EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 3 May 2016  
on the resolution and winding -up of banks  
(CON/20 16/28) 
 
Introduction and legal basis  
On 25 March 2016 the European Central Bank (ECB) received a request from  the Slovenian Ministry of 
Finance for an opinion on a draft law on the resolution and winding- up of banks  (hereinafter the ‘draft 
law’).  On 21 April  2016, the Ministry sent  the ECB a revised version of 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 third and sixth indents of Article 2(1) of Council 
Decision  98/415/EC1, as the draft law relates to Banka Slovenije and 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 Procedure of the E uropean Central 
Bank, the Governing Council has adopted this opinion.  
 
1.  Purpose of the draft law  
1.1 The draft law amends the hierarchy of creditors in insolvency proceedings  for a bank  and 
provides that creditor ’s claims must be paid in the following order2: 
(1)  the costs of compulsory liquidation proceedings and bankruptcy proceedings ; 
(2)  priority claims, including employee- related claims ( e.g. salaries for the three months 
preceding the opening of bankruptcy proceedings ), damages for occupational diseases 
and accidents at work, severance payments, certain taxes and social contributions  linked 
to employee- related claims , etc.3; 
(3)  claims comprising guaranteed deposits  as well as  other  claims listed in Article 80 (2) of 
the draft law, unless the claims listed in that Article fall within the category of  priority 
claims (referred to in point (2)) or can be enforced on the basis of the right to separate 
satisfaction (i.e., secured claims) or the right to separation4. Article 80 (2) of the draft law 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).  
2  See Article 207 of the revised version of the draft law.  
3  See Article 21 of the Law on Financial Operations, Insolvency Proceedings and Compulsory Dissolution (ZFPPIPP) 
(Ur. l. RS No 13/14 –  official consolidated text and 10/15 –corr.).   
4  The r ight to separate satisfaction and the right  to separation are defined in Articles 19, 20 and 22 of the ZFPPIPP. 
The ECB understands that c reditors with a right to separation (izločitvena pravica) are , for example,  creditors with 
retention of title ( e.g. owners of property which is in the possession of t he insolvent debtor). T he assets of such 
creditors must  be separated from the rest of the bankrupt estate and returned to these creditors . Creditors with the 
 
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2 lists liabilities that are excluded from the scope of the bail -in tool in accordance with  
Article 44 of Directive 2014/59/EU of the European Parliament and of the Council5. Some 
of the se claims are secured claims, others  are claims requiring separat ion (e.g. liabilities 
that arise as a result  of a fiduciary relationship) and some represent  priority claims (such 
as certain employee claims  and related tax claims). The ECB thus understands that  the 
claims that rank pari passu with the guaranteed deposits include creditors’ claims that 
arise, primarily,  from the following liabilities of a bank:  (i) liabilities towards  institutions, 
not belonging to the same group, with an original maturity of less than seven days  
(including, for example, very short -term inter -bank deposits) , (ii) liabilities owed to 
systems or operators of payment and settlement systems designated according to 
Directive 98/26/EC  of the European Parliament and of the Council6, or liabilities owed to  
the participants in such systems, where the liabilities of a bank result from its participation 
in such systems and they  have a remaining maturity of less than seven days,  
(iii) liabilities arising from the suppl y of goods or provision of commercial servi ces that are 
critical to the daily functioning of the bank’s operations, including IT services, utilities and the rental, servicing and upkeep of premises,  and (iv) liabilities to deposit guarantee 
schemes ; 
(4)  eligible deposits of investors , who are natural or legal persons and who satisfy the criteria 
for micro, small and medium -sized enterprises , in excess of  the amounts of  guaranteed 
deposits  (i.e. EUR  100 000), including deposits that would be deemed eligible deposits if 
they had not been deposited at the bank’s branch in a third country;  
(5) other eligible deposits not included in points (3) or (4);  
(6)  deposits with the bank which are not considered to be eligible deposits with the bank, 
including: (i) deposits of banks and investment firms and other financial institutions 
deposited on their own behalf and for their own account; (ii) deposits of insurance 
companies, reinsurance companies and insurance holding companies;  (iii) deposits of 
collective inves tment undertakings, including closed investment undertakings;  
(iv) deposits of pension funds and pension companies;  (v) deposits of governments, 
central banks and entities which are direct or indirect users of the State budget;  
(vi) deposits of local communities and direct and indirect users of local communities’ 
budgets
7; 
                                                                                                                                                             
