Eurozone: Bankers-politicians rig keeps robbing taxpayers

Alenka Bratušek, Slovenian Prime Minister at the rostrum, in the presence of Štefan Füle, Member of the EC in charge of Enlargement and European Neighbourhood Policy, Laurent Fabius, French Minister for Foreign Affairs and International Development, and Kristalina Georgieva, Member of the EC in charge of International Cooperation, Humanitarian Aid and Crisis Response, (seated, from left to right). International donors’ conference for Bosnia and Herzegovina and Serbia after the devastating floods in the Balkans. (EC Audiovisual Services, 16/07/2014).

Last week the European Commission ruthlessly wrote the last chapter of the Slovenian financial tragedy. In it, this nation of only two million people was forced by Brussels to save with around €7 billion of taxpayers’ money (a bit less than one tenth of GDP) the overgrown, reckless, aggressive even fraudulent banking system of this otherwise healthy economy. Certainly this is not a Balkan malady. Unfortunately, the small and beautiful country is the latest victim of the global disease, which threatened to send the real economy of the world to chaos. Simply, the international banking cancer of imprudent lending and super risky bets this time struck the third largest bank of Slovenia, the Abanka.

Last December the poor Slovenian taxpayers were forced by Brussels and the European Central Bank to pay the costs to save Nova Ljubljanska banka d.d. (NLB) and of Nova Kreditna Banka Maribor d. d. (NKBM), the largest and second largest banks of the tiny republic. By the same token Slovenians were forced to pay for the winding down of two other banks, the Factor Banka and Probanka. These last two lenders had crossed any line of honesty and prudency and usurped the money deposited with them by the unsuspecting customers. Of course the guilt weights also on the European and national financial watchdogs and auditors, who despite of being responsible to protect the citizens from ‘sharks’ they betrayed them.

An ‘urgent’ case

The European Commission presented this decision as urgently needed measures to “ensure that Slovenia’s economy can count on a viable, healthy banking sector”. Not a word about who was responsible within the banks’ management, the owners (that is the politicians, because the banks are state-owned) and the supervisory authorities for the incredible ‘party’ with other people’s money.

Let’s start from this latest act, in this vast swindle, which started in the US and then spread all over the Western financial system. Ljubljana was the last prey of the banking vultures. All the major banks in the country participated in this world-wide hoax. For as long as the ‘game’ could continue and produce immense takings pocketed by managers, shareholders and dealers, everything was all right and the competent authorities and auditors had nothing to comment or scrutinise. When the trickery became apparent and the bets in every conceivable market went sour, the Commission rushed to Ljubljana to ‘approve the needed measures’ as it had done in Dublin, Nicosia, Madrid and Athens. Not to forget the hundreds of billions paid by the British, the German and French taxpayers to save the lenders in their countries, with or without the Commission’s approval.

The Slovenian tragedy

The last case in the Slovenian drama is Abanka. “The plan covers a first State recapitalisation of €348 million, temporarily authorised by the Commission in December 2013, and a second recapitalisation of €243 million together with a transfer of assets to the Slovenian asset management company (BAMC) of €1 087 million (gross book value)”. This last BAMC is not new. There is one BAMC in every European capital.

Those BAMCs are the ‘bad banks’ created by governments, to undertake the non-performing loans and other toxic assets of the regular banks and make the taxpayers responsible to cover the losses. The real culpable parties, the bankers, who had approved the bad loans and placements got away as if nothing had happened. Probably a large part of those loans had found its way even to the pockets of politicians. In the case of Greece the two major political parties, New Democracy and PASOK, had been handed hundreds of millions in unsubstantiated loans from the country’s banks on collateral of their future…turnouts in elections.

Coming back to Slovenia, the core decision to load the banking trickeries and losses on taxpayers was taken last December in Brussels. On that occasion, the Commission had “approved in five distinct decisions state aid measures in favor of five Slovenian banks. The Commission approved the restructuring plans of NLB and of NKBM, in particular because they will enable the banks to become viable in the long-term without unduly distorting competition. The Commission also approved aid for the orderly winding down of Factor Banka d.d. and Probanka d.d., … Finally, the Commission temporarily approved rescue aid in favor of Abanka Vipa d.d. (Abanka), for reasons of financial stability”. Nova Ljubljanska Banka, Nova KBM and Abanka are state-owned, a fact that makes the politico-banking rig even more apparent.

Free billions for the bankers

The truth remains that the Slovenian taxpayers have been asked to support the country’s banks with €3bn in recapitalisations, plus another €4.6bn in non-performing loans and other assets, which have been transferred to the ‘bad bank’. Large tarts of it will be written off as loss at taxpayers’ expenses. Most or all of this money can be attributed to fraudulent loans and super-risky placements decided by the country’s bankers – politicians unholy alliance.

It is even more disturbing to watch this flagrant robbery of the Slovenian taxpayers, only a few months after the Eurozone’s decision makers agreed in the Eurogroup on the creation of the European Banking Union. Allegedly, the prime objectives of the EBU are to cut the umbilical cord between bankers and politicians and relieve taxpayers from the burden of bailing out failing banks. Alas it proves to be a lie.

All in all the last act of the Slovenian banking tragedy proves that Eurozone’s prime target is not the wellbeing of citizens, but rather the dishonest enrichment of bankers and politicians.