SLOVENIA Law and Practice Contributed by: Vid Kobe and Peter Gorše, Schoenherr Slovenia
1. Loan Market Overview 1.1 The Regulatory Environment and Economic Background
In summary, the recent economic cycles characterised by (stabilisation of) inflation, rising interest rates and new geopolitical uncertainties, coupled with a proac- tive regulatory environment, led to a more cautious and regulated loan market in Slovenia. These factors have collectively contributed to an initial reduction in credit growth, a shift towards fixed-rate loans, and an increased emphasis on risk management within the banking sector, which was followed by slight credit growth increase in 2024 and early 2025. On the other hand, the banking sector, after strong performance in 2023 and 2024 in spite of the mac- roeconomic uncertainties and limitations on lending, recorded an 18.6% decrease in profits before tax in the first quarter of 2025. 1.2 Impact of Global Conflicts As noted in 1.1 The Regulatory Environment and Economic Background , the stabilisation of inflation- ary pressure that followed the Russian invasion of Ukraine and the lowering of key ECB interest rates has led to the credit growth rate increasing once again, driven by consumer loans. Banks and other credit providers have increased their focus on risk manage- ment, in particular with respect to compliance with various sanctions regulations, making it more difficult to acquire a loan, especially for corporations from or Slovenia’s high-yield market has remained relatively modest, with its bond market yet to reach the level of other EU countries. In general, the Slovenian bond market is dominated by public issuance, with a limited number of (mostly private) corporate issuers. Accord- ingly, the high-yield market had a limited overall role in emerging trends and the development of financing Traditionally, the Slovenian credit market has been dominated by established credit institutions. How- ever, in recent years, geopolitical shifts, macroeco- nomic volatility and rising interest rates resulted in a notably increased level of activity among alternative credit providers, such as debt funds, private lenders and factoring companies. terms and structures in Slovenia. 1.4 Alternative Credit Providers associated with critical regions. 1.3 The High-Yield Market
In the face of rising inflation after the start of the war in Ukraine, due to rising energy and fuel prices, the Euro- pean Central Bank (ECB) started intensively raising the key interest rates for the euro area, which directly impacted the Euro Interbank Offered Rate (EURIBOR). Moreover, banks increased their focus on risk manage- ment, particularly in light of heightened economic and geopolitical uncertainties. This included more strin- gent credit assessments and a cautious approach to new lending. However, inflation stabilised and, since 12 June 2024, the ECB has been steadily lowering key interest rates. The initial reduction was evident in the decreased demand for loans, particularly in the non-financial corporate sector (NFD), where credit growth slowed significantly from a peak of 18.4% in August 2022 to a contraction of 2.2% by March 2024, which was followed by a 2% year-over-year increase in early 2025. The growth rate of loans to households also decreased from 8.5% in September 2022 to 4.2% by March 2024, but recovered to approximately 7% in early 2025. Thus, according to the Bank of Slove- nia (BoS), households remain the key factor in credit growth. In terms of regulatory environment – in addition to a more stringent approach to credit risk and sanc- tions regulations by Slovenian banks – the BoS imple- mented several macroprudential measures aimed at enhancing the resilience of the financial system. These notably included the introduction of a positive neutral countercyclical capital buffer (CCyB) rate of 1.0%, effective from 1 January 2025, which was reaffirmed by the BoS on 16 September 2025, and tightening of the consumer credit conditions (eg, by way of estab- lishment of a uniform debt service-to-income (DSTI) ratio cap of 50%). The DSTI ratio cap and the minimal creditworthiness for consumers remained unchanged in 2024, though the BoS announced it will conduct another review in the second half of 2025. After a decline between 2020 and 2022, the demand for housing and consumer loans started increasing after mid-2023. The growth exploded in April 2025, with a 44% year-over-year growth in housing loans.
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