Press release after the Meeting of the Governing Board of the Bank of Slovenia 22 October 2013
1) The Governing Board of the Bank of Slovenia discussed current supervisory matters.
2) The Governing Board of the Bank of Slovenia was briefed on the ECB’s opinion of 15 October 2013 on measures for bank reorganisation in relation to the draft law amending the Banking Act, which was also published on its website: http://www.ecb.europa.eu/ecb/legal/1341/1345/html/act_12860_amend.sl.html .
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third and sixth indents of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, as the draft law relates to the Bank of Slovenia and to rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets.
The ECB received a regular request from Slovenia’s Ministry of Finance for an opinion on the draft law amending the Banking Act. As is always the case for regulations on financial institutions, the opinion was an integral part of the draft law submitted to the National Assembly for debate. In the opinion adopted by the Governing Council of the ECB, the ECB broadly welcomed the draft law, stating in its specific observations: “As highlighted in previous ECB opinions on bank resolution, institutions that are failing or likely to fail should in principle, subject to a decision by the resolution authorities, be resolved using resolution tools when this is deemed necessary and in the public interest, including the prevention of systemic risk. If the resolution authority concludes that there is no public interest concern, the institution should be liquidated under the insolvency proceedings normally applicable to such institutions under national law.” It is our conclusion that it was this paragraph that was misinterpreted as an ECB opinion allegedly favouring the bankruptcy of Factor banka and Probanka. The ECB generally does not take a position on specific proceedings by national central banks, and from the quoted observation it is impossible to conclude that the opinion relates to the measures adopted by the Bank of Slovenia for the restructuring of the two banks. This is definitely a misinterpretation of the ECB opinion, which did not relate to any specific measures, but rather to the draft law amending the Banking Act, which for the first time will introduce the bail-in measure (a mechanism that stipulates that shareholders, junior and senior creditors and unprotected savers should also contribute to bank resolution) introduced by European legislation on 1 August 2013, which is a prerequisite for the implementation of state aid procedures in the banking sector.