0:52.

Capture

 

Key quotes:

We are working on some high profile cases. Apparently we have stepped on some very big toes.

…

Mr. Nyberg is a very senior person who has seen a lot, is the former vice governor of the Swedish National Bank, he was the adviser of Barroso, he has been everywhere. I have a reason to think he has a very precise nose.

The political left, including the government, believes that after all this the “bad bank” will be better. Spelled with a “t”. The right mostly believes it will be worse. The title of this piece is a compromise in spelling it.

PS. BAMC will be hiring. Newspapers are reporting that the government wants the top of the “bad bank” to be independent.

Popular posts from this blog

Updated! Synchronizing Moon+ Books on Android

Image
I do a lot of reading on my Android devices, phones and tablets. After a long search I selected  Moon+ Reader , the  Pro  version. The killer feature was the way bookmarks and underlining is handled. I mostly read non-fiction and like to mark important passages. And I want to be sure my marks are available forever. After I am done with a book, I create an Evernote clip from my marks and comments. With Moon+ this is done with a single click. I did most of my reading on my Nexus 7 tablet, but when my phone was getting bigger I realized it would be nice to do some reading there as well. And it would be even nicer if I could synchronize the books, notes etc. Synchronizing book files Moon+ provides functionality to sync books (.epub, .pdf ...) to cloud, but they are just pushed to cloud and this is the end of the story. They will not end up on your other device. So you need to do it like this:  Create a backup of the Moon+ main folder. Just in case. Many android file manages let you
Read more

Council on Scientific Information in the Digital Age: Too Little Too Late

I have been involved in publishing on the World-Wide-Web since 1992 and with scholarly publishing since 1995, also as a co-editor of a peer-reviewed journal ITcon and a coordinator of a framework program SciX, that was studying the topic in depth. The bottom line is that in the scientific publishing process there is a decreasing value added by the publishers. The research is funded by the governments or the industry, performed by the researchers, papers are written and reviewed by them for free, only at the very end a publisher comes along that takes over the copyright, publishes the work and sells the journal at great expense to the community that created and edited the content for free. At the Competitiveness (Internal market, Industry and Research) Council meeting in Brussels, on 22 and 23 November 2007 a conclusion has been reached on scientific information in the digital age: access, dissemination and preservation . It recognizes: the major contribution of universities, internati
Read more

Time to Make Content Neutrality into Law

Nowadays, the main issue are not monopolies, not pricing levels. The issue is free and open space for innovation and the exchange of ideas. A law on internet content neutrality would ensure it.   The previous battle in the  war for a free and open Internet  was about  net neutrality  — equal access for all to the plumbing level of the Internet. The next battle is about  content neutrality  — equal access for all to the content level of the internet. Content neutrality is more important than net neutrality. It is not about what speed is available to what service but about what voices are heard and what are suppressed. It should be made into a law. Net Neutrality I was one of those ministers in charge of information society that pushed hard for enshrining net neutrality into Slovenian law and into EU directives. We had some success. While the net neutrality hardliners would not be entirely satisfied, provisions have been made that ask for internet service providers and telecommunication
Read more