Opinion of the European Central Bank of 25 November 2008 at the request of the Slovenian Ministry of Finance on a draft law amending the Law on public finance (CON/2008/76)
Date: 2008-11-25
Institutions: European Central Bank
Subjects: Slovenia, cost of borrowing, financial institution, financial stability, monetary crisis, public borrowing, public finance

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 25 November 2008 

at the request of the Slovenian Ministry of Finance  

on a draft law amending the Law on public finance 

(CON/2008/76) 

Introduction and legal basis 

On 3 November 2008 the European Central Bank (ECB) received a request from the Slovenian Ministry 
of Finance (hereinafter the ‘Ministry’) for an opinion on a draft law amending the Law on public finance1 

(hereinafter  the  ‘draft  law’  and  the  ‘Law’,  respectively),  which  was  adopted  on  11  November  2008 

(hereinafter the ‘adopted law’).  

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

European  Community  and  on  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 provisions2, as the draft law relates 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  draft  law  is  aimed  at  limiting  the  effects  of  the  global  financial  crisis  in  Slovenia  and 

maintaining the stability of the domestic financial system. During the financial crisis, the draft law 

allows for additional State borrowing and issuing of State guarantees beyond the extent laid down 
in the existing budget legislation3, without a prior budget adjustment and adoption of a special law 

on guarantees or the amending of the existing amounts of State guarantees projected in the existing 

budget, respectively.  

1.2  The  draft  law  provides  for  four  categories  of  measures:  (i) loans  to  credit  institutions,  insurance 

companies, reinsurance companies and pension companies having their corporate seat in Slovenia; 

(ii) purchase of claims from credit institutions with their seat in Slovenia; (iii) capital investments 

1  
2  
3  

Law on public finance, published in Uradni list Republike Slovenije No 79/1999.  
OJ L 189, 3.7.1998, p. 42.  
See  Articles  29  and  31  of  the  Law  on  the  implementation  of  the  Republic  of  Slovenia  Budget  for  2008  and  2009, 
published in Uradni list Republike Slovenije No 114/2007.  

 
 
 
 
                                                 
by  the  State  in  credit  institutions  as  well  as  in  insurance  companies,  reinsurance  companies  and 

pension  companies  having  their  corporate  seat  in  Slovenia;  and  (iv) State  guarantees  to  credit 

institutions  up  to  the  total  principal  amount  of  EUR  8  billion,  which  was  increased  to 

EUR 12 billion in the adopted law. The criteria, conditions and charges for implementation of the 

abovementioned measures will be set out in separate decrees to be adopted by the Government for 

each measure. 

1.3  The draft law provides for a general legal framework allowing the State to address the emergency 

situation in the financial markets, should the need arise. Detailed rules for the implementation of 

specific  measures  in  individual  cases,  such  as  their  content,  extent,  duration,  as  well  as  the 

designated  beneficiaries,  will  be  defined  in  a  decision  to  be  adopted  by  the  Government  on  the 

proposal  of  the  Ministry.  These  decisions  will  be  based  on  the  assessment  by  the  competent 

supervisory  authorities  on  the  need  for  and  appropriateness  of  individual  measures.  The 

Government is obliged to inform the Parliament of any measures taken under the draft law. 

1.4  The provisions on measures introduced by the draft law will enter into force on the day after their 

publication and are of a temporary nature: they will apply until 31 December 2010. 

2.  General observations 

2.1  The ECB was consulted by the Ministry on the draft law on 3 November 2008 and was asked to 

issue  its  opinion  within  one  month  after  receiving  the  consultation  request  to  enable  the  swift 

adoption  of  the  draft  law  by  the  Slovenian  Parliament.  The  ECB  was  not  notified  of  any 

acceleration  in  the  legislative  procedure.  However,  the  draft  law  was  then  adopted  on 

11 November 2008,  without  any  prior  notification  of  the  ECB.  In  fact,  the  ECB  was  unofficially 

informed that the consultation request would be supplemented with a revised draft law and a draft 

government decree governing State guarantees. The ECB would like to point out that, in cases of 

particular  urgency,  which  do  not  allow  for  a  normal  consultation  period,  the  consulting  authority 

may indicate such urgency in the consultation request and ask for a shorter deadline for adoption of 

the  ECB’s  opinion.  This does  not prejudice  the  national  authorities’  duty under  Article  105(4)  of 

the Treaty to appropriately consult the ECB on national draft legislative provisions falling within its 

fields of competence. It follows from Article 3(4) of Decision 98/415/EC that Member States are 

obliged to suspend the process of adoption of the draft legislative provision pending receipt of the 

ECB’s  opinion.  The  adopting  national  authority  should  have  the  opportunity  meaningfully  to 

deliberate 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 process4. 

