Opinion of the European Central Bank of 20 July 2012 on the Slovenia Sovereign Holding (CON/2012/57)
Date: 2012-07-20
Institutions: European Central Bank
Subjects: Slovenia, financial stability, investment company, national law, public investment, public sector

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 20 July 2012  

on the Slovenia Sovereign Holding 

(CON/2012/57) 

Introduction and legal basis 

On 13 July 2012, the European Central Bank (ECB) received a request from the Slovenian Ministry of 

Finance for an opinion on a draft law on the Slovenia Sovereign Holding (hereinafter the ‘draft law’). 

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 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 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 main purpose of the draft law is to establish the Slovenia Sovereign Holding (SSH) which will 

be  charged  with  managing  all  investments  of  the  Republic  of  Slovenia.  Concentrating  all  State 

investments at one managing entity allows active management of the investments and a consistent 

corporate management system. Consequently, the value of the investments is expected to increase. 

The draft law: (a) simplifies the management structure; (b) defines more clearly the intention and 

criteria of State investment management; and (c) creates a single State asset reserve.  

1.2   Article 29 of the draft law provides that the SSH or its subsidiary may acquire and manage assets 

transferred  within  restructuring  programmes  by  the  banks  to  the  SSH  or  its  subsidiary  against 

consideration.  In  this  context:  (a)  all  ancillary  rights,  such  as  rights  to  privileged  repayment, 

mortgage, pledge, rights arising from the contract with the guarantor, rights to interest, penalties, 

and other ancillary rights provided by law, pass to the SSH on the transfer of assets; (b) all bank 

assets  acquired  on  the  basis  of  an  enforced  ancillary  right  referred  to  in  point  (a)  prior  to  the 

transfer of a bad claim are also transferred to the SSH on the transfer of assets; (c) the SSH may 

acquire  investments  as  capital  instruments,  including  hybrid  convertible  instruments,  issued  by 

banks and taken into account in calculation of the bank’s own funds in accordance with laws and 

1  

OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
                                                 
ECB-PUBLIC 

regulations  and  may  recapitalise  banks  with  monetary  or  non-monetary  contributions.  The 

consideration for the purchase of the banks’ assets may be either monetary or non-monetary in the 

form of financial instruments whose holder or, respectively, issuer is the SSH or its subsidiary. The 

SSH or its subsidiary may issue State-guaranteed bonds and take State-guaranteed loans to finance 

the  purchase  of  the  banks’  assets.  Bonds  issued  by  the  SSH  or  its  subsidiary  for  the  purpose  of 

financing the purchase of the banks’ assets may be paid in by transferring assets which are being 

purchased  to  the  SSH  or  its  subsidiary.  The  Government  may  adopt  a  regulation  specifying  the 

manner  in  which  the  assets  are  transferred  to  the  SSH  and  the  manner  in  which  the  activities 

referred to in this paragraph are performed.  

2. 

Duty to consult the ECB 

2.1  The  Slovenian  government  endorsed  the  draft  law  on  12 July  2012  and  submitted  it  to  the 

Parliament for adoption in an extraordinary session of the Slovenian Parliament on 18 to 20 July 

2012. The Ministry requested the ECB to deliver its opinion as soon as possible which effectively 

means that the ECB has been given an extremely short deadline of three to five working days. The 

ECB would like to draw the Ministry’s attention to the proper procedure for its consultations as set 
out below2. 

2.2  The second sentence of Article 4 of Decision 98/415/EC provides that the ECB must be consulted 

‘at  an  appropriate  stage’ in  the  legislative  process. This implies  that  the  consultation  should  take 

place  at  a  point  in  the  legislative  process  which  affords  the  ECB  sufficient  time  to  examine  the 

draft  legislative  provisions,  and  where  necessary  translate  them,  and  to  adopt  its  opinion  in  all 

required  language  versions,  and  which  also  enables  the  relevant  national  authorities  to  take  the 

ECB’s  opinion  into  consideration  before  the  provisions  are  adopted.  Where  draft  legislative 

provisions are prepared by an authority other than the adopting authority, it can be derived from 

Article  4  of  Decision  98/415/EC  that  consultation  on  such  provisions  must  take  place  at  a  time 

which  enables  the  authority  initiating  the  draft  legislative  provisions  to  consider  whether  they 

should  be  amended  in  order  to  accommodate  the  ECB’s  opinion,  i.e.  before  transmission  of  the 

provisions to the adopting authority. The timetable should also factor in a reasonable period for the 

ECB  to  examine  the  consultation  dossier  and  deliver  its  opinion.  Article  4  does  not  preclude 

national  authorities  from  taking  steps  in  accordance  with  their  legislative  procedures  that  do  not 

affect the substance of the draft legislative provisions.  

