EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 11 November 2014 
on banking regulation 
(CON/2014/79) 
 
Introduction and legal basis 
On 1 October 2014, the European Central Bank (ECB ) received a request from the Slovenian Ministry of 
Finance for an opinion on a draft law on banking1 (hereinafter the ‘draft law’). On 20 October 2014, the 
ECB received certain revised provisions of the draft law2. 
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 si xth indents of Article 2(1) of Council Decision 
98/415/EC3, as the draft law relates to Banka Slovenije an d to rules applicable to  financial institutions 
insofar as they materially influence the stability of financial institutions and markets. In accordance with 
the first sentence of Article 17.5 of the Rules of Pr ocedure of the European Central Bank, the Governing 
Council has adopted this opinion. 
 1.  Purpose of the draft law 
1.1 The draft law regulates, inter alia, the conditions for the establishment, operation and winding up of 
credit institutions, the powers a nd procedures for supervising the activities of credit institutions, 
and the powers and procedures for managing macro-prudential and systemic risks relating to credit institutions
4. 
1.2 The draft law is a recast of the current Law on banking5. The main purpose of the amendments 
made by the draft law is to transpose or adapt na tional law to Union legislation prepared in the 
context of and as a response to the recent financial crisis. In par ticular, the draft law implements 
Directive 2013/36/EU of the European  Parliament and of the Council6 (hereinafter ‘CRD IV’) and 
adapts national law to Regulation (EU) No 575/2013 of the European Parliament and of the 
                                                 
1  Predlog zakona o ban čništvu (ZBan-2) . 
2  The revised provisions are Articles 400 to 406 of the draft law. 
3  Council Decision 98/415/EC of 29 June 1998 on the consulta tion of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
4  See Article 1(1) of the draft law. 
5  Zakon o ban čništvu (ZBan-1)  (Official Journal of the Republic of Slovenia, no. 99/10 – official consolidated text, 52/11 - 
corr., 9/11 - ZPlaSS-B, 35/11, 59/11, 85/11, 48/12, 105/12, 56/13, 63/13 - ZS-K and 96/13). 
6  Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit 
institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC 
and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). 
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2 Council7 (hereinafter the ‘CRR’). Certain elements of Directive 2014/59/EU8 (hereinafter the 
‘BRRD’) are transposed by the draft law, includi ng provisions relating to early intervention 
measures, recovery plans and intra-group financial su pport. In the light of the establishment of the 
single supervisory mechanism (hereinafter the ‘SSM ’), the draft law also adapts national law to 
Council Regulation (EU) No 1024/20139 (hereinafter the ‘SSM Regulation’) and Regulation (EU) 
No 468/2014 of the European Central Bank10 (hereinafter the ‘SSM Framework Regulation’). This 
adaptation includes, inter alia, the reflection of ch anges to the distribution of powers between the 
authorities involved in banking supervision. 
1.3 Similarly to current requirements under the Law on banking with respect to the members of banks’ 
boards of management, the draft law introduces a re quirement to obtain the authorisation of Banka 
Slovenije in order to perform the functions of a member of the supervisory board of a bank11. The 
draft law also transfers from the Slovenian banking association to Banka Slovenije the 
responsibility to maintain the system for th e exchange of bank information on client 
creditworthiness12. 
1.4 The draft law envisages the adoption of further legislation to regulate the winding up and resolution 
of banks, and to regulate the deposit guarantee scheme. According to th e explanatory memorandum 
to the draft law, such future legislation is in tended to fully transpose the BRRD and Directive 
2014/49/EU13 (hereinafter the ‘new DGS Directive’) into national law. Until the adoption of this 
legislation, the winding up and resolution of  banks, and the deposit gua rantee scheme will be 
regulated by the current Law on banking, as amended and extended in the recast effectuated by the 
draft law. The new am endments in this respect are as follows. 
 The deposit guarantee scheme 
1.5  The draft law introduces changes to the current deposit guarantee scheme14. It provides for the 
transition from a scheme financed ex post to a scheme financed ex ante by establishing a deposit guarantee fund within Banka Slovenije. Pursuant to the draft law, the assets of the deposit guarantee fund will have a target level of 0.8% of  the total guaranteed deposits in all banks. The 
                                                 