4  

See  Guide  to  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft  legislative  provisions, 
Title IV, Section 1. 

2 

 
                                                 
2.2  The ECB has issued several recent opinions on State measures taken to address the global financial 
crisis5, which all emphasise the importance of a common approach aimed at restoring confidence in 

financial markets. Similarly, the ECB notes that the conclusions adopted at the Ecofin meeting on 
7 October 2008  highlighted  common  principles  to  guide  the  States’  actions6.  Moreover,  the  ECB 

notes  that  on  12 October  2008  the  Heads  of  State  of  the  euro  area  issued  a  ‘Declaration  on  a 
concerted European action plan of the euro area countries’7 (hereinafter the ‘Declaration’), in which 

they confirmed their commitment to act together in a decisive and comprehensive way in order to 

restore confidence and the proper functioning of the financial system and to restore appropriate and 

efficient financing conditions for the economy. They agreed on common principles to be followed 

by  the  EU  and  euro  area  governments,  central  banks  and  supervisors,  to  avoid national  measures 

adversely  affecting  the  functioning  of  the  single  market  and  the  other  Member  States.  This 

coordinated  approach  includes  initiatives  aimed  at  ensuring  appropriate  liquidity,  facilitating  the 

funding of banks by various means, providing additional capital resources to financial institutions 

and recapitalising distressed banks. These principles were also endorsed for all Member States by 