right to separate satisfaction ( ločitvena pravica) are secured creditors  and are thus repaid from the relevant asset . If 
the value of the asset  securing the claim is lower than the secured claim, the difference in value will be treated as an 
unsecured claim  pursuant to the ZFPPIPP . 
5  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 investment 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, 201 1/35/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) . 
6  Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment 
and securities settlement systems (OJ L 166, 1 1.6.1998, p. 45) . 
7  It is noted that under existing Slovenian law there is already a general  depositor preference similar to that  described 
herein (see Article 365 of the Law on B anking (ZBan- 2) (Ur. l. RS No 25/15) in connection with Article 329 of the old 
Law on Banking (ZBan- 1) (Ur. l. RS 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, 96/13, and 25/ 15 – ZBan -2 and 27/26 – ZSJV) . 
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3 (7)  other unsecured ordinary claims  (which may include, for example, certain claims arising 
under derivatives transactions) , except claims arising from debt securities and similar 
instruments issued by the bank;  
(8)  unsecured and non- subordinated  claims arising from debt securities and other similar 
financial instruments issued by the bank, with the except ion of  structured instruments 
which based on their characteristics satisfy the criteria set out in points (2) -(7); 
(9)  subordinated  claims which on the basis of contractual arrangements between the parties 
in the event of a bank’s insolvency proceedings are paid out as unsecured claims after 
full payment of the claims referred to in points (2) -(8), and which are not classified in the 
categories referred to in points (10) -(12); 
(10)  claims which satisfy the conditions for the bank’s Tier II capital instruments, and other subordinated claims which, having regard to the contractual arrangements in the event of the bank’s insolvency, are paid at the same time as claims arising from Tier II capital 
instruments;  
(11)  claims which satisfy the conditions for the bank’s Tier I capital instruments, and other 
subordinated claims which, having regard to the contractual arrangements in the event of 
the bank’s insolvency, are paid at the same time as claims arising from Tier I capital 
instruments; and  
(12)  claims which satisfy the conditions for the bank’s common equity Tier I capital 
instruments, and other subordinated claims which, having regard to the contractual 
arrangements in the event of the bank’s insolvency, are paid at the same time as claims 
arising from common equity Tier I capital instruments
8.  
1.2 The draft law also transposes into Slovenian law certain provisions of Directive 2014/59/EU relating to the resolution of banks. In particular, the draft law regulates : (1) Banka Slovenije’s 
responsibilities and procedures  for the implementation of its  tasks and powers as the banking 
resolution authority; (2) bank resolution planning; (3) the resolution procedures and powers 
related to the resolution tools. Directive 2014/59/EU has already been part ially transposed into 
Slovenian law . The provisions relating to early intervention measures, recovery plans and intra-
group financial support were transposed in the recast of the Law on Banking
9. Banka Slovenije, 
which was  already  acting as a resolution authority  at th at time, was explicitl y designated as a 
resolution authority for the purposes of Article 3 of Directive 2014/59/EU  under the Law on Bank 
Resolution Authority and Fund10. The current legal framework for the resolution of banks , which is  
also based on Directive 2014/59/EU , enables Banka Slovenije to impose certain ‘extraordinary 
measures’11 on banks that are failing or likely to fail. These measures include: (a) putting the 
                                                 
8  See Article 207 of the draft law.  
9  Law on B anking (ZBan- 2), on which the ECB issued Opinion CON/2014/79. All ECB Opinions  are published on the 
ECB’s website at www.ecb.europa.eu.  
10  Law on the Bank Resolution Authority and Fund (ZOSRB) (Ur. l. RS No 97/14 and 91/15). P arts of this Law were  
initially intended to be included in the recast of the Law on Banking, however , they were later excluded from the 
latter and adopted as a separate legal act. The Law on the Bank Resolution Authority and Fund was adopted in 
December 2014, shortly after the publication of  Opinion CON/2014/79.   
11  See Opinion CON/2013/73.  
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4 bank into special administration and appointing administrators; (b) selling all of the bank’s shares; 
(c) increasing the share capital of the bank; (d) transferring the bank’s assets ; (e) establishing a 
bridge bank, and (f) reducing share capital, writing off and writing down of: (i) hybrid capital 
instruments,  (ii) other financial instruments which must be taken into account in calculating the 
bank’s additional capital, and (iii) subordinated liabilities of a bank, or converting such instruments 
and subordinated liabilities into common shares of a bank12. 
1.3 By further adapting existing national  legislation to comply with the provisions of Directive 
2014/59/EU , the draft law  enables Banka Slovenije t o take resolution measures regarding the 
following entities established in Slovenia: ( 1) banks,  (2) financial institutions which are 
subsidiaries of a credit institution or of a financial holding company, mixed financial holding 
company or a mixed activity holding company , which have their head office in a Member State 
and are included in the supervisi on of the parent undertaking on a consolidated basis in 
accordance with Articles 6 to 17 of Regulation (EU) No 575/2013 of the European Parliament and 
of the Council13, (3) financial holding companies , mixed financial holding companies  or the mixed 
activity holding companies , which are subsidiar ies of credit institutions  established in a Member 
State;  (4) financial holding companies , mixed financial holding companies  and mixed activity 
holding companies , which are the parent undertakings of  a credit institut ion established in a 
Member State;  and ( 5) Slovenian branches of any third country credit institutions14.  
1.4 In order for Banka Slovenije to carry out resolution measures, the draft law requires  adequate 
internal organisation al measures  to ensure Banka Slovenije’s operational independence , as well 
as to avoid any potential conflict of interests in the performance of Banka Slovenije’s resolution 
tasks on the one hand and its prudential supervisory tasks on the other15.  
1.5 The draft law takes  into account the competences of the Single Resolution Board and provides 
that Banka Slovenije will perform resolution tasks and exercise resolution powers except in 
situations where the Single Resolution Board is competent in line with Regulation (EU) 
No 806/2014 of the European Parliament and of the Council16. In such cases Bank a Sloveni je 
exercises resolution tasks  and powers only where this is necessary to implement the decisions of 
the Single Resolution Board17. The draft law also contains provisions that regulate a mechanism 
to collect and transfer , into the Single Resolution Fund, ex ante and extraordinary ex post  
contributions made by banks to their head offices  in Slovenia . This mechanism was  set up in 
accordance with Regulation (EU) No 806/2014 and the Agreement on the transfer and 
                                                 
