Opinion of the European Central Bank of 19 December 2008 at the request of the Slovenian Ministry of Finance on a draft decree laying down criteria and conditions for granting guarantees under Article 86.a of the Law on public finance (CON/2008/88)
Date: 2008-12-19
Institutions: European Central Bank
Subjects: Slovenia, borrowing, cost of borrowing, credit institution, financial requirements, financial stability, monetary crisis, monetary policy, public finance

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 19 December 2008 

at the request of the Slovenian Ministry of Finance  

on a draft decree laying down criteria and conditions for granting guarantees  

under Article 86.a of the Law on public finance 

(CON/2008/88) 

Introduction and legal basis 

On 3 December 2008 the European Central Bank (ECB) received a request from the Slovenian Ministry 

of  Finance  (hereinafter  the  ‘Ministry’)  for  an  opinion  on  a  draft  decree  laying  down  criteria  and 

conditions for granting guarantees under Article 86.a of the Law on public finance (hereinafter the ‘draft 
Decree’). The draft Decree was adopted by the Slovenian Government on 4 December 20081.  

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  Decree  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 Decree 

1.1  The legal basis for the adoption of the draft Decree is the Law on public finance (hereinafter the 
‘Law’)3  which  provides  for  four  categories  of  measures  for  limiting  the  effects  of  the  global 

financial crisis in Slovenia and maintaining the stability of the domestic financial system. One of 

these  measures  is  the  provision  of  State  guarantees  to  credit  institutions  for  up  to  a  total  of 

EUR 12 billion. Article 88.a(1) of the Law requires the Government to adopt separate decrees for 

each of these measures setting out the criteria, conditions and charges for their implementation. 

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2  
3  

  Uredba  o  merilih  in  pogojih  za  izdajanje  poroštev  po  86.a  členu  Zakona  o  javnih  financah,  published  in  Uradni  list 

Republike Slovenije No 115/2008. 

  OJ L 189, 3.7.1998, p. 42.  

Zakon o javnih financah, published in Uradni list Republike Slovenije No 79/1999. The Law as last amended by the Law 
amending Law on public finance (Uradni list Republike Slovenije No 109/2008). 

 
 
 
 
                                                 
 
1.2  Solvent credit institutions which hold a valid licence to provide banking services issued by Banka 

Slovenije and which have their corporate seat in Slovenia are eligible for a State guarantee. State 

guarantees  may be granted to those credit institutions which fulfil minimum  capital requirements 
pursuant to the Law on banking4 but which, due to the effects of the global financial crisis, are not 

able,  without  State  guarantees,  to  carry  out  borrowing  transactions  in  the  financial  and  interbank 

markets to finance their obligations and operating costs.  

1.3  The terms and conditions for borrowing by credit institutions subject to a State guarantee must be 

essentially comparable to those agreed for borrowing by the State for similar types of transactions. 

Credit  institutions  must  primarily  use  the  funds  obtained  on  the  basis  of  a  State  guarantee  for 

enhancing economic activities and ensuring appropriate credit for the support of the economy. The 

Ministry  will  lead  the  procedure  for  granting  State  guarantees  and  if  it  assesses  that  a  credit 

institution fulfils the prescribed conditions, it will recommend that the Government should adopt a 

decision granting a guarantee. As the competent supervisory authority, Banka Slovenije will give 

its assessment of the necessity and appropriateness of granting a guarantee and it will be notified by 

the  Government  of  the  adoption  of  any  decision  granting  a  guarantee.  A  fee  will  be  charged  for 

guarantees. The fee will be calculated on the basis of the maturity of the guarantee and on a long-

term credit assessment of the credit institution by internationally recognised rating agencies. 

1.4  The draft Decree will be temporary and will apply until 31 December 2010. 

2.  General observations 

2.1  The ECB was consulted by the Ministry on the draft Decree on 3 December 2008 and was asked to 

give priority to the consultation request as the pressing need to adopt the draft Decree did not allow 

for  a  normal  consultation  period.  No  specific  deadline  for  the  adoption  of  the  ECB  opinion  was 

indicated and, notwithstanding the frequent informal contacts between the ECB and the Ministry, 

the ECB was not notified of the advanced status of the adoption procedure. The draft Decree was 

then adopted on the day following the consultation of the ECB (on 4 December 2008), without any 

prior  notification  of  the  ECB.  The  ECB  reiterates  the  position  which  it  has  previously 
communicated to the Slovenian authorities5 that even cases of particular urgency do not abrogate 

the  duty  of  the  national  authorities  under  Article  105(4)  of  the  Treaty  to  consult  the  ECB  on 

national draft legislative provisions falling within its fields of competence. The ECB would have 

welcomed  being  consulted  on  the  draft  Decree  at  an  earlier  stage  in  order  to  ensure  that  the 

adopting authority would have had sufficient time to take the ECB’s considerations into account. It 

follows  from  Article  3(4)  of  Decision  98/415/EC  that  once  a  consultation  request  has  been 

4  

5  

Zakon  o  bančništvu,  published  in Uradni  list  Republike  Slovenije  No  131/2006.  The  Law  as  last  amended  by  the  Law 
amending the Law on banking (Uradni list Republike Slovenije No 109/2008). 
See paragraph 2.4 of ECB Opinion CON/2008/76 of 25 November at the request of the Slovenian Ministry of Finance on 
a draft law amending the Law on public finance, available on the ECB’s website at www.ecb.europa.eu. 