5  

6  

7  

See ECB Opinions: CON/2008/44 of 3  October 2008 at the request of the Irish Minister for Finance on a draft Credit 
Institutions  (Financial  Support)  Bill  2008;  CON/2008/46  of  8  October  2008  at  the  request  of  the  Belgian  Ministry  of 
Finance  on  a  preliminary  draft  law  on  measures  promoting  financial  stability  and  in  particular  establishing  a  State 
guarantee for the provision of credit in the context of financial stability; CON/2008/48 of 15 October 2008 at the request 
of  the  Irish  Minister  for  Finance  on  a  draft  Credit  Institutions  (Financial  Support)  Scheme  2008;  CON/2008/50  of 
17 October 2008 at the request of the Belgian Ministry of Finance on a draft royal decree adopted under Article 117bis of 
the  Law  of  2  August  2002  on  the  supervision  of  the  financial  sector  and  on  financial  services;  CON/2008/51  of 
17 October  2008  at  the  request  of  the  Greek  Ministry  of  Economy  and  Finance  on  a  draft  law  on,  inter  alia,  the 
establishment  of  the  ‘Depositors  and  Investors  of  Credit  Institutions  Compensation  Fund’;  CON/2008/52  of 
17 October 2008 at the request of the Spanish State Secretary for Economic Affairs on a Royal Decree-Law creating a 
Fund for the acquisition of financial assets and on a Royal Decree-Law adopting urgent financial and economic measures 
in  relation  to  the  concerted  European  action  plan  of  the  euro  area  countries;  CON/2008/54  of  17  October  2008  at  the 
request of the Danish Ministry of Economic and Business Affairs on a proposed Law on financial stability; CON/2008/55 
of 20 October 2008 at the request of the Austrian Ministry of Finance on draft legal measures to ensure the stability of the 
Austrian financial market; CON/2008/56 of 21 October 2008 at the request of the Banque de France on a draft amending 
finance law for the financing of the economy; CON/2008/57 of 21 October 2008 at the request of the German Ministry of 
Finance on a Law on the implementation of a package of measures to stabilise the financial market and an order on its 
implementation; CON/2008/58 of 23 October 2008 at the request of the Banca d’Italia on behalf of the Italian Ministry 
for  Economic  Affairs  and  Finance  on  two  Decree-Laws  containing  urgent  measures  to  guarantee  the  stability  of  the 
banking  system  and  the  continuity  of  the  provision  of  credit;  CON/2008/59  of  24  October  2008  at  the  request  of  the 
Swedish Ministry of Finance on a draft proposal on stabilising measures for the Swedish financial system; CON/2008/60 
of  27  October  2008  at  the  request  of  the  Spanish  State  Secretary  for  Economic Affairs  on  a  draft  Order implementing 
Royal Decree-Law 6/2008 creating the Fund for the acquisition of financial assets and on a draft Basic Agreement of the 
Fund’s Executive Council; CON/2008/61 of 28 October 2008 at the request of the Belgian Minister for Finance on a draft 
royal  decree  implementing  the  Law  of  15  October  2008  on  measures  promoting  financial  stability  and  in  particular 
establishing a State guarantee for the provision of credit in the context of financial stability, in relation to the protection 
of deposits and life insurance and amending the Law of 2 August 2002 on the supervision of the financial sector and on 
financial  services;  CON/2008/62  of  29  October  2008  at  the  request  of  the  Swedish  Ministry  of  Finance  on  a  draft 
ordinance on State guarantees for banks etc.; CON/2008/65 of 12 November 2008 at the request of the Banca d’Italia on 
behalf  of  the  Italian  Ministry  for  Economic  Affairs  and  Finance  on  a  draft  ministerial  decree  containing  provisions  to 
implement  Decree-Law  No  157/2008  on  further  urgent  measures  to  guarantee  the  stability  of  the  credit  system; 
CON/2008/67 of 13 November 2008 at the request of the Spanish Ministry for Economic Affairs and Finance on a draft 
order implementing Royal Decree-Law 7/2008 authorising State guarantees; and CON/2008/68 of 13 November 2008 at 
the  request  of  the  Finnish  Ministry  of  Finance  on  a  draft  government  proposal  for  laws  amending  the  Law  on  the 
Government Guarantee Fund and the Law on credit institutions. 
According to these principles, (i) interventions should be timely and the support should in principle be temporary; (ii) the 
interests  of  taxpayers  should  be  protected;  (iii) existing  shareholders  should  bear  the  due  consequences  of  the 
intervention;  (iv) the  Government  should  be  in  a  position  to  bring  about  a  change  of  management;  (v) management 
should  not  retain  undue  benefits;  (vi) governments  may  have,  inter  alia,  the  power  to  intervene  in  remuneration; 
(vii) legitimate  interest  of  competitors  must  be  protected,  in  particular  through  the  State  aid  rules,  and  (viii) negative 
spill-over effects should be avoided. 
Available on the website of the French Presidency at www.ue2008.fr. 

3 

                                                 
the European Council on 16 October 2008. As pointed out in these recent ECB opinions8, it is of 

utmost  importance  that  the  operations  conducted  by  national  authorities  do  not  interfere  by  any 

means with the single monetary policy and/or with the Eurosystem’s refinancing operations. 

2.3  The  ECB  also  wishes  to  underline  the  importance  of  ensuring  that  the  proposed  arrangements 

comply  with  the  relevant  Community  law  provisions  and  with  criteria  set  out  in  the  recently 

adopted Commission’s guidance on compliance by financial sector support schemes with EU State 
aid rules9 (hereinafter the ‘Commission’s guidance’), and that the State’s role as shareholder as a 

consequence of recapitalisation under the draft law is limited in time.  

2.4  The ECB understands that the Slovenian Government intends to adopt decrees on the basis of the 
new  Article  88.a(1)  of  the  Law10  if  it  assesses  that  taking  measures  under  the  draft  law  may  be 

necessary  to  address  the  situation  in  the  Slovenian  financial  market.  The  ECB  expects  to  be 

consulted on any new draft legislative provisions should they materially influence the stability of 

financial markets. 

3. 