12  These measures can be found in the old Law on Banking (ZBan- 1), which is in the relevant part still applicable as 
provided for in Article 405 of the recast of the Law on B anking (ZBan- 2) (Ur. l. RS No 25/15), and in the Law on the 
Bank Resolution Authority and Fund.  
13  Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudent ial 
requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 
27.6.2013, p. 1) . 
14  See Article 2 of the draft law.  
15  See Article 7(2) of the draft law.  
16  Regulation (EU) No 806/2014 of the European Parliament and of the Council  of 15 July 2014 establishing uniform  
rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework  of 
a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 
225, 30.7.2014, p. 1).  
17  See Articles  7(1), 7(5) and 7(8) of the draft law.  
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5 mutualisation of contributions to the Single Resolution Fund. This mechanism was so far 
regulated under the Law on the Bank Resolution Authority and Fund.  
1.6 The draft law reflects the powers and competences of the ECB within the Single Supervisory 
Mechanism (SSM) . It stipulates that i f, in accordance with Council Regulation (EU) 
No 1024/201318, the ECB is competent for the implementation of specific tasks  and powers in the 
field of  the prudential supervision of banks , Bank a Sloveni je as the resolution authority will take 
into account the views and findings of the ECB regarding  the fulfilment of  a bank’s  prudential 
requirements and prudential supervisory measures19. 
1.7 Under the draft law, the resolution measures include reaching the concl usion  that the conditions 
for resolution have been met, deciding to use one or more resolution tools and using other 
resolution powers  to implement the resolution tools.  The resolution tools available to Banka 
Slovenije include: (i) the write -down and conversion of capital instruments  tool; (ii) the sale of 
business  tool; (iii) the bridge institution  tool; (iv) the asset  separation  tool; and (v) the bail -in 
tool20. Moreover, Banka Slovenije also takes measures regarding asset management companies  
in relation to the asset separation tool and bridge bank s in relation to the bail-in tool.  
1.8 In addition to the provisions already cited , the draft law also regulates procedures for the 
compulsory winding- up of banks. Under  the current legal framework, Banka Slovenije is the 
competent authority for the implementation of compulsory liquidation proceedings for banks and 
has the competence  to initiate bankruptcy proceedings in relation to a bank with the relevant 
court21. The current legal framework only defines general powers in relation to liquidation and 
bankruptcy proceedings, and refers to a reasonable use of the instruments generally available for insolvency proceedings . Under t he draft law similar powers  are now conferred on Banka 
Slovenije for the winding -up of banks –  the administration of compulsory liquidation and the 
initiation of  judicial bankruptcy proceedings.   
1.9 The draft law revises the legal framework governing compulsory liquidation and bankruptcy 
proceedings for banks .
22 In particular, it aims to regulate more comprehensively  compulsory 
liquidation powers and instruments. Compulsory liquidation proceedings  will always be initiated 
following the withdrawal or termination of a bank’s authorisation, unless a bank had already 
fulfilled all of its obligations in relation to eligible deposits23. The aim of any compulsory liquidation 
proceedings initiated by Banka Slovenije as winding -up proceedings is  to conclude the bank’s 
operations and to repay the bank’s obligations vis -à-vis depositors. Under the draft law, if  the 
conditions for compulsory liquidation are met , Banka Slovenije will initiate the proceedings, 
designate one or more liquidation administrator and impose limits on the bank’s  business. The 
                                                 