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submitted  to  the  ECB,  Member  States  are  obliged  to  suspend  the  process  of  adoption  of  draft 
legislative provisions, pending receipt of the ECB’s opinion6. 

2.2  The  draft  Decree  was  adopted  on  the  basis  of  the  Law  on  which  the  ECB  issued  its  Opinion 

CON/2008/76.  The  ECB  is  now  consulted  on  legislation  implementing  the  Law  and  the 

observations made in Opinion CON/2008/76 also apply to the draft Decree. 

3. 

Specific observations 

3.1 

Scope of the obligations covered by State guarantees 

The draft Decree does not specify further which obligations may be covered by State guarantees. 

Pursuant  to  Article  86.a  (4)  of  the  Law,  guarantees  may  be  granted  to  cover  liabilities  with  a 

maturity of from 3 months to 5 years arising from borrowing in the financial or interbank markets 

which, for the purposes of the Law, comprise all liabilities incurred by an eligible credit institution 

towards  other  credit  institutions  and  other  financial  companies  except  liabilities  arising  from 

structured  financial  instruments,  subordinated  liabilities  of  credit  institutions  and  liabilities  to  the 
parent entity and its associated entities. In its Opinion CON/2008/767 the ECB recommended that 

the extension of State guarantees to cover interbank deposits should be avoided in order to ensure 

effective implementation of the single monetary policy in the euro area. In this respect, the ECB 

notes  that  further  clarification  regarding  the  scope  of  the  coverage  of  State  guarantees  is  still 

needed.  

3.2  Charges imposed on receiving credit institutions 

Pursuant to Article 7 of the draft Decree, the amount of the annual fee for a guarantee will be set by 

the  Government  in  its  decision  granting  the  guarantee.  It  will  be  based  on  a  proposal  by  the 

Ministry taking into account the maturity of the guarantee and a long-term credit assessment of the 
credit  institution  by  internationally  recognised  rating  agencies.  In  its  Opinion  CON/2008/768,  the 

ECB  emphasised  that  it  is  crucial  to  ensure  the  coordination  of  the  pricing  of  State  guarantees 

within the euro area and the EU, given that a level playing field is of the essence. The price of a 

State guarantee should be risk-based and market-oriented, and determined on the basis of the costs 

of  a  corresponding  guarantee  in  the  market.  In  this  respect,  the  ECB  appreciates  the  additional 

information  provided  in  the  Annex  to  the  draft  Decree.  It  is  important  that  the  pricing  of  a  State 

guarantee should link the level of charges to be paid by a credit institution receiving a guarantee to 

the residual maturities of the guaranteed obligations with maturities exceeding one year. The ECB 

also  stresses  the  need  for  further  harmonisation  within  the  euro  area  which  will  be  conducive  to 

6  

7  
8  

See Title IV, Section 1 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. 
See paragraph 3.3 of Opinion CON/2008/76. 
See paragraph 3.4 of Opinion CON/2008/76. 

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ensuring that State support measures do not negatively affect the single monetary policy of the euro 
area9. 

3.3  Central bank involvement in the support measures 

The ECB understands that Banka Slovenije will be responsible for various tasks for implementing 

the  measures  under  the  draft  Decree.  In  line  with  its  previous  opinions,  the  ECB  reminds  the 

Slovenian authorities that the tasks performed by Banka Slovenije must comply with the monetary 

financing prohibition under Article 101 of the Treaty and Council Regulation (EC) No 3603/93 of 

13  December  1993  specifying  definitions  for  the  application  of  the  prohibitions  referred  to  in 
Articles 104 and 104b (1) of the Treaty10. 

Banka  Slovenije  will  process  applications  submitted  by  credit  institutions  requesting  a  State 

guarantee,  ensuring  priority  treatment.  Moreover,  Banka  Slovenije  will  assess  the  necessity  and 

appropriateness  of  granting  a  guarantee  and  indicate  whether  the  credit  institution  concerned  is 

eligible for the guarantee under the Law and the draft Decree, and whether the grant of a guarantee 
is the most appropriate measure for achieving the aim of the Law11. 

The  ECB  emphasises  that  the  tasks  to  be  performed  by  Banka  Slovenije  must  comply  with  the 

above prohibition of monetary financing as regards their remuneration. It is also expected that tasks 

to be performed by Banka Slovenije for the benefit of the State support measures will be conducted 

in  a  manner  fully  compatible  with  Banka  Slovenije’s  institutional  and  financial  independence 

which is a safeguard for the proper performance  of  the Banka Slovenije’s tasks under the Treaty 

and  the  Statute  of  the  European  System  of  Central  Banks  and  of  the  European  Central  Bank. 

Finally, the ECB understands that the entire costs of the guarantees issued by the Slovenian State 

will  be  exclusively  financed  from  budgetary  resources  and  that  they  will  in  no  event  lead  to  the 

provision of an overdraft credit facility by Banka Slovenije. 

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

Done at Frankfurt am Main, 19 December 2008. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

9  

10  
11 

See e.g. paragraph 3.2 of ECB Opinion 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;  and  paragraph  3.7  of  ECB  Opinion  CON/2008/81  of  1  December  2008  at  the  request  of  the 
Hungarian Ministry of Finance on a draft law on strengthening the financial intermediary system. 
OJ L 332, 31.12.1993, p. 1. 
See Articles 3-6 of the draft Decree. 

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