Specific observations 

Selection of beneficiary credit institutions 

3.1  Pursuant  to  the  new  Article  81.a  of  the  Law11,  all  credit  institutions  as  defined  in  the  Law  on 
banking12 having their corporate seat in Slovenia are entitled to benefit from the measures under the 

draft law. The ECB understands, therefore, that this comprises banks, savings banks and e-money 

institutions where the term ‘bank’ applies to any bank having its corporate seat in Slovenia that was 

licensed  by  Banka  Slovenije  to  provide  banking  services;  subsidiaries  of  foreign  banks  are  also 

included, but branches of foreign banks are not. The ECB welcomes the above provisions, as they 

avoid  the  preferential  treatment  of  specified  credit  institutions,  and  the  distortion  of  the  level 

playing field as regards the treatment of domestic financial institutions and subsidiaries of foreign 
institutions13.  The  ECB  notes  that,  in  the  specific  context  of  provision  of  State  guarantees,  the 

Commission’s  guidance  includes  detailed  rules  on  the  eligibility  criteria  for  the  beneficiary 
institutions14. In this context, the ECB appreciates that pursuant to the new Article 88.a(2) of the 

8  
9  

10  
11  
12  
13  
14  

See, in particular, ECB Opinions CON/2008/52 and CON/2008/60. 
See ‘Communication from the Commission – The application of State aid rules to measures taken in relation to financial 
institutions  in  the  context  of  the  current  global  financial  crisis’  (2008/C  270/02)  of  13  October  2008,  available  on  the 
Commission’s website at www.ec.europa.eu. 
Inserted by Article 4 of the draft law. 
Inserted by Article 2 of the draft law. 
Law on banking, published in Uradni list Republike Slovenije No 131/2006.  
On these aspects see, in particular, ECB Opinions: CON/2008/44, CON/2008/48, CON/2008/52 and CON/2008/55. 
See paragraph 18 of the Commission’s guidance, specifying that ‘The eligibility criteria of financial institutions … must 
be  objective,  taking  due  account  of  their  role  in  the  relevant  banking  system  and  the  overall  economy,  and  non-
discriminatory  so  as  to  avoid  undue  distortive  effects  on  neighbouring  markets  and  the  internal  market  as  a  whole.  In 
application  of  the  principle  of  non  discrimination  on  the  grounds  of  nationality,  all  institutions  incorporated  in  the 
Member State concerned, including subsidiaries, and with significant activities in that Member State should be covered 
by the scheme’. 

4 

 
                                                 
Law15,  the  Government’s  decisions  on  measures  under  the  draft  law  must  be  based  on  the 

assessment  of  the  need  for  and  appropriateness  of  the  individual  measures  provided  by  the 

supervisory authority.  

Relationship of the draft law to the single monetary policy of the euro area 

3.2 

In line with the Declaration, Member States have to act in a coordinated manner to avoid significant 

differences in national implementation having a counter-productive effect and creating distortions 

in global banking markets. The euro area Heads of State also acknowledged the need to cooperate 

with the ECB to ensure consistency in liquidity management by the Eurosystem and compatibility 

with  the  operational  framework  of  the  Eurosystem.  Against  this  background,  the  ECB  notes  that 

uncoordinated  decisions  among  Member  States  should  be  avoided  as  they  may  involve  a 

fragmentation of the euro area money market.  

3.3  Pursuant  to  the  new  Article  86.a(4)  of  the  Law16,  State  guarantees  may  be  issued  to  cover  all 

liabilities  of  credit  institutions  vis-à-vis  credit  institutions  and  other  financial  companies  with  the 

exception of liabilities arising from: (i) structured financial instruments, (ii) subordinated liabilities 

of a credit institution and (iii) liabilities to the parent company and its associated entities. On this 

basis, the ECB understands that State guarantees  may be issued to cover interbank deposits. This 

should be avoided as it could entail a substantial distortion in the various national segments of the 

euro area money market by potentially increasing short-term debt issuance activity across Member 

States,  thus  impairing  the  implementation  of  the  single  monetary  policy,  which  is  an  exclusive 

Eurosystem competence under Article 105(2) of the Treaty.  

3.4  Pursuant  to  the  new  Article  88.a(1)  of  the  Law17,  the  criteria,  conditions  and  charges  for 
implementation of the measures under the new Articles 81.a and 86.a of the Law18 will be set out in 

separate decrees to be adopted by the Government for each measure. The ECB would like to recall 

the  need  for  its  involvement  in  such  concertation  and  the  importance  it  attaches  to  the 

harmonisation of the pricing of guarantees and other measures under the draft law within the euro 

area and the EU aimed at creating the essential conditions for a level playing field. In particular, it 

is important to ensure that the price of the State guarantee is risk-based and market-oriented in that 

it is determined on the basis of the costs of a corresponding guarantee in the market. 