18  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 institutions (OJ L 287, 29.10.2013, p. 63).  
19  See Article 7 (7) of the draft law. The ECB’s competences within the SSM are reflected also in other provisions of the 
draft law.  
20  See Article 25 of the draft law.  
21  See Article 8 and Chapter 3 (Article 145 et seq. ) of the draft law.  
22  The rules are set out in the old Law on Banking (ZBan- 1). 
23  The deposit guarantee scheme is regulated in the Law on the deposit guarantee scheme (ZSJV) (Ur. l. RS 
No 27/16) , on which the ECB recently issued Opinion CON/2016/6.  
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6 compulsory liquidation instruments  available to Banka Slovenije include: (1) the sale of assets; 
(2) separation of assets; and (3) the sale of business.  
1.10 With respect to the regular insolvency proceedings of other entities over which Banka Slovenije 
has resolution powers, as described in par agraph 1.3, the prior consent of Banka Slovenije is 
required under the draft law for the initiation of such proceedings24. Banka Slovenije is also 
competent to propose the initiation of insolvency proceedings regarding these entities should the conditions f or their resolution not be met
25. 
1.11 Lastly, the draft law also includes an amendment concerning the conditions for appoint ing 
member s of a bank’s supervisory board26. According to Article 53 of the Law on Banking which 
governs  such conditions , a person may be appointed as a member of a bank’s supervisory board 
if, inter alia, they enjoy the reputation and possess the qualities  required to supervise the 
management of a bank’s operations . The draft law would  add a provision stating that a person is 
deemed not to enjoy the reputation and possess the qualities  required to supervise the 
management of a bank’s operations if that  person was employed in a bank as a member of a 
bank’s management board , a member of a bank’s supervisory board, a senior  executive or an 
employee with special authorisation for represent ing and entering into business relations on 
behalf of and in the name of an individual bank , in which the ratio of non- performing cl aims 
relative to all claims, in an y individual period , was on average not less than the ratio in other 
banks  in the country where the bank  is operating, or was on average not less than the ratio in 
other banks  in the European Economic and Monetary Union, as further specified in the draft law.  
 
2. Scope of the opinion  
The opinion focuses on (1) the insolvency hierarchy of bank creditors , (2) the new tasks conferred on 
Banka Slovenije as the resolution authority for banks and other financial institutions forming part of a 
banking group and (3) specific provisions on appoint ing members of a bank’s supervisory board. The 
ECB stresses, however, that it does not opine on whether the draft law effectively implements Directive 2014/59/EU into Slovenian law. In this respect, so far as concerns the new tasks conferred on Banka Slovenije, the ECB focuses on those provisions that may impact on the roles and tasks of Banka 
Slovenije as a central bank and as a member of the European System of Central Banks (ESCB), as well as those provisions that may impact the specific tasks conferred on the ECB by Regulation (ΕU) No 1024/2013.  
 
3. Observations  
3.1  Insolvency hierarchy of bank  creditors  
3.1.1  The draft law  provides for a preference not only for claims arising out of deposits guaranteed 
under the deposit guarantee scheme (‘covered deposits ’, or, as used in this opinion, ‘guaranteed 
                                                 
24  See Article 28 of the draft law.  
25  See Article 72(5) of the draft law.  
26  See Article 268(1) of the revised version of the draft law  amending Article 53 of the Law on B anking (ZBan- 2). 
ECB -PUBLIC  
7 deposits ’) and eligible deposits of natural persons and micro , small and  medium -sized enterprises  
(SMEs), but also for other deposits , thereby providing for a general depositor preference27. The 
draft law introduces some changes to the ranking of depositor s, by ranking guaranteed deposits 
alongside a variety of claims  which are mandatorily excluded from bail -in under 
Directive  2014/59/EU , including, for example, short -term interbank liabilities, liabilities arising out 
of payment systems, certain claims of trade creditors that are critical to a bank’s operations and 
liabilities to deposit guarantee schemes.  In addition, the draft law ranks eligible deposits from 
natural persons and micro enterpr ises, SMEs  below guaranteed deposits and the claims  excluded 
from bail -in under Directive 2014/59/EU , but ahead of other deposits, which in turn rank ahead of 
unsecured ordinary claims . The ECB also notes that the draft law subordinates unsecured and 
non-subordinated claims arising from debt securities and other similar financial instruments 
issued by a bank  (hereinafter referred to as ‘unsecured bank debt instruments’) , except as 
regards certain structured instruments , to unsecured ordinary claims, whil st ensuring that these 
claims are still rank ed ahead of contractually subordinated claims.  
3.1.2  The ECB welcomes the fact that the draft law provides for a general depositor preference and the 
statutory subordination of unsecured bank debt instruments, since  both of these features are 
expected to enhance resolvability by providing clarity about the hierarchy of creditors and 
enabling the allocation of losses to unsecured bank debt instruments without triggering concerns  
with regard to the principle that no cr editor should be worse off in resolution than in insolvency . 
This may also facilitate the application of the bail -in tool to unsecured bank debt instruments 
ahead of operational liabilities, including, for example, corporate deposits and derivatives. The bail-in of unsecured bank debt instruments is regarded as  carry ing a lower contagion risk than 
that of operational liabilities
28, which makes it likely to be more effective and credible to market 
participants. Facilitating the allocation of losses to the hol ders of such instruments therefore 
fosters effective resolution action and reduces the need to use the resolution fund, which is 
expected to promote an adequate pricing of risk on the side of investors. This is  expected to 
improve the resolvability of credit institutions and to enhance market discipline.29 
3.1.3  Regarding the ranking of deposit claims, the ECB notes that the draft law amends  Slovenia’s 
existing depositor preference rule by elevating certain  other claim s that are excluded from bail -in, 
so that they rank pari passu with  guaranteed deposits, and above other deposit claims.  The ECB 
understands that this is intended to allow for the mandatory exclusion of these claims from bail -in 
to take effect without triggering ‘no creditor worse off than in insolvency’ concerns, which will facilitate resolution action.  
However, a distinction should be made insofar as this change relates to short -term interbank 
liabilities, which also represent a form of deposit. I t is question able whether granting interbank 
deposits an equally preferred status as guaranteed deposits  is strictly in line with Article 108 of 
                                                 
