The bailout deal for Cyprus cast a shadow over Slovenia’s potentially under-capitalized banking sector. Manolis Davradakis, Senior Emerging Econmist at Axa IM argues that the recapitalization needs of Slovenian banks stand at €3 to €5bn, significantly lower than those of Cyprus. A mix of bailout from Eurozone partners and enacted bail-in clauses should help to overcome these concerns.
According to the report the bailout is likely to be requested once external auditors have completed a due diligence of the banking system, although sovereign-rating downgrades could trigger an early request.
Axa IM points out that Latvia might be the next in line for a bailout.
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