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Slovakia’s Financial Institution Security Under Scrutiny

Lending and borrowing are regulated by the Civil Code and Commercial Code in Slovakia. While borrowers are generally not regulated, it is advisable for them to consider whether the mortgage or consumer lending regimes apply.

Regulations for Lenders

Lenders must be authorized by the National Bank of Slovakia if they provide loans from financial resources acquired from third persons through a public call. Housing loans provided to consumers are regulated by the Act on Housing Loans, which sets out requirements for:

• Information provision
• Credit assessment
• Obligations of lenders and borrowers

Mortgage Lending Regulations

Mortgage lending is subject to specific regulations aimed at preventing irresponsible lending and borrowing practices exposed during the global financial crisis. The Mortgage Credit Directive requires lenders to:

• Conduct affordability tests
• Provide standard information about mortgages
• Ensure staff training

Risks Associated with Lending

Lenders must also be aware of potential risks associated with lending to:

• Companies in crisis
• Insolvent firms

Borrowers, on the other hand, should be mindful of implications of the EU’s Bank Recovery and Resolution Directive (BRRD), which outlines measures for dealing with failing financial institutions.

Conclusion

In light of these regulations and risks, borrowers and lenders alike must exercise caution when engaging in lending activities in Slovakia.