Opinion of the European Central Bank of 22 December 2008 at the request of the Slovenian Ministry of Finance on a draft decree laying down criteria and conditions for granting loans under Article 81.a of the Law on public finance (CON/2008/92)
Date: 2008-12-22
Institutions: European Central Bank
Subjects: Slovenia, cost of borrowing, credit institution, financial stability, loan, public finance

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 22 December 2008 

at the request of the Slovenian Ministry of Finance  

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

under Article 81.a of the Law on public finance 

(CON/2008/92) 

Introduction and legal basis 

On 16 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  loans  under  Article  81.a  of  the  Law  on  public  finance  (hereinafter  the  ‘draft 

decree’). The draft Decree was adopted by the Slovenian Government on 18 December 2008. 

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  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’)2  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 loans to credit institutions and other financial companies. 

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. 

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

Slovenije and have their corporate seat in Slovenia are eligible for a State loan. State loans may be 

granted  to  those  credit  institutions  which  fulfil  minimum  capital  requirements  under  the  Law  on 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
Law on public finance, published in Uradni list Republike Slovenije No 79/1999.  

 
 
 
 
                                                 
banking3 but which, due to the effects of the global financial crisis, are not able, even with State 

guarantees, to acquire funds in the financial and interbank markets to finance their obligations and 

operating costs.  

1.3  Credit institutions must use the funds obtained through a State loan to enhance economic activities 

and  ensure  appropriate  credit  for  the  support  of  the  economy  and  the  population.  The  Slovene 

Export and Development Bank (hereinafter the ‘SID Bank’) is responsible for assessing whether a 

credit  institution  fulfils  the  relevant  conditions  for  obtaining  a  State  loan.  Upon  reaching  an 

affirmative decision, the SID Bank advises the Ministry to recommend that the Government adopt 

a decision granting the loan. As the competent supervisory authority, Banka Slovenije provides its 

assessment  of  the  necessity  and  appropriateness  of  granting  individual  loans  to  credit  institutions 

and is notified by the Government of the adoption of any decision granting such a loan.  

1.4  The decision to grant a loan must set out the terms and conditions of the loan agreement as well as 

other commitments accepted by the beneficiary, e.g. restrictions on the income and other benefits 

of the company’s management, including options over the company’s shares, and restrictions with 

respect  to  dividend  payments  and  other  shareholder  rights.  The  maturity  of  the  loans  may  range 

from one year up to a maximum five years and may not exceed the maturity of the resources that 

the State acquires by issuing debt securities on the financial market or by taking loans at the time of 

granting loans. The annual interest rate of the loan consists of the cost of borrowing with the State 

guarantee arising from issuing debt securities or from taking loans of comparable maturity and the 

credit risk margin based on a long-term credit assessment of the credit institution by internationally 

recognised rating agencies. 

1.5  The draft decree is a temporary measure and will only apply until 31 December 2010. 

2.  General observations 

2.1  The ECB was consulted by the Ministry on the draft decree on 16 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 the ECB was not notified of the advanced status of the adoption procedure. The draft 

decree  was  then  adopted  on  18 December 2008,  without  any  prior  notification  of  the  ECB.  The 
ECB reiterates the position which it has previously communicated to the Slovenian authorities4 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. In the present case, the ECB was consulted, but no time limit was 

set  for  the  submission  of  the  ECB’s  opinion  and  no  notice  was  given  that  the  law  were  to  be 

3  
4  

Law on banking published in Uradni list Republike Slovenije No 131/2006.  
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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adopted two days after the request for an opinion. The ECB has been flexible and able to respond 

within  extremely  short  time  limits  to  consultation  requests  received  during  this  year’s  financial 

turmoil,  but  would  have  welcomed  being  consulted  on  the  present  Slovenian  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 submitted to the ECB, Member States are obliged to suspend 

the process of adoption of draft legislative provisions, pending receipt of the ECB’s opinion or the 

expiry  of  a  time  limit  set  for  the  submission  of  the  ECB  opinion  in  accordance  with  Decision 
98/415/EC5. 

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. Accordingly, the 

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

3. 