27   It is noted that also the existing Slovenian law provides  for a general depositor preference, however with a somewhat 
different scope of sub- ranking within the general depositor preference.  
28  See paragraph 3.2.2 of Opini on CON/2015/31; paragraph 3.7.1  of Opinion CON/2015/35; paragraph 3.1 of Opinion 
CON/2016/7.   
29  See paragraph 3.2.3 of Opinion CON/2015/31 and paragraph 3.1 of Opinion CON/2016/7.  
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8 Directive 2014/59/EU, which regulates the ‘ ranking of deposits in insolvency hierarchy ’ and 
provides for a ‘super priority ’ for guaranteed deposits and a ‘simple priority ’ for eligible depos its of 
natural persons , microenterprises and SMEs. This clear ranking of depositors would be altered by 
granting short -term interbank deposits an equally high preference as guarant eed deposits, and 
the protection of guaranteed deposits and of eligible deposits of natural persons , 
microenterprises  and SMEs would be thereby diluted. This situation could be avoided if short -
term interbank deposits were considered a separate creditor category and were allocated a 
ranking below guaranteed deposits and eligible deposits of natural persons , microenterprises  and 
SMEs.  
While Article 108 of Directive 2014/59/EU regulat es the ranking of different categories of 
depositors  and their ranking compared to ordinary unsecured, non- preferred creditors , it does not 
prevent Member States from granting a preference to other c ategories  of claims under their 
insolvency law.  As such, it is in accordance with Article 108 for Member Stat es to provide for  a 
preference to other liabilities  that are excluded from bail -in, by making them rank pari passu with 
guaranteed deposits.  Such a provision may  prove beneficial from a resolution perspective when 
applying the bail -in tool for the abovementioned reasons.  However, the ECB would underline the 
fact that when conferring additional preferences on  other classes of claims, Member States 
should be mindful of not overly diluting the preferred status of depositors  under Article 108, which 
is notably  intended to provide a certain level of protection for the deposits of natural persons , 
microenterprises  and SMEs  holding eligible deposits in excess of  the level of guaranteed 
deposits. In addition, Article 108 is intended to ensure that the claims  of guaranteed deposits 
(and deposit guarantee schemes) should have an even higher ranking under national insolvency 
law30. From a financial stability perspective, this depositor preference reduces the risks of bank 
runs, potential losses of the guaranteed depositors in a liquidation phase, as well as the 
excessive depletion of the DGS31. Furthermore, it should be carefully assessed whether  the 
preferred ranking of other liabilities alongside guaranteed deposits , could complicate the 
application of other resolution tools, such as the sale- of-business or bridge bank tool . This is 
especially relevant where  the resolution strategy  is to carve out and transfer the deposit book 
while leaving the other liabilities in the ‘old bank ’ which will then enter into liquidation.  
3.1.4  Regarding the statutory subordination of unsecured bank debt instruments and its positive impact 
on the eligibility of these instruments for the purpose of total loss -absorbing capacity (TLAC) 
under the Financial Stability Board’s  TLAC term sheet, the ECB also notes that, in principle, the 
same considerations apply here as raised in its earlier opinion on the German L aw on bank 
resolution32. The ECB notes, however, that there is currently no global systemi cally important 
bank established in Slovenia, to which the TLAC requirement w ould apply . 
3.1.5  The ECB welcomes the additional degree of precision introduced by the draft law with respect to 
the respective ranking of contractually subordinated claims arising out  of, inter alia, Tier 1 and 
Tier 2 capital instruments.  
                                                 
