Slovenia’s central bank is restricting loans, uneasy about an overconfident relaxation of credit standards. 

The south-eastern European states formerly associated with the Soviet Union have been slow to privatise state-owned assets when compared with their western European neighbours, but political reforms and softening attitudes mean fresh momentum is spurring a wave of long-delayed sell-offs in the region, particularly in Serbia and Slovenia.

Bulgarian lenders bucked the trend as Tier 1 capital contracted in most of central and eastern Europe, while Czech institutions retained their status as most profitable banks in the region.

Slovenia's economy was in a precarious position, even by current European standards, as recently as 2013. The country's central bank governor, Boštjan Jazbec, explains how a return to health has been achieved through methods that were not universally popular.

While consolidation is likely to change the face of Slovenia’s banking system in the coming years, in the near term issues with low profitability are top of the agenda. And, despite the creation of a bad bank to expunge the problem of non-performing loans, many banks still have a far from healthy loan book.

Central and eastern European banks in the EU faced a sluggish 2013, but Poland led the region in terms of growth and the Czech Republic in terms of returns. Baltic banks are also starting to rise to the challenge.