3.5  Article  6  of  the  adopted  law  provides  that  the  provisions  of  Articles  2,  3  and  4  of  the  draft  law 

apply  until  31  December  2010.  The  ECB  notes  that  this  provision  is  in  line  with  the  principles 

stated  in  the  Declaration  which  point  to  the  temporary  features  of  such  schemes.  Moreover,  the 

harmonisation regarding the end date of such schemes across the euro area and EU Member States 

is also crucial and the ECB should be involved in such concertation.  

15  
16  
17  
18  

Inserted by Article 4 of the draft law. 
Inserted by Article 3 of the adopted law. 
Inserted by Article 4 of the adopted law. 
Inserted by Articles 2 and 3 of the adopted law respectively. 

5 

                                                 
Role of the central bank 

3.6  The ECB understands that Banka Slovenije in its supervisory role will provide its assessment under 
the new Article 88.a (2) of the Law19 with respect to banks, savings banks and e-money institutions.  

3.7  The  ECB  expects  that  the  involvement  of  Banka  Slovenije  will  not  go  beyond  the  supervisory 

function and, in particular, that it will fully comply with the prohibition on monetary financing laid 

down  in  Article  101  of  the  Treaty.  According  to  the  specific  deposit  guarantee  scheme  in 
Slovenia20, Banka Slovenije pays in its name and on behalf of Slovenian banks and of the State the 
guaranteed deposits to depositors21. To address the current financial crisis this scheme was recently 
changed to introduce an unlimited State guarantee for bank deposits22. The ECB notes with concern 

that  no  legislative  provision  was  envisaged  in  the  draft  law  with  regard  to  additional  State 

borrowing which would ensure that sufficient funds are available to cover such potential amounts 

to be paid. Should the State not be able to transfer sufficient funds to Banka Slovenije, the latter 

may  be  put  in  a  position  where  it  has  to  provide,  even  if  only  temporarily,  its  own  funds  for 
financing the national deposit guarantee scheme23 which would be a clear breach of the monetary 

financing prohibition under the Treaty. 

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

Done at Frankfurt am Main, 25 November 2008. 

[signed] 

The Vice-President of the ECB 

Lucas D. PAPADEMOS 

19  
20  
21  

22  

23  

Inserted by Article 4 of the draft law. 
Articles 310 to 329 of the Law on banking. 
Pursuant to provisions of the Law on banking governing the deposit guarantee scheme in Slovenia, the banks having their 
corporate  seat  in  Slovenia  guarantee  payment  of  guaranteed  deposits  held  at  a  bank  against  which  bankruptcy 
proceedings have been initiated. Upon the initiation of bankruptcy proceedings, Banka Slovenije assumes the obligation 
to pay the guaranteed deposits in its own name and on behalf of the banks. To cover this obligation it orders the banks to 
pay  in  their  respective  shares  and  forwards  these  funds  to  the  successor  bank  authorised  to  execute  the  payments  of 
guaranteed  deposits  to  the  depositors.  In  the  bankruptcy  proceedings,  Banka  Slovenije  lodges  claims  arising  from  the 
guaranteed  deposits  and  returns  any  funds  retrieved  from  the  bankruptcy estate  to  the  banks  according  to  their  paid-in 
shares. 
In the latest amendment to the Law on banking adopted on 11 November 2008, it was stipulated that the banks with their 
seat in Slovenia guarantee payment of guaranteed deposits of the bank in bankruptcy up to the amount of EUR 22 000 
and  the  State  guarantees  the  exceeding  amount  without  limitation  (Articles  310  and  313  of  the  amended  Law  on 
banking).  
Upon the initiation of bankruptcy proceedings, Banka Slovenije assumes the obligation to pay the guaranteed deposits of 
the  bank  in  bankruptcy  in  its  own  name  and  on  behalf  of  the  banks  with  their  seat  in  Slovenia  and  of  the  State 
(Article 315 of the amended Law on banking). 

6