30  See Recital 111 of Directive 2014/59/EU . 
31  See paragraph 8.2 of Opinion CON/2012/99.  
32  See paragraphs 3.2.4 and 3.2.5 of Opinion CON/2015/31.  
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9 3.1.6  As regards the legal drafting of the draft law , the ECB would recommend that, instead of using a 
cross- reference to Article 80(2) when referring to liabilities that are excluded from bail -in, legal 
certainty  would be enhanc ed if such liabilities were  explicitly listed in the insolvency ranking  
instead. This would also serve to further clarif y whether some of the respective liabilities fall 
under the rank of priority claims or secured claims or whether they will be fully separated as the 
property of third persons, and whether, for example,  in the event of an underlying obligation to a 
secured claim not being fully covered by  the value of the security  provided, the uncovered part  of 
the claim  would be categorised as an unsecured ordinary claim. Similarly, concerning the 
treatment of structured instruments, in particular instruments that may qualify as debt securities, 
the ECB would also recommend enhancing the clarity of the dr afting of the draft law to further 
promote legal certainty in the ranking of creditor s’ claims .  
3.1.7  A common framework at  Union level  on the hierarchy of creditors and notably the scope of the 
depositor preference and the degree of subordination of debt securities and other similar financial 
instruments in bank resolution and/or insolvency proceedings may help to advance the 
integration  of the financial services market s within the Union and facilitate the tasks of t he ECB 
both with regard to monetary policy and to supervision within the SSM33. 
3.2 Conferral of new resolution tasks on Banka Slovenije  
3.2.1  The ECB welcomes the draft law ’s resolution- related provisions , as they  strengthen the tools and 
procedures available to Banka Slovenije to carry out effective resolution in line with the common 
framework of intervention powers, rules and procedures laid down in Directive 2014/59/EU.  
3.2.2  The ECB has developed guidance,  as set out  in paragraphs 3.2. 3 and 3.2. 4, on the basis of 
which it may decide whether a new task conferred on an ESCB national central bank (NCB) is to 
be considered a central banking task or a governmental task for the purposes of assessing the 
conferral of such a task against the prohibition of monetary financing under Article 123 of the 
Treaty34. This guidance applies to genuinely new tasks that either did not exist in the past or did 
not form an integral part of the central banking tasks previously assigned to the NCB  in question. 
The tasks currently discharged by an NCB as central banking tasks are not reviewed and re-
categorised, but may be reassessed if they are subject to substantive legislative amendments. In 
this regard, the ECB notes that , already in the past,  Banka Slovenije has had extensive powers to 
take specific resolution measures in relation to credit institutions. The draft law, however, extends 
the existing resolution powers and responsibilities of Banka Slovenije,  as it is designated as the 
resol ution authority not only for credit institutions , but also for other  financial  institutions as 
described in paragraph 1. 3. The draft law should therefore be assessed in the light of the 
prohibition of monetary financing. The concrete assessment of whether Banka Slovenije ’s tasks  
as the resolution authority for financial institutions forming part of a banking group  is to be 
considered a central banking task or a governmental task is undertaken in paragraph 3.2. 5 of this 
opinion.  
                                                 
33  See paragraph 3.4 of Opinion CON/2015/31 and paragraph 3.7.3 of CON/2015/35.  
34  See paragraph 2.3 of Opinion CON/2015/22.  
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10 3.2.3  First, the principle of financial independence requires that the Member States may not put their 
NCBs in a position where they have insufficient financial resources to carry out their ESCB - or 
Eurosystem -related tasks , as applicable35.  
Second, central banking tasks comprise in particular those tasks that are related to the tasks 
listed in Article 127(2), (5) and (6) of the Treaty.  
Third,  new tasks conferred on an NCB that are atypical of NCBs ’ tasks, or which are clearly 
discharged on behalf of and in the exclusive interest of t he government or of other public entities, 
should be considered as governmental tasks. In that context, a distinction should be drawn 
between the liquidity - and solvency -related tasks of NCBs. While, for the purposes of assessing 
compliance with the monetary financing prohibition, solvency support is a governmental task , 
liquidity -related tasks , the ultimate objective of which is to financ e the economy , are central 
banking tasks.  
Resolution tasks may be considered to be central banking tasks, provided that they do not 
undermine an NCB’s independence in accordance with Article 130 of the Treaty. However, the 
discharge of these tasks by central banks may not extend to the financing of resolution funds or 
other financial arrangements  related to resolution proceedings  as these are governmental 
tasks36. This is without prejudice to the possibility that: (a) central banks may provide short -term 
financing to deposit guarantee schemes under certain conditions; and (b) NCBs may provide 
emergency liquidity assistance to solvent credit institutions.  
3.2.4  An important criterion for qualifying a new task as a governmental task  is therefore the impact of 
the task on the institutional, financial and personal independence of the NCB. In particular, the 
following should be taken into account.  
First, it should be assessed whether the performance of the new task creates inadequately 
addressed conflicts of interests with existing central banking tasks, and does not necessarily complement those existing central banking tasks. If a conflict of interest arises between existing 
and new tasks, there should be sufficient mitigation in place to adequately address that conflict. Complementarity between the new task and existing central banking tasks should not, however, be interpreted ext ensively, so as to lead to the creation of an indefinite chain of ancillary tasks. 
Complementarity should also be examined from the point of view of the financing of those tasks.  
Second,  it should be assessed whether without new financial resources the per formance of the 
new task is disproportionate to the financial or organisational capacity of the NCB and may 
negatively impact on its capacity to properly perform existing central banking tasks.  
Third,  it should be assessed whether the performance of the ne w task fits into the institutional 
set-up of the NCB in the light of central bank independence and accountability considerations.  
Fourth,  it should be assessed whether the performance of the new task would entail substantial 
financial risks.  
                                                 
