Opinion of the European Central Bank of 28 March 2012 on the deposit-guarantee scheme (CON/2012/22)
Date: 2012-03-28
Institutions: European Central Bank
Subjects: Slovenia, bank deposit, bankruptcy, financial stability, guarantee, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 28 March 2012 

on the deposit-guarantee scheme 

(CON/2012/22) 

Introduction and legal basis 

On  5  March  2012  the  European  Central  Bank  (ECB)  received  a  request  from  Banka  Slovenije  for  an 

opinion  on  the  draft  decision  amending  the  Decision  on  the  deposit-guarantee  scheme  (hereinafter  the 

‘draft decision’). 

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/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities 
regarding  draft  legislative  provisions1,  as  the  draft  decision  relates  to  Banka  Slovenije  and  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 decision 

1.1 

Slovenian deposit-guarantee scheme 

The Slovenian deposit-guarantee scheme (DGS) is governed by the Law on banking2, which was 
the subject of several ECB consultations3. Pursuant to the Law on banking, banks with their head 

offices in Slovenia (hereinafter the ‘member banks’) guarantee the repayment of deposits up to a 

net deposit of EUR 100 000 held with a member bank against which bankruptcy proceedings have 

been  initiated.  The  DGS  is  funded  on  an  ex-post  basis.  If  bankruptcy  proceedings  are  initiated 

against a member bank, Banka Slovenije activates the DGS by requesting all other member banks 

to contribute their share of the funds necessary to repay guaranteed deposits held with the member 

bank facing bankruptcy. If they are unable to provide sufficient funds in good time, the State, upon 

Banka Slovenije’s proposal, temporarily provides funds. Banka Slovenije forwards the funds to the 

designated successor bank charged with the repayment of guaranteed deposits. The member banks 

are repaid from the bankruptcy estate in proportion to their respective funds paid in. 

1  
2  

3  

OJ L 189, 3.7.1998, p. 42.  
Zakon o bančništvu (Official Gazette of the Republic of Slovenia Nos 99/10 – official consolidated version, 9/11, 35/11, 
59/11, 85/11).  
See Opinions CON/2010/46, CON/2011/70 and CON/2006/48. All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu. 

 
 
 
 
 
                                                 
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1.2  Draft decision 

The DGS rules contained in the Law on banking are set out in more detail in the Banka Slovenije 
Decision  on  the  deposit-guarantee  scheme4.  As  stated  in  the  explanatory  memorandum,  the  draft 

decision  is  intended  to  improve  preparedness  in  the  guaranteed  deposits  repayment  process, 

particularly  in  view  of  the  shorter  repayment  period.  To  this  end,  the  draft  decision  inserts:  (a) 

a new Article 10.a which further defines successor bank tasks and responsibilities; and (b) a new 

Article 10.b which introduces the notion of potential successor banks, i.e. member banks appointed 

by Banka Slovenije to be prepared in advance to carry out specific tasks related to the repayment of 

guaranteed deposits. 

2. 

General observations 

2.1  Operation and financing of the DGS 

The ECB welcomes that the draft decision is aimed at, inter alia, ensuring a more efficient process 

for  repayment  of  guaranteed  deposits  and  at  preparing  for  a  shorter  repayment  period.  In  this 
context,  the  proposed  recast  of  Directive  94/19/EC5  (hereinafter  the  ‘proposed  Directive’), 

currently at an advanced stage in the legislative process, reduces the repayment period from twenty 

to  seven  days,  implying  the  need  for  further  adjustments  upon  the  adoption  of  the  proposed 

Directive. Moreover, the proposed Directive introduces funding arrangements for DGSs consisting 

of  ex  ante  contributions  provided  by  the  member  credit  institutions,  partly  on  a  risk-weighted 
basis6. This implies the need for the introduction of such an ex ante funding arrangement for the 

DGS following adoption of the proposed Directive. 

2.2  The role of Banka Slovenije  

The  ECB  supports  Banka  Slovenije’s  monitoring  role  in  relation  to  the  repayment  of  guaranteed 

deposits, in particular as regards a successor bank’s preparedness to carry out this task. Since DGSs 

are a key element of the financial safety net, overseeing their operation falls within the scope of the 
central bank task of contributing to financial stability7.  

3. 

Reimbursement of costs incurred by potential successor banks 

3.1  According to the new Article 10.b, each potential successor bank shall ensure that it is prepared to 

discharge its successor bank duties. In turn, it is entitled to reimbursement of actual costs related to 

its staffing, organisational preparedness and technical capability. Banka Slovenije, on behalf of the 

member  banks,  reimburses  such  costs  to  potential  successor  banks  within  15  days  from  the 

4  
5  

6  
7  

Sklep o sistemu jamstva za vloge (Official Gazette of the Republic of Slovenia No 97/10).  
See  the  Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  deposit  guarantee  schemes  (recast) 
(COM(2010) 368 final). 
See Article 9 of the proposed Directive. 
See paragraph 3.3 of Opinion CON/2007/26. 

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ECB-PUBLIC 

confirmation of the cost calculation. The member banks reimburse this amount to Banka Slovenije 

in equal shares within 15 days from the payment to the potential successor bank. 

3.2  The ECB understands that actual costs incurred by a potential successor bank are costs connected 

to the operation of the Slovenian DGS. The draft decision therefore implies that Banka Slovenije 

will finance, until it is reimbursed, the costs of operating the DGS and will make advance payments 

in this context. Such advance payments are incompatible with the monetary financing prohibition 

laid  down  in  Article  123  of  the  Treaty.  This  provision  prohibits  central  banks  from  providing 

overdraft facilities or any other type of credit facility to the public sector, including any financing 
of  the  public  sector’s  obligations  vis-à-vis  third  parties8.  Hence,  advance  payments  by  national 

central  banks  in  the  context  of  the  operation  of  the  DGS  are  incompatible  with  the  monetary 
financing  prohibition9.  The  only  compatible  forms  of  central  bank  financing  of  DGSs  are:  (a) 

intraday credit in line with the general rules on provision of such credit by the central bank; and (b) 

short-term  emergency  liquidity  financing  under  strict  conditions  established  in  the  ECB’s 

convergence  reports,  i.e.  if  such  funding  is  short  term,  to  address  urgent  situations,  systemic 
stability  aspects  are  at  stake  and  decisions  are  at  the  national  central  bank’s  discretion10.  These 
conditions need to be listed in national law11 in cases where emergency liquidity financing of the 

DGS is provided for by the national legal system.  

3.3  To  ensure  compliance  with  the  monetary  financing  prohibition,  any  reliance  on  central  bank 

funding  needs  to  be  avoided.  This  implies  that  other  funding  sources  should  be  found  for  the 

financing of the reimbursed costs to a potential successor bank and that the arrangement provided 

for under the draft decision needs to be modified in this respect.  

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

Done at Frankfurt am Main, 28 March 2012. 

[signed] 

The President of the ECB 

Mario DRAGHI 

8  

9  
10  
11  

See  Article  1(b)(ii)  of  Council  Regulation  (EC)  No  3603/93  of  13  December  1993  specifying  definitions  for  the 
application of the prohibitions referred to in Articles 104 and 104(b)(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 
See e.g. Opinion CON/2011/76. 
See the ECB’s Convergence Report, May 2010, p. 25.  
See paragraphs 2.2 to 2.8 of Opinion CON/2008/5.  

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