When Is A "Unique Template" Bailout Not A Bailout? When It's In Slovenia

Tyler Durden's picture

As we noted yesterday, Slovenia appears the inevitable next player set to experience the non-template of uninsured depositor bail-ins and the good-bank-bad-bank solution that was uniquely applied to Cyprus. However, global investors should rest assured as this miracle of modern financial engineering will not be a detriment to the nations as the Slovenian banks will be internally recapitalized (in the latest proposal) by a government guarantee. Simply put, in the world of European accounting idiocy, Reuters reports "this would not result in an immediate spike in the government's debt level, because the authorities would initially provide banks with guarantees rather than newly issued securities." Which leaves us asking, just how much is a one-week-old Slovenian government's guarantee worth in real money? And why didn't the Cypriot government just 'promise' to do 'whatever it takes' to support their banks' bad assets? Of course the chance of the bailout happening just surged:




Via Reuters,

Slovenia has been thrown into the spotlight as the next eurozone country likely to seek an international bailout, given the fragile state of its banking sector.




While the government insists that Slovenia will be able to get through the crisis under its own steam, a deal with international lenders could provide a key backstop to fears of contagion, say analysts.


"Slovenia is now inevitably heading to a bailout, the eurozone shot itself completely in the foot following the Cyprus issue," said Tim Ash, head of EM research ex-Africa at Standard Bank.




"There is a pocket of interest [among investors], so an international bond issue could work, but they would have to pay up massively," said an origination official. "They would need some tailwind as well."


The government might also need to target US dollars, rather than euros. "In euros no way," said a second banker. "US dollar investors are used to volatility. They definitely still have access to US dollars."




"Market momentum is moving against Slovenia, and quick," said Ash. "It will be tough and expensive for them to put a new issue to bed without significant backstopping from the Troika."




Part of the uncertainty still surrounding the country is due to adjustments that the new governing coalition - led by Prime Minister Alenka Bratusek - has pledged to make to the original 'bad bank' proposal put forward by the previous Janez Jansa administration.


One of the key tweaks now under consideration, according to RBS, is the creation of internal bad banks within each of the country's largest financial lenders, postponing any transfer of toxic assets to an external bank asset management company to a later date.


"Initially, bad assets would be transferred to the internal bad banks and backed simply by government guarantees," said Abbas Ameli-Renani, an emerging market strategist at RBS.


Under the original proposal, assets would have been transferred immediately to the BAMC in exchange for newly-issued government bonds.


While there will be a simultaneous recapitalisation of banks under both arrangements, the new version would not result in an immediate spike in the government's debt level, because the authorities would initially provide banks with guarantees rather than newly issued securities.


One of the downsides, however, is that the plan will keep bad assets on banks' balance sheets and under the same management.

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hedgeless_horseman's picture



Slovenia cannot print their own money.  They are screwed.

redpill's picture



Death sentence.

hedgeless_horseman's picture



All these lies, all this pain, just so zee Germans can keep the ECB from issuing EuroBonds.  I admit, they have fought longer and harder than I guessed.

Manthong's picture

They had their chance

(to be like Iceland)

and they blew it.

Lucky to get sloppy seconds.   

johngaltfla's picture

The good news?


Their stock market is ONLY down 78%(as the chart in the link below indicates) as opposed to the 98.9% in Cyprus. I would call that the buying opportunity of a lifetime. Where's that ghoulish bitch from Goldman pumping that along with SPX 1750?


Slovenia is the Next Crisis for the Dysfunctional European Union

Cdad's picture

Slovenia = all the nations of the Earth

won't need bailout = legislation being written for mandatory bail-ins

ECB = pretty daffodils

Kranjec says = as Kranjec hits send on Op ed while finishing packing up the Land Rover

death sentence = access denied or ROW!

redraft and submit


Abraxas's picture

You guys are so cynical. Why can't you trust the authorities, just for once? I'm sure they have our best interests at the top of their priorities.

aint no fortunate son's picture

no bailout maybe, but a nice big fat bailIN is coming

Skateboarder's picture

Bailouts, bailouts, everywhere,
And all the wealth did shrink.
Bailouts, bailouts everywhere,
Nor any time to think!

hedgeless_horseman's picture



Bailouts, bailouts, everywhere,
And all the wealth did shrink.
Bailouts, bailouts everywhere,
Not any time to think! Time to order more ink!

asteroids's picture

It IS a long holiday weekend. Anything can happen.

ChanceIs's picture

Do I have to repeat??????

"It's contained to subprime......er ah........Cyprus, Bitchez."

Benyamin Shalom Bernanke

See Max Keiser.   Lanny Breuer landed at Covington for $4 megs per annum.  I bet that will be deposited over at least 40 - no wait - 80 banks.  Just to be safe.

Stoploss's picture

Slovenia is no bigger than a flea, absolutely no impact on markets whatsoever.


Let me guess, Larry Fink is long Slovenia..



masterinchancery's picture

Otto von Bismarck--"Never believe anything until it's been officially denied."