35  See paragraph 2.2.1 of Opinion CON/2015/37.  
36  See paragraph 2.3.2 of Opinion CON/2015/22.  
ECB -PUBLIC  
11 Fifth, it shou ld be assessed whether the performance of the new task exposes the members of 
the NCB’s decision- making bodies to political risks which are disproportionate and may also 
impact on their personal independence and, in particular, the guarantee of the term of  office 
under Article 14.2 of the Statute of the European System of Central Banks and of the European 
Central Bank.  
Any final assessment on the qualification of a task given to an NCB as either falling within the 
scope of a central banking task or a governmental task will  be guided by the objective of ensuring 
the consistent application of the prohibition of monetary financing within the Eurosystem and the ESCB to the extent that it applies to its members.  
3.2.5  As noted in paragraph 3.2. 2, the draft law also designates Banka Slovenije as the resolution 
authority  for financial institutions  which are part of a banking group. In the light of th e guidance  in 
paragraphs 3.2. 3 and 3.2. 4, an assessment must therefore be made as to whether Banka 
Slovenije’s  new tasks and responsibilities in this field could constitute a breach of the prohibition 
of monetary financing.  
3.2.5.1  Principle of financial independence  
The principle of financial independence requires NCBs to have sufficient means to carry out not 
only their  ESCB- related tasks from an operational and financial point of view, but also their 
national tasks
37. In this respect the ECB notes that , under  the draft law , banks and branches of 
Union banks established in Slovenia are required to pay an annual fee in relation to  Banka 
Slovenije’s resolution tasks38. Moreover, in order to safeguard Banka Slovenije’s financial 
independence, the provisions of the draft law authorise Banka Slovenije,  in its capacity as 
resolution authority , to require institutions to reimburse all operati onal expenditure and costs 
incurred during the performance of its responsibilities and powers  in relation to resolution39.  
3.2.5.2  Links to tasks listed in Article 127(2), (5) and (6) of the Treaty   
Administrative resolution tasks are considered to be tasks related to those referred to in 
Article  127(5) of the Treaty, based on the understanding that administrative resolution tasks and 
supervisory tasks complement each other. In the case of the extensi on of Banka Slovenije ’s 
resolution- related responsibilit ies to other  financial  institutions  forming part of a banking group, 
such new tasks may also be considered to be related to tasks under Article 127(5) of the Treaty , 
by analogy with the complementarity of Banka Slovenije’s resolution tasks in respect of credit 
institutions  with its existing supervisory and financial stability tasks.  
3.2.5.3 Atypical tasks 
A number of Member States have conferred on their NCBs a significant role in the resolution of 
credit and financial institutions, whether as the resolution authority or as a competent supervisory 
authority. The ECB has generally accepted the allocation of such tasks to NCBs provided they do 
not interfere financially and operationally with the performance of the NCB’s ESCB- related 
                                                 
37  See the ECB’s 2014 Convergence Report, p. 25.  
38  See Article 14 (1) of the draft law.  
39  See Article 15 (1) of the draft law.  
ECB -PUBLIC  
12 tasks40. The new resolution tasks of Banka Slovenije in respect of other financial institutions 
forming part of a banking group ca n therefore be regarded as being tasks not atypical of a central 
bank, particularly if, as in the case of Banka Slovenije, it already had responsibilities and tools for 
interven ing in relation to distressed financial institutions that pose a risk to financ ial stability.  
3.2.5.4 Discharge of tasks on behalf of and in the exclusive interest of the Government or of other public 
entities  
Whilst Banka Slovenije is designated as the sole resolution authority and takes resolution 
measures acting as an administrative authority exercis ing a public functions in its own name, and 
not on behalf of any other authority, it is required , before placing a credit or financial institution 
into resolution or taking any other resolution action , to: (i) inform the Ministry of Finance and 
obtain the prior approval of the Government if the decision would entail additional public financing 
and (ii)  to inform the Ministry of Finance where there are systemic implications41. This provision 
implements Article 3(6) of Directive 2014/59/EU and ensures that Banka Slovenije has control 
over any decision related to a resolution matter that could affect Banka Slovenije’s financial 
independence. There is no indication that in discharging its resolution function Banka Slovenije 
acts exclusively in the interest of another public entity.  
3.2.5.5  Extent to which conflict s of interest with existing tasks are addres sed 
Pursuant to the draft l aw, Banka Slovenije must adopt and publish all of its relevant internal rules 
in order to ensure that there is no conflict of interest , and t o ensure the operational and 
organisational independence of the organisational unit carrying out resolution functions from 
Banka Slovenije’s other tasks42. The ECB expects Banka Slovenije’s internal rules to adequately 
address potential conflicts of interest between Banka Slovenije’s  resolution function and its other 
tasks, particularly its tasks related to the supervision of credit institutions and other financial 
institutions.  
3.2.5.6 Extent to which the performance of tasks is proportionate to Banka Slovenije ’s financial and 
operational capacity and its ability to perform its ESCB -related tasks  
The ECB welcomes the fact that Banka Slovenije may recover the expenses incurred in carrying 
out its resolution tasks from the institutions concerned.43 
3.2.5.7  Extent to which the performance of tasks entails substantial financial risks  
With regard to the Banka Slovenije’s liability , the draft law stipulates that Banka Slovenije and its 
staff must act with the diligence of a ‘good expert ’. Banka Slovenije will be held liable for any 
damages that occur as a result of a breach of this obli gation, and the draft law does not contain 
provisions excluding or limiting the liability of Banka Slovenije in this respect . By contrast , the 
draft law does provide that the liability of Banka Slovenije’s staff is limited to acts of gross 
                                                 