2.3 

It follows from the wording of Article 3(4) of Decision 98/415/EC that Member States are obliged 

to  suspend  the  process  for  adoption  of  the  draft  legislative  provision  pending  submission  of  the 

ECB’s  opinion.  This  does  not  mean  that  the  whole  national  legislative  process,  for  example, 

preparatory work of parliamentary standing committees, discussion of other opinions submitted by 

national  authorities,  etc.  should  be  suspended  pending  delivery  of  the  ECB’s  opinion.  Rather  it 

2 

See Title IV, Section I 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. 

2 

  
                                                 
ECB-PUBLIC 

means that the adopting authority has to have the opportunity to deliberate meaningfully 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 process. But even in such a case, and as long as the legislation has not yet been adopted, 

the national authorities continue to be obliged to take the ECB’s opinion into consideration. 

3. 

Consultation on the implementing regulations 

The ECB takes note of the Slovenian authorities’ endeavours to help banks in difficulties by transferring 

their  bad  claims  to  the  SSH.  The  ECB  understands  that  Article  29  of  the  draft  law  is  only  the  basic 

provision enabling such transfer whereas the detailed rules on the asset transfer and the SSH’s activities 
in  this  respect  will  be  set  out  in  an  implementing  regulation  to  be  adopted  by  the  Government3.  Such 

implementing  rules  are  of great  interest  to  the  Eurosystem,  for  example  as  regards  the  possible  role  of 

Banka Slovenije, the price at which assets are transferred to the SSH and the SSH’s investment strategy. 

Taking due account of the ECB’s fields of competence, the ECB invites the Slovenian authorities to duly 

consult it on any such implementing regulations. 

4. 

Role of Banka Slovenije  

Banka  Slovenije  as  the  banking  supervisor  should  be  involved  in  any  procedure  identifying  the  banks 

transferring their bad claims to the SSH as well as identifying and defining the value of the assets to be 

transferred to the SSH. The ECB would therefore suggest explicitly providing for an appropriate role of 

Banka Slovenije, either in the draft law or in any other relevant legal act. 

5. 

Value at which banks’ assets are transferred to the SHH or its subsidiary  

In accordance with Article 29 of the draft law the SSH or its subsidiary may acquire banks’ assets as part 

of restructuring programmes. Although the draft law does not provide any details about their valuation, 

the ECB emphasises the importance of assets being transferred at their real economic value. Bad claims 

should usually be purchased at market value. Using public resources to purchase assets at relatively high 

prices from a bank under resolution may be a hidden subsidy and bail out private shareholders or creditors 

and may conceal the real cost of recapitalisation. It may also provide incentive to banks to sell to the SSH 

a greater portion of their assets than justified.   

6. 

Transfer of interest accrued on bank assets transferred to the SSH 

In accordance with the second indent of the first paragraph of Article 29 of the draft law, all bank’s assets 

acquired on the basis of an enforced ancillary right prior to the transfer of a bad claim are also transferred 

to the SSH together with the transfer of assets. This implies that, in addition to the bad claim itself, also 

all interest accrued prior to the transfer of the bad claim to the SSH, including the interest accrued in the 

3 

See the third paragraph of Article 29 of the draft law. 

3 

 
 
 
 
                                                 
ECB-PUBLIC 

course  of  the  regular  repayment  of  the  bank  claim,  should  be  transferred  to  the  SSH.  Such  provision 

would thus apply in arrears and could also refer to assets that have perhaps already been disposed of. It 

would also not be in line with the intention of the asset transfer under the draft law to reduce the burden 

on  banks  with  bad  claims.  Taking  the  above  into  account,  the  ECB  would  recommend  revisiting  this 

provision. 

7. 

Bank recapitalisation by the SSH 

In  accordance  with  the  third  indent  of  the  first  paragraph  of  Article  29  of  the  draft  law,  the  SSH  may 
recapitalise  banks  with  cash  or  non-cash  contributions.  As  consistently  expressed  in  its  opinions4,  the 

ECB  generally  prefers  issuances  of  shares  against  a  cash  contribution  for  financial  stability  reasons.  It 

should also be noted that recapitalisation against non-cash contributions may in this case be carried out 
only if the bank share capital increase is based on an additional measure of Banka Slovenije5. 

8. 

SSH bonds  

In  accordance  with the  second  paragraph  of  Article  29  of  the  draft law,  the  SSH  or  its  subsidiary  may 

issue State-guaranteed bonds to finance the purchase of the banks’ assets. Bonds issued by the SSH or its 

subsidiary for the purpose of financing the purchase of the banks’ assets can be paid in by transferring 

assets being purchased to the SSH or its subsidiary. Such investment in banks of the State-owned SSH’s 

bonds is not desirable from the financial stability perspective as it reinforces the link between the State 

and the banking sector.  

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

Done at Frankfurt am Main, 20 July 2012. 

[signed] 

The Vice-President of the ECB 

Vítor CONSTÂNCIO 

4 

5 

See paragraph 2.2 of Opinion CON/2012/23 and in the context of consultations by Slovenia paragraph 4.1.2 of Opinion 
CON/2012/48. All ECB Opinions are available on the ECB’s website at www.ecb.europa.eu. 
See Article 43(8), point 2 of the Law on banking. 

4