OptionNinjaNYC's picture

Number of countries in the European Union: 27

Number of letters in the following sentence: 25

Goldman Sachs Doing God’s Work.

Greece and Cyprus – ELIMINATED.

2 Down, 25 More To Go.


Mark123's picture

So, correct me if I am wrong...but new Fed math goes as follows:


create money for Fed ($85 billion/month)....use new money to buy government debt....government gives money away....gold price flat to down....cash becomes scarce and more valuable.


So cash is different than money?  Cash is better than gold?  I give up....it is more and more like trying to figure out a David Lynch movie.

SheepDog-One's picture

It's just the Brave New Normal...nothing to see here, just hand over all your money and get back on those oars and ROW, damn insolent peasants!

Cdad's picture

But not all of the peasants are insolvent...unless...oh, I see...you mean all peasants are by default insolvent if there are talking monkeys at the controls in their local bank.  Gotcha.  Never mind.

Still, I cannot help but think that not all peasants like rowing.

SheepDog-One's picture

That's OK, they've got whips for that. They call em 'Incentivizers'.

earnyermoney's picture

"the beating will continue, until morale improves..."  Anonymous Fascist

jover's picture

If slovenia gets the same treatment as cyprus, there will be bank runs across europe.

One time is really a unique situation but two times isnt

BooMushroom's picture

Three times is enemy action.

SpiceMustFlow's picture

I want to see Zizek start bitching and flailing his arms about

fonzannoon's picture

These bond vigilante's are a bunch of pussy's. Slovenia?

Seasmoke's picture

may as well spend it all and enjoy it , before they take it all from you

SheepDog-One's picture

Yep, I just bought a $800 Balabushka pool cue....may as well. 

Nobody For President's picture

Yep, just bought more silver for delivery and local storage before the boat trip.

Cognitive Dissonance's picture


That is the signal to the citizens of Slovenia to run to your bank before there is a bank run....which will never happen because the banks will be closed before "the run".

<Run Forest Slovenia Run.>

machineh's picture


It's not official till it's officially denied.

Dareconomics's picture

The first indication that your country needs a bailout is when your government claims the opposite.



masterinchancery's picture

Always key to be the first to panic.

Gief Gold Plox's picture

I for one have kept my earnings and savings far far away from the banking system of this corrupt country. Yes, I do actually live there. Can't you sense all my nationalist pride? Anyways, those few I could save have been the rest of em can figure the shit out as they are told whats been done to them through the telly.

toys for tits's picture

If it's perceived you're a tax haven country, you are a bullseye for financial devastation by the EuroZone. 

The Invisible Foot's picture

Ahhh free markets M&A at work.

hugovanderbubble's picture

Greece 2011 we wont need bailout

Portugal 2012 we wont need bailout

Spain we dont need ESM money and PCCL



Last one, please close the door softly...




hugovanderbubble's picture

And Dont Forget CROATIA...


One of  Basketball Colleagues in Serbia told me: Hugh, Our Banking System will be FULLY NATIONALIZED. (and its not a threat is just a tip)



TPTB_r_TBTF's picture

That far South they need to ask the Ottomans for a bail-in arrangement.  I am sure the Ottomans will oblige.

Abraxas's picture

The Turks might want to drive spits through a few of the leaders just to make sure they will get their money back with the interest. After all, they had ruled the Balkans for only 500 years.

Bold Eagle's picture

Will Slovenia need a bail-in?

earnyermoney's picture

Looking at the Domino chart of the other post on this topic, why Slovenia before Belgium?

Bicycle Repairman's picture

What is the point of a small country belonging to the EU, if there is no help when the SHTF?  Where's the unity?  The protection as part of a bigger, stronger whole?

Dan Conway's picture

I am sure it made sense to the slovenia/cyprus leaders after a long weekend of women, booze and coke.  Oh, and probably a german thug with a gun saying "zine zee papers!"

SheepDog-One's picture

AH well....at least things are just great here in the good 'ol USA...look at STAWKS look at em go!

Yen Cross's picture

    All these good bank bad bank[eurocrat] schemers, remind me of that show about people that hoard things that they have zero use for. We should fly the lot of them to 'Fantasy Island' for an intervention by Mr. Roarke.

L_Conquistador's picture

Whenever a European minister says something like "this is not the bail-out you're looking for" can he at least do the little Obi-Wan finger waive thing, to make it interesting?

ziggy59's picture

ECBsters should be looking for BAIL!

ConfederateH's picture

Does anyone else find it despicable the way each sovereign government in the EU is forced to go to confession at the ECB for their past sins when their past sins pale in comparison to those of the ECB?

eclectic syncretist's picture

HOLY SHIT BERNANKE, YOU STUPID MOTHERFUCKER!  Get those plates on the presses changed back over to Euro's and start printing like Porky Pig on Prozac!  Ol' Bennie's gonna need some Bennie's before this days done.  Print, print, print, you worthless sack of shit for brains asshole jizzface scumbag.