LJUBLJANA, Slovenia — Only a few years ago, Bine Kordez was feted as Slovenia’s star entrepreneur. After transforming a home-improvement chain, Merkur, into a regional giant, he drew on easy credit from state-run banks to help orchestrate a 400 million euro management buyout of the company, the largest in the country’s history.
The rewards of success included an imposing mountainside retreat and frequent mention of his name as a possible future finance minister of this small, idyllic Alpine country.
Now, though, Kordez stands convicted of forgery and abuse of office for financial dealings as Merkur struggled under a mountain of debt.
‘’My mistake and the mistake of the banks was to vastly underestimate the risk,’’ Kordez, 56, said in an interview. He awaits a decision later this month on an appeal of his conviction, which could send him to prison for five years.
As fears grow that Slovenia could follow Cyprus and become the sixth eurozone country to seek a bailout, his rise and fall have come to symbolize the way easy and cheap credit, combined with Balkan-style crony capitalism and corporate mismanagement, fueled a banking crisis that has unhinged a country previously praised as a regional model.
The recent bailout of Cyprus at a cost of 10 billion euros, or $13 billion, which included stringent conditions forcing losses on bank depositors, has focused minds in Ljubljana, the Slovenian capital. Slovenia’s struggling banking sector is saddled with about 6.8 billion euros in nonperforming loans, about one-fifth of the national economy. Slovenia is now in recession, and the gloom across the eurozone shows little sign of abating.
Last Thursday, Slovenia bought time by borrowing $3.5 billion on international markets. That was two days after Moody’s Investors Service cut the country’s credit rating to junk status, citing the banking turmoil and a deteriorating national balance sheet. Analysts said the bond sale would probably enable the new Slovenian government to stay afloat at least through the end of the year.
The Cypriot debacle has shown how bailing out even a small country can damage the credibility of the euro currency union. But Slovenia, with 2 million people, insists that it will not seek emergency aid.
On Thursday, Alenka Bratusek, the 43-year-old prime minister only a little more than a month in office, is expected to present a financial turnaround plan to the European Commission, the executive arm of the European Union.