EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 20 July 2012  
on the Slovenia Sovereign Holding  
(CON/20 12/57) 
 
Introduction and legal basis  
On 13 July 2012, the European Central Bank (ECB) received a request from the Slovenian Ministry of 
Finance  for an opinion on a  draft law on the Slovenia Sovereign Holding  (hereinafter the ‘draft law’).  
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 sixth indent  of Article  2(1) of C ouncil Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to rules applicable to financial institutions insofar as they 
materially in fluence the stability of financial institutions and markets . In accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.  
 
1.  Purpose of the draft law  
1.1 The main purpose  of the draft law is to establish the Slovenia Sovereign Holding (SSH) which will 
be charged with managing all investments of the Republic of Slovenia . Concentrating all State 
investments at one managing entity  allows active management of  the investments and  a consistent  
corporate management system. Consequently, the value of the investments is expected to increase. 
The draft law : (a) simplifies the management structure; (b)  defines more clearly the intention and 
criteria of State investment ma nagement ; and (c) creates a single  State asset reserve.  
1.2  Article 29 of the draft law provides t hat the SSH or its subsidiary may acquire and manage assets 
transferred within restructuring programmes by the banks to the SSH or its subsidiary against consideration. In this context: (a) all ancillary rights, such as rights to privileged repayment, 
mortgage, pledge, rights arising from the contract with the guarantor, rights to interest, penalties, 
and other ancillary rights provided by law, pass to the SS H on the transfer of assets; (b) all bank 
assets acquired on the basis of an  enforced ancillary right referred to in point (a)  prior to the 
transfer of a bad claim are also transferred to the SSH on the transfer of assets;  (c) the SSH may 
acquire investmen ts as capital instruments , including hybrid convertible instruments , issued by 
banks and taken into account in calculation of the bank’s own funds in accor dance with laws and 
                                                 
1  OJ L 189, 3.7.1998, p.  42.  
ECB -PUBLIC 
2 regulation s and may recapitali se banks with monetary or non- monetary contributions. The 
consideration for the purchase of the banks ’ assets may be either monetary or non- monetary in the 
form of financial instruments whose holder or , respectively,  issuer is the SSH or its subsidiary.  The 
SSH or its subsidiary may issue State -guaranteed bonds and take State -guaranteed loans to finance 
the purchase of the banks ’ assets. Bonds issued by the SSH or its subsidiary for the purpose of 
financing the purchase of the banks’  assets may be paid in by transferring assets which are being  
purchased  to the SSH or its subsidiary.  The Government may adopt a regulation specifying the 
manner in which the assets are transferred to the SSH and the manner in which the activities 
referred to in this paragraph are performed.   
  
2. Duty to consult the ECB  
2.1 The Slovenian government endorsed the draft law on 12 July 2012 and submitted  it to the 
Parliament for adoption in an extraordinary session of the Slovenian Parliament on 18 to 20 July 
2012. The Ministry requested the ECB to deliver its opinion as soon as poss ible which effectively 
means that the ECB has been given an extremely short deadline of three to five working days.  The 
ECB would like to  draw the Ministry’s attention to the proper procedure for its consultations  as set 
out below2. 
2.2 The second sentence  of Article 4 of Decision 98/415/EC provides that the ECB must be consulted 
‘at an appropriate stage’ in the legislative process. This implies that the consultation should take 
place at a point in the legislative process which affords the ECB sufficient ti me to examine the 
draft legislative provisions , and where necessary translate them , and to adopt its opinion in all 
required language versions, and which also enables the relevant national authorities to take the 
ECB’s opinion into consideration before the  provisions are adopted. Where draft legislative 
provisions are prepared by an authority other than the adopting authority, it can be derived from 
Article 4 of Decision 98/415/EC that consultation on such provisions must take place at a time 
which enables the authority initiating the draft legislative provisions to consider whether they 
should be amended in order to accommodate the ECB’s opinion, i.e. before transmission of the provisions to the adopting authority. The timetable should also factor in a reas onable period for the 
ECB to examine the consultation dossier and deliver its opinion. Article 4 does not preclude 
national authorities from taking steps in accordance with their legislative procedures that do not 
affect the substance of the draft legislat ive provisions.  
2.3 It follows from the wording of Article 3(4) of Decision 98/415/EC that Member States are obliged to suspend the process for adoption of the draft legislative provision pending submission of the 
ECB’s opinion. This does not mean that the whole national legislative process, for example, 
preparatory work of parliamentary standing committees, discussion of other opinions submitted by national authorities, etc. should be suspended pending delivery of the ECB’s opinion. Rather it 
                                                 
2 See Title IV, Section I of the Guide to consultation of the European Central Bank by national authorities regarding draft 
legislative provisions,  available on the ECB ’s website at www.ecb.europa.eu.  
ECB -PUBLIC 
3 means that t he adopting authority has to have the opportunity to deliberate meaningfully the ECB’s 
opinion prior to taking its decision on the substance. If a time limit has been set for submission of 
the ECB opinion and this time limit has expired, the national authority concerned may restart the 
adoption process. But even in such a case, and as long as the legislation has not yet been adopted, 
the national authorities continue to be obliged to take the ECB’s opinion into consideration.  
 
