Opinion of the European Central Bank of 19 September 2006 at the request of the Slovenian Ministry of Finance on certain provisions of a draft law on banking (CON/2006/48)
Date: 2006-09-19
Institutions: European Central Bank
Subjects: Slovenia, banking, credit institution, financial stability, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 19 September 2006 

at the request of the Slovenian Ministry of Finance 

on certain provisions of a draft law on banking  

(CON/2006/48) 

Introduction and legal basis 

On 23 August 2006 the European Central Bank (ECB) received a request from the Slovenian Ministry of 

Finance for an opinion on certain provisions of a draft law on banking (hereinafter the ‘draft law’). 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European  Community  and  the  sixth  indent  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 provisions1, as the draft provisions in question relate 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 Procedure of the European Central Bank, the Governing 

Council has adopted this opinion. 

1. 

Purpose of the draft law 

1.1  The main objective of the draft law is to comprehensively regulate the banking sector and transpose 

relevant  Community  directives  into  Slovenian  law,  in  particular  Directive  2006/48/EC  of  the 

European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the 
business of credit institutions (recast) (hereinafter the ‘Recast Banking Directive’)2 and Directive 

2006/49/EC  of  the  European  Parliament  and  of  the  Council  of  14 June  2006  on  the  capital 
adequacy of investment firms and credit institutions (recast)3. 

1.2  The ECB has only considered those provisions of the draft law that are covered by the scope of the 

consultation  request  received  from  the  Slovenian  Ministry  of  Finance  and  has  in  general  not 

assessed the other provisions. The consultation request only applies to those provisions of the draft 

law  that:  (i)  do  not  implement  Community  directives;  (ii)  are  new  in  substance  compared  to  the 

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2  
3  

OJ L 189, 3.7.1998, p. 42.  
OJ L 177, 30.6.2006, p. 1. 
OJ L 177, 30.6.2006, p. 201. 

 
 
 
 
                                                 
current  Law  on  banking4;  and  (iii)  potentially  influence  the  stability  of  financial  institutions  and 

markets. These provisions are contained in various parts of the draft law and cover the following: 

definitions  of  relevant  terms,  the  corporate  structure  of  banks,  the  provision  of  banking  and 

financial  services,  risk  management  and  internal  audit,  business  books  and  annual  reports,  the 

supervision of banks, guaranteed deposits and e-money institutions. 

2.  General observations  

The ECB  welcomes this general revision of the existing Slovenian Law on banking, which is the  main 

law regulating the banking sector in Slovenia. The draft law is expected to achieve its main objective of 

ensuring consistent implementation of financial Community directives in national law. 

3. 

Definition of credit institutions 

3.1 

In Article 13(3) of the draft law, the term ‘credit institution’ is used as a generic term for banks and 

companies issuing e-money. The ECB notes that savings banks are not included in the category of 

credit institutions. A savings bank is defined in Article 13(5) of the draft law as a legal person with 
its seat in the Republic of Slovenia performing banking services5 on the basis of Banka Slovenije’s 

authorisation and which is subject to the same rules that apply to banks, unless stated otherwise in 
Chapter 11 of the draft law6. 

3.2  Under Article 4 of the Recast Banking Directive, the term ‘credit institution’ comprises, in addition 

to e-money institutions, undertakings whose business is to receive deposits or other repayable funds 

from  the  public  and  to grant  credits  for  its  own  account.  In  order to  bring  the draft  law  into  line 

with  the  Recast  Banking  Directive,  the  ECB  would  recommend  that  the  consulting  authority 

includes savings banks under the definition of credit institutions. 

4. 

Bank management system 

4.1  Pursuant  to  Article  60  of  the  draft  law,  a  bank  may  choose  either  a  two-tier  bank  management 

system with a management board and a supervisory board, or a one-tier bank management system 

with a board of directors. In the latter case, certain provisions referring to the management board 

will  also  apply  mutatis  mutandis  to  the  executive  directors,  including  Article  62  of  the  draft  law 

4  
5  

6  

Official Gazette of the Republic of Slovenia, No 104/2004 – official consolidated version. 
Under Article 7 of the draft law, the banking services are receiving deposits from the public and granting credits for own 
account. 
Pursuant to the specific rules in Chapter 11 of the draft law, savings banks: 
− 
− 

may have a lower initial capital than banks (EUR 1 million instead of EUR 5 million);  
are prohibited from providing pension fund management services in accordance with the law governing pension 
and disability insurance as defined in point 3 of Article 11(1) of the draft law; 
may only perform foreign exchange transactions with prior Banka Slovenije authorisation for such transactions; 
may  contractually  transfer  internal  audit  tasks  to  a  person  not  employed  by  the  savings  bank  but  fulfilling  the 
conditions for carrying out such tasks. 

