Opinion of the European Central Bank of 7 December 2012 on the Law on banking (CON/2012/101)
Date: 2012-12-07
Institutions: European Central Bank
Subjects: Slovenia, banking, central bank, competence of the institution, financial stability, monetary crisis, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 7 December 2012  

on the Law on banking 

(CON/2012/101) 

Introduction and legal basis 

On 14 November 2012, the European Central Bank (ECB) received a request from the Slovenian Ministry 

of Finance for an opinion on the draft law amending the Law on banking (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  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 law 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 law 

1.1  The  measures  proposed  in  the  draft  law  are  aimed  at  addressing  the  impact  of  the  deepening 

financial  crisis  on  the  banking  system.  In  particular,  the  crisis  has  had  an  adverse  effect  on  the 

ability of banks to obtain appropriate financing and, therefore, to comply with the capital adequacy 

requirements of Banka Slovenije and the European Banking Authority. Accordingly, the draft law 

provides for the establishment of a legal regime to address these issues. 

1.2  Pursuant to the draft law, Banka Slovenije, as the banking supervisory authority, may take actions 

against  a  bank  that  breaches  risk  management  rules  and  capital  requirements.  It  may  also  act 

against a bank where it considers it likely that a breach will occur on the basis of defined negative 

trends in a bank. In addition, Banka Slovenije may act when it considers that the financial system’s 

stability  is  endangered.  The  draft  law  accordingly  provides  for  a  clearer  definition  of  the 

supervisory  measures  and,  in  addition  to  amending  some  of  the  existing  measures  that  Banka 

Slovenije may utilise in its supervisory capacity, introduces new supervisory measures, including 

the following: (a) Banka Slovenije may appoint an authorised person to a bank to act pursuant to 

Banka  Slovenije’s  instructions  in  order  to  improve  a  bank’s  risk  management  strategy  or  to 

effectively  implement  measures  to  eliminate  breaches.  Under  certain  conditions,  the  authorised 

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OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
                                                            
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person  may  also  be  given  the  powers  of  a  bank’s  management  board  member;  and  (b)  Banka 

Slovenije may transfer a bank’s assets and liabilities to an acquiring company in cases of increased 

risk in a bank. 

1.3  The scope of Banka Slovenije’s supervisory powers is also extended, inter alia, with regard to the 

members  of  a  banks’  supervisory  board.  Under  the  draft  law,  Banka  Slovenije  may  prohibit 

supervisory  board  members  from  performing  their  functions  where  the  member  breaches 

supervisory board member’s duties or does not meet the conditions necessary for appointment or 

there is an obstacle to the appointment. 

1.4 

In  addition,  the  draft  law  amends  the  Law  on  banking  in  relation  to,  inter  alia,  (a)  the  deposit 

guarantee scheme, (b) the regulation of non-cash contributions for banks’ share capital increase, (c) 

the  supervisory  order  by  Banka  Slovenije  to  a  bank  to  increase  its  capital,  (d)  exemptions  to  the 

obligation  to  submit  a  mandatory  takeover  bid.  Moreover,  the  draft  law  introduces  certain 

provisions regarding the Law on Slovenia’s measures to strengthen bank stability. 

2. 

General observations 

The  ECB  welcomes  the  Slovenian  authorities’  initiative  to  improve  and  introduce  measures  on  capital 

requirements  for  banks,  their  risk  management  and  their  resolution.  As  the  Ministry  of  Finance  has 

explained in its accompanying memorandum to the draft law, the proposed amendments regarding bank 

resolution  were  prepared  on  the  basis  of  the  Commission’s  proposal  for  a  directive  on  recovery  and 
resolution of banks2. In addition to this proposal, further related Union legislation is expected soon3. The 

ECB  points  out  that  national  laws  and  regulations  will  have  to  be  brought  into  line  with  such  Union 

legislation  once  it  is  adopted.  Finally,  national  legislation  will  have  to  be  brought  into  line  also  with 

anticipated Union legislation, including the Proposal for a Council Regulation conferring specific tasks on 
the  ECB  concerning  policies  relating  to  the  prudential  supervision  of  credit  institutions4,  and  the 

upcoming  establishment  of  a  single  resolution  mechanism,  focused  on  a  European  resolution  authority, 

which the ECB fully supports, as highlighted in Opinion CON/2012/96. 

3. 