3. Consultation on the impleme nting regulations  
The ECB takes note of the Slovenian authorities’ endeavours to help banks in difficulties by transferring 
their bad claims to the SSH. The ECB understands that Article 29 of the draft law is only the basic 
provision enabling such transfer  whereas the detailed rules on the asset transfer and the SSH’s activities 
in this respect will be set out in an implementing regulation to be adopted by the Government3. Such 
implementing rules are of great interest  to the Eurosystem , for example  as regar ds the possible role of 
Banka Slovenije, the price at which assets are transferred to the SSH  and the SSH’s investment strategy . 
Taking due account of the ECB’s fields of competence, the ECB invites the Slovenian authorities to duly 
consult it on any such implementing regulations.  
 
4. Role of Banka Slovenije   
Banka Slovenije as the banking supervisor  should be involved in any procedure identifying the banks  
transferring their bad claims to the SSH  as well as identifying and defining the value of the assets to be 
transfer red to the SSH . The ECB would therefore suggest explicitly providing for  an appropriate role of  
Banka Slovenije, either in the draft law or in any other relevant legal act . 
 5. Value at which banks’ assets are transferred to the SHH or its su bsidiary  
In accordance with Article 29 of the draft law the SSH or its subsidiary may acquire banks’ assets as part  
of restructuring programmes. Although the draft law does not provide any details about the ir valuation, 
the ECB emphasises the importance o f assets being transferred at their real economic value. Bad claims 
should usually be purchased at market value. Using public resources to purchase assets at relatively high 
prices from a bank under resolution may be a hidden subsidy and bail out private s hareholders or creditors 
and may conceal the real cost of recapitalisation. It may also provide incentive to banks to sell to the SSH a greater portion of their assets than justified.   
 
6. Transfer of interest accrued on  bank assets  transferred to the SSH  
In accordance with the second indent of the first paragraph of Article 29 of the draft law, all bank’s assets 
acquired on the basis of an enforced ancillary right prior to the transfer of a bad claim are also transferred 
to the SSH together with the trans fer of assets. This implies that, in addition to the bad claim itself, also 
all interest accrued prior to the transfer of the bad claim  to the SSH , including the interest accrued in the 
                                                 
3 See the third  paragraph of Article 29 of the draft law.  
ECB -PUBLIC 
4 course of the regular repayment of the bank claim, should be transferr ed to the SSH. S uch provision 
would thus apply in arrears and could also refer to assets that have perhaps already been disposed of. It 
would also not be in line with the intention of the asset transfer under  the draft law  to reduce the burden 
on banks wit h bad claims . Taking the above into account, the ECB would recommend revisiting this 
provision.  
 
7. Bank recapitalisation by the SSH  
In accordance with the third indent of the first paragraph of Article 29 of the draft law, the SSH may 
recapitalise banks w ith cash or non- cash contributions. As consistently expressed in its opinions4, the 
ECB generally prefers issuances of shares against a cash contribution for financial stability reasons. It 
should also be noted that recapitalisation against non- cash contri butions may in this case be carried out 
only if the bank share capital increase is based on an additional measure of Banka Slovenije5. 
 
8. SSH bonds   
In accordance with the second  paragraph of Article 29 of the draft law, the SSH or its subsidiary may 
issue State -guaranteed bonds to finance the purchase of the banks’ assets. Bonds issued by the SSH or its 
subsidiary for the purpose of financing the purchase of the banks’ assets can be paid in by transferring 
assets being purchased to the SSH or its subsidia ry. Such investment in banks of  the State -owned SSH’s 
bonds  is not desirable from the financial stability perspective as it reinforces the link between the State 
and the banking sector.  
 
This opinion will be published on the ECB’s website.  
  
Done at Frank furt am Main, 20 July 2012.  
 
[signed]  
 
The Vice -President of the ECB  
Vítor CONSTÂNCIO  
                                                 
4 See paragraph 2.2 of Opinion CON/2012/23 and in the context of consultations by  Slovenia paragraph 4.1.2 of Opinion 
CON/2012/48.  All ECB Opini ons are available on the ECB ’s website at www.ecb.europa.eu.  
5 See Article 43(8), point 2 of the Law on banking.