− 
− 

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laying down the membership requirements of banks’ management boards. Article 62(3) of the draft 

law states that at least one member of the management board must have a perfect command of the 

Slovenian language and that at least one member of the management board must have ‘their centre 

of vital interests in the Republic of Slovenia’.  

4.2  These two requirements may constitute a breach of the principle of free movement of workers, as 

they  limit  the  access  of  citizens  of  other  Member  States  to  membership  of  Slovenian  banks’ 

management  boards.  According  to  Community  law,  such  requirements  could  be  justified  as 
(i) exceptions  permissible  under  Article  39  of  the  Treaty7;  or  (ii)  exceptions  concerning  ‘general 
interest  objectives’8.  Unless  the  two  requirements  in  Article  62(3)  of  the  draft  law  can  be  so 

justified, the ECB would recommend abolishing them. 

4.3  As regards the language requirement in Article 62(3) of the draft law, the ECB recognises the right 
to impose such a requirement in certain circumstances9; however, the level of linguistic knowledge 

must  be  proportionate  to  the  objective  to  be  achieved  and  should  not  result  in  discrimination 
against citizens of other Member States10. Therefore, if the language requirement is to be retained, 

the  phrase  ‘perfect  command  of  the  Slovenian  language’  should  at  least  be  replaced  by  different 

wording,  which  can  perhaps  refer  to  a  ‘satisfactory  command  of  the  Slovenian  language 

commensurate  with  performing  the  duties  of  a  member  of  the  bank’s  management  board’,  since 

this would be more in line with Community law. Moreover, it is recommended that the language 

requirement is waived if it is not necessary for prudential supervision reasons. 

7  

8  

9  

10  

in 

its  origins 

the  Court  of  Justice’s 

Such exceptions must be justified on grounds of public policy, public security or public health; in addition, employment 
in the public service is exempt from the free movement of workers provisions. 
This  concept  has 
in  Case  120/78  Rewe-Zentral  AG  v 
judgment 
Bundesmonopolverwaltung  für  Branntwein  [1979]  ECR  649  (‘Cassis  de  Dijon’),  in  particular  paragraph  8.  National 
measures  which  are  liable  to  hinder  or  make  less  attractive  the  exercise  of  fundamental  freedoms  guaranteed  by  the 
Treaty  must  fulfil  four  conditions:  they  must  be  applied  in  a  non-discriminatory  manner;  they  must  be  justified  by 
imperative requirements in the general interest; they must be suitable for securing the attainment of the objective which 
they pursue; and they must not go beyond what is necessary in order to attain it (see, for example, paragraph 37 of the 
Court of Justice’s judgment in Case C-55/94 Reinhard Gebhard v Consiglio dell'Ordine degli Avvocati e Procuratori di 
Milano [1995] ECR I-4165).  
Article  3  of  Regulation  (EEC)  No  1612/68  of  the  Council  of  15  October  1968  on  freedom  of  movement  for  workers 
within the Community allows conditions relating to ‘linguistic knowledge required by reason of the nature of the post to 
be filled’. 
In  Case  C-379/87  Anita  Groener  v  Minister  for  Education  and  the  City  of  Dublin  Vocational  Educational  Committee 
[1989] ECR 3967, the Court of Justice held at paragraph 19 that although there was no Treaty ban on a policy for the 
protection  and  promotion  of  a  language  of  a  Member  State  which  is  both  the  national  language  and  the  first  official 
language, such a policy must not in any circumstances be disproportionate to the aim pursued and the manner in which it 
is applied must not bring about discrimination against nationals of other Member States. 

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5. 

References to the European Commission 

The ECB would like to make the following editorial comment. Article 22(2) of the draft law states that 

the  term  ‘EU  Commission’  means  the  Commission  of  the  European  Communities.  The  ECB  would 

recommend  simply  referring  to  the  ‘Commission’,  which  is  more  accurate  (as  it  is  an  institution  of  the 

European Communities and not the EU) and is also an established term in Community legislation.  

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 19 September 2006. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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