7  Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements 
for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1). 
8  Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the 
recovery and resolution of credit institutions and invest ment firms and amending Council Directive 82/891/EEC, and 
Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC , 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, 
and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 
12.6.2014, p. 190). 
9  Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit instit utions (OJ L 287, 29.10.2013, p.63). 
10  Regulation (EU) No 468/2014 (ECB/2014/17) of the European Central Bank of 16 April 2014 establishing the 
framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national 
competent authorities and with national de signated authorities (SSM Framework Re gulation) (OJ L 141, 14.5.2014, p. 1). 
11  Article 55 of the draft law.  
12  Articles 407 to 409 of the draft law in conjunction with Article 390.a of the Law on banking, as well as Article 397(3) of 
the draft law. 
13  Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes 
(OJ L 173, 12.6.2014, p. 149). 
14  The current deposit guarantee scheme is governed by Chapter 8 of the Law on banking. 
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3 banks’ contributions to the deposit guarantee f und will be collected over time and will include 
regular and, if necessary, extraordinary contributio ns. The contributions paid into the fund will 
reduce the amount of liquid assets that the banks are required to hold for the purposes of the deposit 
guarantee scheme. Although it will have no legal personality, the deposit guarantee fund will be 
separate from Banka Slovenije and the latter will not be liable for the obligations of the fund. If the 
contributions from the banks and their liquid investme nts are insufficient or not available in time to 
cover the obligations of the de posit guarantee fund, the draft law envisages that alternative 
financing, including loans, or temporary financial as sistance from the State, may be obtained by the 
fund to cover the financial shortfall.  
 In addition to providing for the availability of the deposit guarantee fund to repay guaranteed 
deposits where a bank becomes bankrupt, the draft law also provides for the fund’s availability in 
the context of bank resolution. According to th e draft law, where resolution measures grant 
depositors access to their guaranteed deposits and it is in the interest of financial stability, the 
deposit guarantee fund may be available in the reso lution process up to the amount of the estimated 
loss that the fund would suffer in the event of bankruptcy proceedings. 
 The deposit guarantee fund will be established within and mana ged by Banka Slovenije. Banka 
Slovenije will bear no liability for the obligations  of the fund and the costs of Banka Slovenije 
relating to the management of the fund are to be recovered from the fund itself15. 
 The resolution fund 
1.6  The draft law also provides for the establishmen t of a resolution fund. The banks will be required to 
make a capital investment in the resolution fund, in  the form of cash, within a maximum period of 
three months from the entry into force of the draf t law. This capital investment is to amount to 
2.3% of the total guaranteed deposits in all banks. The banks’ investment in the resolution fund will 
not be transferable and will only be repaid to a bank if the bank is voluntarily or compulsorily 
liquidated, or if it commences  bankruptcy proceedings. 
 Pursuant to the draft law, Banka Slovenije may d ecide to activate the resolution fund where banks 
are in resolution if this is necessary for financ ial stability reasons. Activatio n of the resolution fund 
where a bank is in resolution may take the form of: (a) purchase of capital instruments of a bridge 
bank or of another bank in resolution; (b) a contribu tion to a transferee to cover a financial shortfall 
specifically arising from the transfer to it of the assets and liabilities of the bank in resolution; (c) a 
contribution to the compensation of shareholders an d other creditors of the bank following bail-in, 
where the losses of the shareholders and other cred itors of the bank are greater than they would be 
in the event of bankruptcy proceedings; and (d) loans, guarantees and the provision of other types of security interest to the bridge bank or a nother bank involved in the resolution process. 
 In a similar manner to the deposit guarantee fu nd, the resolution fund will be established within 
Banka Slovenije. The resolution fu nd will have no legal personality but , according to the draft law, 
it will be liable for the obligations it assumes in the sense that assets in the fund will be available to 
                                                 
15  Articles 400 to 402 and 405 (as revised), in conjunction with Article 397(3) of the draft law. 
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4 meet such obligations. Accordingly, the draft law states that Banka Slovenije will have no liability 
for the obligations of the resolution fund and that the costs incurred by Banka Slovenije in 
managing the fund will be covered by the fund itself16. 
 Other amendments 
1.7  Other measures introduced by the draft law in clude: (a) a new resolution tool – the bridge bank17; 
(b) the possibility of early repayment of a bank’s  liabilities where the bank is in the process of 
winding down gradually18; and (c) certain proposed amendments to the rules on the ranking of 
creditors’ claims in the event of a bank becoming bankrupt19. 
 2. General observations 
2.1 The draft law aims to integrate the Slovenian national banking supervisory structure into the SSM 
and to ensure that no legal obstacles arise under national law in relation to the performance by the 
ECB, with the assistance of the national competent authority, of its banking supervisory tasks under 
the SSM Regulation. The ECB understands that the rules are not intended to narrow or amend the 
scope of the SSM Regulation and the SSM Framework Regulation, which are directly applicable. 
In this regard, the ECB welcomes Articles 9 an d 235 of the draft law, which make general 
reference to the division of powers under the SSM Regulation between Banka Slovenije and the 
ECB. 
2.2 The draft law transposes certain elements of the BRRD, including provisions relating to early 
intervention measures, recovery plans and intra-gr oup financial support. The ECB understands that 
the Slovenian authorities will tran spose the remaining elements of the BRRD, as well as the new 
DGS Directive, in a separate law, which is intended to ensure fu ll transposition of the 
abovementioned Union law into national law. In this context, the Slovenian authorities may also 
implement adequate structural arrangements to  ensure the separation between the resolution 
function and Banka Slovenije’s other functions considering that Banka Slovenije is the national central bank and acts as both supervisory authority and resolution authority
20.  
 