40  See paragraphs 2.1 and 3.4.3 of Opinion CON/2016/5, paragraphs 2.1 and 2.3 and paragraph 3.2.4 of Opinion 
CON/2015/22, paragraph 4.1 of Opinion CON/20 14/60, paragraph 2.1 of Opinion CON/2013/73, paragraph 2.3 of 
Opinion CON/2011/72, paragraph 2.2 of Opinion CON/2011/83, and paragraph 2.2 of Opinion CON/2011/39.   
41  See Article 22 of the draft law.  
42  See Article 7 of the draft law.  
43  See Article 15 of draft law.  
ECB -PUBLIC  
13 negligence or wi lful misconduct  in the performance of their functions . In such  case s, Banka 
Slovenije  will pay the injured party for any damages that result from its staff member ’s gross 
negligence or wilful misconduct  and Banka Slovenije will then will require the staff member to 
reimburse it for any money paid out to the injured party44. In the light of this difference in 
approach, it might be worth consider ing whether Banka Slovenije’s  institutional liability should 
also be confined to acts of gross negligence or wilful misconduct, as is the case for  Banka 
Slovenije’s staff45. 
3.2.5.8 Conclusion  
The ECB considers that there are grounds for regarding Banka Slovenije’s ex tended resolution 
tasks as central banking tasks, in the sense that they complement Banka Slovenije’s existing 
supervisory and resolution functions. The fact that Banka Slovenije may require financial 
institutions to pay for any operational expenditure and c osts incurred during the performance of 
its responsibilities safeguards Banka Slovenije’s  financial independence and has a positive 
impact on Banka Slovenije’s financial capacity to assume the extended tasks .  However, given 
that potential liability issues  represent a substantial financial risk for Banka Slovenije, the ECB 
suggests that Banka Slovenije’s institutional liability should be usefully confined to acts of gross 
negligence or wilful misconduct, similar to the standard applicable to the liability of Banka 
Slovenije’s staff.  
3.2.6 Resolution planning  
The draft l aw stipulates that when Banka Slovenije evaluates resolution plans for specific 
institutions, it must not assume that extraordinary public financial support will be granted, other 
than the use of resources from the resolution fund. The draft law further clarifies that there must 
be no assumption that any special liquidity loan or any other liquidity assistance from Banka 
Slovenije based on non- standard collateral isation, tenor  and interest rate terms , will be granted46. 
While this appears to be in line with the requirements of Directive 2014/59/EU, the ECB 
emphasises that these provisions do not in any  way affect Banka Slovenije ’s competence to 
decide,  independently and at its full discretion , on the  provision of central bank liquidity to solvent 
institutions, both through standard monetary policy  operations and emergency liquidity 
assistance, within the limits imposed by the prohibition of monetary financing under the Treaty47. 
3.3 Appointment of members of a bank’s supervisory board 
The explanatory memorandum to the draft law states that the amendment pursuant  to which a 
person who held a senior position in a bank, which has accumulated a higher tha n average level 
of non- performing claims , may not be considered to have the necessary reput ation  and qualities  
to be a member of the bank ’s supervisory board, is  intended to ensure that the composition of 
banks’ supervisory boards will be of a higher quality. According to the explanatory m emorandum, 
this provision should result in the more stable and efficient functioning of banks and an 
                                                 
44  See Article 16 of draft law . 
45  See paragraph 3.4.7 of Opinion CON/2016/5.  
46  See Article 29(3) of the draft law.  
47  See paragraph 3.2 of Opinion CON/2012/99 and paragraph 3.3 of Opinion CON/2014/67.  
ECB -PUBLIC  
14 improvement to the entire Slovenian banking system. The ECB notes that the amendment does 
not appear  to leave any discretion.  Applying this provision in such a formulaic manner  without 
leaving any discretion might raise concerns with regard to whether the new amendment is 
proportionate to what is necessary to achieve its objectives . Furthermore , the consulting authority 
is invited to consider whether the provision might be open to legal challenge.  
 
This opinion will be published on the ECB’s website.  
  
Done at Frankfurt am Main, 3 May  2016.  
 [signed]  
 
The President of the ECB  
Mario DRAGHI