Slovenia working 'day and night' to save banks

(BRUSSELS) - Slovenia's new Prime Minister Alenka Bratusek insisted Thursday that her government is working "day and night" to save a banking system which the OECD says is in urgent need of repair.

Bidding to avoid her country becoming the debt-riddled eurozone's sixth bailout recipient, Bratusek met European Commission President Jose Manuel Barroso for talks on economic reforms and measures that already resemble conditions applied in previous bailouts.

However, both Bratusek and Barroso rejected attempts to compare the former Yugoslav state to Cyprus, the most recent and controversial bailout where bank depositors were hit with a near unprecedented levy to help pay for the rescue.

"Literally, day and night we are dealing with this problem," said Bratusek, her country's first female prime minister who had been in charge of the budget at the finance ministry.

"Absolutely we are trying to save our banking system," she added.

"We do not have easy times ahead ... We are aware of that," she said. "Our first task is to stabilise the banking system. In June, with (the creation of) a bad bank, we will solve the first problem.

"We will also begin privatisations," on the back of key reforms to pensions and labour laws, Bratusek said, aiming to reduce the budget deficit and update laws to cover banks and the management of state assets.

There is "no universal template" for remedying the problems of the eurozone, Barroso said of the situation in Slovenia, apparently referring to a remark by Eurogroup head Jeroen Dijsselbloem that the Cyprus terms might be applied elsewhere.

"I made it clear Slovenia is facing a very demanding task," he said, adding: "I came out of this meeting with a feeling of confidence that Slovenia will rise to the challenge."

Slovenia, which adopted the euro single currency in 2007, is to present a full reform agenda "relatively soon," Barroso said, although Bratusek indicated she thought a 2015 target for fiscal consolidation to meet EU demands was unlikely to be met.

"Personally, I have a problem," she said of the date. "I think this is too optimistic as regards the current economic situation and the current deficit."

Concerns over Slovenia will likely come up when eurozone finance ministers hold informal talks with their EU counterparts in Dublin over the coming weekend.

Earlier Tuesday, the Organisation for Economic Co-operation and Development said Slovenia's banks, saddled with huge bad loans, had to be stabilised as the "most urgent priority."

At the same time, OECD deputy secretary general Yves Leterme said there "is no reason to anticipate an immediate need for a bailout."

Slovenia's three-largest banks are owned by the state and have been recapitalised several times.

The country faces a deep recession this year -- with the economy tipped to shrink by more than two percent -- and more capital injections for the banks are expected.

Slovenia's last government collapsed in February after a wave of protests against austerity cuts and corruption allegations against then prime minister Janez Jansa.