3. Supervisory fees and fines 3.1 Pursuant to Article 239 of the draft law, the ba nks are required to pay supervisory fees to Banka 
Slovenije to fund its supervisory tasks. The annual amount of the fees to be paid to Banka Slovenije 
shall not exceed the actual cost of supervision for that year. Income received from the proceeds of 
fees charged in relation to the issuance of authorisations and the supervisory procedures of Banka Slovenije is to be deducted from the cost of superv ision. Pursuant to Article 265(6) of the draft law, 
                                                 
16  Articles 403 and 404 (as revised) of the draft law. 
17  Article 406 of the draft law. Banka Slovenije has other resolution tools at its disposal; see Chapter 7.7 of the Law on 
banking. 
18  Article 398 of the draft law. 
19  Article 399 of the draft law. 
20  See Article 3(3) of the BRRD. 
ECB-PUBLIC  
5 income received by Banka Slovenije from the proc eeds of fines imposed on banks for breaches of 
prudential requirements shall become the revenue  of Banka Slovenije and shall be taken into 
account in determining the cost of banking supervis ion for the purposes of Article 239 of the draft 
law. 
3.2 Whereas relevant Union law, including the CRD IV, CRR, SSM Regulation and SSM Framework 
Regulation, does not specify who should own the proceeds of sanctions imposed by national competent authorities, Article 137 of the SSM Fr amework Regulation provides that the proceeds 
from administrative penalties imposed by the ECB under Article 18 of the SSM Regulation shall be 
the ECB’s property. Those sums will not be deducte d from the supervisory fees payable by banks 
to the ECB pursuant to Article 30 of the SSM Regulation. 
 
4. Deposit guarantee f und – role of the State  
4.1 Pursuant to Article 401(2) of the draft law,  where the assets of the deposit guarantee fund, 
including the regular contributions made by banks, the liquid assets that the banks are required to 
hold for the purposes of the deposit guarantee scheme, the banks’ extraordinary contributions, and 
any borrowings made by the deposit guarantee fund are insufficient to cover the obligations of the 
deposit guarantee fund, Banka Slovenije is to make a proposal to the State that the State temporarily covers any shortfall in the deposit guarantee fund’s assets in accordance with the 
second paragraph of Article 313 of the Law on banking. 
4.2 It is important to ensure, in the light of the prohibition on monetary financing under Article 123 of 
the Treaty, that the draft law, together with Article 313 of the Law on banking, clearly places an obligation on the State to cover any potential fi nancial shortfall in the deposit guarantee fund. 
 
5. Resolution fund – financial stability considerations 5.1 The ECB welcomes the establishm ent of a resolution fund in Slovenia that is financed ex ante. 
However, it is unclear how the pr oposed resolution fund will fit into the framework of the BRRD, 
which must be transposed into national legisla tion by 31 December 2014. The ECB understands 
that the Slovenian authorities will fully transpose th e BRRD in a separate law and it is important to 
ensure consistency between any such  transposition and the draft law. 
5.2 The aggregate capital investment that banks will be required to make into the resolution fund 
within three months seems relatively large. It is  therefore recommended that the national authorities 
prudently assess how the size of this aggregate ca pital investment and the timeframe within which 
it must be made could affect the banks concerne d. In particular, given the cash nature of the 
investment and the fact that a bank’s investment cannot be repaid to it unle ss it is liquidated, the 
authorities might wish to assess the effect of the draft law on the banks’ liquidity and capital 
positions in order to avoid any unintend ed consequences for financial stability. 
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6  
6.  Deposit guarantee fund and resolution fund – liability of Banka Slovenije Banka Slovenije will manage the deposit guarantee fund  and the resolution fund in accordance with the 
draft law. Although the draft law states that Banka Sl ovenije will bear no liability for the obligations of 
these funds, Banka Slovenije’s possible liability with regard to the management of the funds does not 
seem to be fully clear. Taking into account the stru cture of these funds, as described above, the authorities 
may consider whether the draft law would benefit from  clarifying the legal consequences of a potential 
breach of fund management duties by Banka Slovenije. 
 This opinion will be published on the ECB’s website. 
 
 Done at Frankfurt am Main, 11 November 2014. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI