Almost 250,000 Slovaks clients of suspended non-banking firms: report

Almost a quarter of a million Slovaks were clients of non-banking financial institutions that suspended or limited their operations after last year's legislative changes to conditions for short-term loans, announced Maros Ovcarik from Financial Compass on TABLET.TV on Thursday.

"If we take into account companies that decided to suspend or significantly limit their operations, we're talking about 230,000 Slovaks, which is a large group of people. The total amount of loans reached 124 million euro (134 million U.S. dollars) in 2014," emphasised Ovcarik.

Last year's legislative changes have cleaned up the market for short-term loans offered by non-banking institutions. According to Ovcarik, many of these companies resembled loan sharks, so it's a good thing that the legislation was changed.

"Their space to cover their risks was diminished, so many decided to suspend or limit their activities," added Ovcarik, also praising the new measure that non-banking institutions are obliged to obtain a licence.

"It was illogical that regular banks were under the harsh supervision of the Slovak central bank (NBS), while non-banking institutions offering far more unfavourable loans weren't under surveillance," stated Ovcarik.

However, he said there was a need to be careful that limiting these financial institutions wouldn't create a situation wherein some people wouldn't have an opportunity to obtain a loan, as this would facilitate the emergence of a grey economy, stressed Ovcarik.

British company Provident Financial is among those that have decided to suspend their activities. Endit