Specific observations 

3.1  Costs of State loans imposed on receiving credit institutions 

Pursuant to Article 9 of the draft decree, the amount of the annual interest rate for a loan is set by 

the  Government  when  granting  the  loan.  This  is  based  on  a  proposal  by  the  SID  Bank  and  the 

Ministry  and  is  calculated  taking  into  account  the  cost  of  borrowing  with  the  State  guarantee 

arising from issuing debt securities or from taking loans increased by the credit risk margin. The 

latter  is  based  on  a  long-term  credit  assessment  of  the  credit  institution  by  internationally 

recognised rating agencies. In addition, the SID Bank charges an up-front fee of 25 basis points for 
processing  the  State  loan  application.  In  Opinion  CON/2008/766,  the  ECB  emphasises  that  it  is 

crucial to ensure the coordination of the pricing of State measures under the Law within the euro 

area and the EU, given that a level playing field is of the essence. Such prices should be risk-based 

and market-oriented, and determined on the basis of the costs of a corresponding instrument in the 

market.  In  this  respect,  the  ECB  appreciates  the  additional  information  provided  in  the  Annex  to 
the draft decree7. 

3.2  Central bank involvement in the support measures 

The ECB understands that under the draft decree, Banka Slovenije is responsible for various tasks 
related to the implementation of the measures. In particular, Banka Slovenije will be responsible for 

assessing  the  necessity  and  appropriateness  of  granting  a  loan  to  a  credit  institution,  indicating 

whether the credit institution concerned is eligible for the loan under the Law and the draft decree 

5  

6  
7  

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 3.4 of Opinion CON/2008/76. 
Concerning the methodology for benchmarking the pricing, please also see the ‘Communication from the Commission - 
The recapitalisation of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and 
safeguards against undue distortions of competition’ C(2008) 8259 final of 5 December 2008. 

3 

 
 
                                                 
and whether granting the loan is the most appropriate measure to achieve the aim of the Law8. In 
addition, Banka Slovenije provides its opinion on the maturity of the loan to be granted9. 

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.  Compliance  with  the  prohibition  of  monetary  financing  in  relation  to  Banka 

Slovenije’s  activities  under  the  draft  decree  will,  inter  alia,  require  appropriate  remuneration  of 

such activities. 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 Banka 

Slovenije’s tasks under the Treaty and the Statute of the European System of Central Banks and of 

the European Central Bank.  

Moreover, the ECB understands that the entire cost of the loans granted by the Slovenian State is 

exclusively  financed  from  the  State  funds  acquired  by  additional  State  borrowing  in  accordance 

with Article 81.a of the Law. The ECB understands that such additional State borrowing will not 

include  prefinancing  or  refinancing  of  the  State  budget  by  Banka  Slovenije,  e.g.  in  the  form  of 

extension of overdraft credit facilities by Banka Slovenije to the Slovenian State or in the form of 

Banka Slovenije’s direct acquisition of the Slovenian State’s debt instruments. In this respect, the 

ECB reminds the Slovenian authorities that, under Article 101(1) of the Treaty, central banks are 

prohibited from extending credit to, or purchasing debt instruments directly from, the public sector 

and/or Community institutions or bodies, i.e. debt instruments issued in the primary market. At the 

same  time,  debt  instrument  purchases  made  on  the  secondary  market  must  not  be  used  to 
circumvent the objective of Article 101(1) of the Treaty11. 

3.3  Exchange of confidential information 

Under the draft decree, Banka Slovenije is required to provide to the SID Bank an assessment of 

the  necessity  and  appropriateness  of  granting  individual  loans  to  credit  institutions.  Banka 

Slovenije,  as  the  competent  supervisory  authority,  has  access  to  confidential  information  about 

individual credit institutions. It may thus occur that this information is disclosed to the SID Bank as 

part  of  Banka  Slovenije’s  assessment.  Given  the  sensitive  nature  of  supervisory  information,  the 

ECB  reminds  the  Slovenian  authorities  of  the  importance  of  safeguarding  the  confidentiality  and 

the need for a valid legal basis for any exchange of such information. 

8 
9  
10  
11  

See Article 6 of the draft decree. 
See Article 8 of the draft decree. 
OJ L 332, 31.12.1993, p. 1. 
See recital 7 of Council Regulation (EC) No 3603/93. 

4 

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

Done at Frankfurt am Main, 22 December 2008. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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