Regulatory framework
Prudential banking rules
The basic prudential banking framework consists of the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR), which reflect the implementation of the standards of the Basel Committee on Banking Supervision in European law.
The CRD encompasses requirements in connection with the commencement of activities and the provision of services by banks, provisions in connection with the implementation of banking supervision and sanctions, and requirements with regard to internal governance and capital buffers. The CRD is subject to transposition into national legislation. In Slovenia the majority of its provisions are transposed by the Banking Act (ZBan-3). The CRR is applied directly in all Member States, and includes requirements in connection with the calculation of own funds and capital requirements, liquidity, leverage and large exposures. It also encompasses provisions regarding disclosures by banks.
The CRD and the CRR are complemented by regulatory and implementing technical standards, prepared by the European Banking Authority (EBA) and adopted by the European Commission as decisions and regulations, which are also binding and directly applicable in Member States.
The banking rules which include the EU legislative framework and the Slovenian framework, which is the basis for the implementation of microprudential supervision of banks, can be found here.
Sustainable finance
Legislation in the area of sustainable finance introduces new requirements for various business entities. The banking sector and the wider financial sector are particularly exposed in this regard, given that they are supposed to play a major role in financing the transition to a sustainable economy. In addition, banks are also facing increased risks related to the aforementioned transition and broader environmental issues, which are being addressed by banking rules. Bank of Slovenia website mainly features part of the legislation that imposes direct requirements on banks, and also the part that is of importance to interpreting these requirements.
Banka Slovenije is responsible for supervising the implementation of prudential banking rules on sustainable finance, where the focus is primarily on risks related to environmental, social and governance (ESG) factors.
Market infrastructure
The European Market Infrastructure Regulation (EMIR) and the Securities Financing Transactions Regulation (SFTR), which pursue the objective of reducing counterparty credit risk and increasing the transparency of derivatives transactions and securities financing transactions (SFTs), are part of the legislative framework of market infrastructures.
Banka Slovenije is the competent authority for supervising banks, which under the EMIR and the SFTR are financial counterparties to whom obligations and requirements in derivatives transactions and SFTs apply.
European Market Infrastructure Regulation (EMIR)
The EMIR defines the obligations relating to trading in derivatives, namely the obligation to report derivatives transactions to trade repositories, the clearing obligations for standardised classes to OTC derivatives, the application of risk mitigation techniques to non-centrally cleared OTC derivative contracts, prudential requirements for central counterparties and requirements for trade repositories.
Securities Financing Transactions Regulation (SFTR)
The SFTR sets out obligations for counterparties in SFTs (repurchase transactions, securities or commodities lending, securities or commodities borrowing, buy-sell back transactions or sell-buy back transactions, margin lending transactions).
Covered bonds
The Covered Bond Directive (CBD) is the first one that has minimally harmonised conditions, requirements and supervision in connection with the issuance of covered bonds at the level of EEA countries with the aim of increasing investor protection. The aforementioned directive has been transposed into the Slovenian legislative framework by the Mortgage and Municipal Bonds Act (ZHKO-2) and the Banka Slovenije secondary legislation issued on its basis.
The prudential treatment of covered bonds for banks is regulated by the CRR, which sets out the requirements that need to be met by covered bonds in order to be subject to preferential capital treatment for banks as investors. The aforementioned requirements are also taken into account in the ZHKO-2, which means that covered bonds issued pursuant to the ZHKO-2 allow banks to apply preferential capital treatment in accordance with the CRR.
In cooperation with the Securities Market Agency (SMA), Banka Slovenije is responsible for conducting supervision of mortgage bonds, municipal bonds, and banks issuing mortgage and municipal bonds.
FAQs
For the interpretation of issues in connection with EU banking legislation (directives, regulations, technical standards, etc.) directly applicable in Member States, an EBA Q&A mechanism can be found on the link below (EBA). The submitters are strongly encouraged to check whether the question has already been addressed before submitting it, to avoid potential rejection.