Specific observations 

3.1  Performance of new tasks by Banka Slovenije under the draft law  

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See Commission’s Proposal for a Directive establishing a framework for the recovery and resolution of credit institutions 
and investment firms and amending Council Directives 77/91/EEC and 82/891/EC, Directives 2001/24/EC, 2002/47/EC, 
2004/25/EC, 2005/56/EC, 2007/36/EC and 2011/35/EC and Regulation (EU) No 1093/2010 (COM(2012) 280 final). 
See  (a)  Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  the  access  to  the  activity  of  credit 
institutions and the prudential supervision of credit institutions and investment firms and amending Directive 2002/87/EC 
of  the  European  Parliament  and  of  the  Council  on  the  supplementary  supervision  of  credit  institutions,  insurance 
undertakings and investment firms in a financial conglomerate (COM(2011) 453 final); (b) Proposal for a Regulation of 
the  European  Parliament  and  of  the  Council  on  prudential  requirements  for  credit  institutions  and  investment  firms 
(COM(2011) 452 final); (c) Proposal for a Directive of the European Parliament and of the Council on Deposit Guarantee 
Schemes (recast) (COM(2010) 368 final). 
See COM(2012) 511 final. 

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The  draft  law  assigns  new  supervisory  tasks  to  Banka  Slovenije,  including,  inter  alia,  the 

supervision  of  members  of  banks’  supervisory  boards  and  the  power  to  order  the  transfer  of  a 

bank’s  assets  and  liabilities  to  an  acquiring  company.  The  ECB  welcomes  the  fact  that  Banka 

Slovenije  will  be  given  additional  powers  to  contribute  to  the  efficient  supervision  of  banks  by 

taking  timely  action  to  identify  and  resolve  relevant  issues,  thus  ensuring  financial  stability. 

Nonetheless, widening the scope of Banka Slovenije’s tasks should not affect its ability to carry out 
its ESCB-related tasks from an operational and financial perspective5. 

In addition, in performing the new powers, Banka Slovenije should ensure appropriate functional 

separation of resolution activities from its supervisory or other activities in order to avoid possible 

conflicts of interest between these functions, in line with the Commission’s proposal for a directive 
on recovery and resolution of banks6. 

3.2  The draft law and the Law on Slovenia’s measures to strengthen bank stability 

In parallel to the draft law, the Slovenian authorities have prepared the Law on Slovenia’s measures 
to  strengthen  bank  stability7,  which  aims  to  strengthen  the  stability  of  the  financial  system  as  a 

whole  by  improving  the  stability  of  banks.  The  ECB  was  consulted  on  this  Law  and  adopted 

Opinion CON/2012/71, in which it suggested further clarifying how the measures under the Law 

on  Slovenia’s  measures  to  strengthen  bank  stability  fit  into  the  system  of  supervisory  measures 
taken  by  Banka  Slovenije  pursuant  to  the  Law  on  banking8.  Given  that  the  draft  law  further 

broadens the scope for supervisory action by Banka Slovenije and also entrusts it with resolution 

powers, including in cases of endangerment of the financial system’s stability, the ECB notes that it 

would be beneficial to ensure that the Law on Slovenia’s measures to strengthen bank stability and 

the  Law  on  banking  are  aligned  to  avoid  any  potential  conflict  between  both  laws  and  thereby 

Banka  Slovenije’s  ability  to  fulfil  its  regulatory  and  supervisory  responsibilities,  including  under 

the Law on banking, as amended by the draft law. 

3.3  Endangered financial system stability 

The  proposed  Article  254  of  the  Law  on  banking  provides  that,  if  financial  system  stability  in 

Slovenia  is  or  might  be  jeopardised,  Banka  Slovenije  is  to  immediately  notify  the  Ministry  of 

Finance  as  well  as  other  national  authorities.  The  ECB  is  of  the  view  that  if  these  risks  have  a 

systemic dimension, i.e. when there is a risk of disruption in the financial system with the potential 
to have serious negative consequences for the internal market and the real economy9, the European 

Systemic  Risk  Board  (ESRB)  should  also  be  informed  of  these  developments  as  well  as  of  the 

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9  

See,  for  example,  Opinions  CON/2011/46  and  CON/2010/46.  All  Opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
See Article 3 of COM(2012) 280 final. 
Zakon o ukrepih Republike Slovenije za krepitev stabilnosti bank. 
See paragraph 4.2 of Opinion CON/2012/71. 
See Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European 
Union macro-prudential oversight of the financial system and establishing the European Systemic Risk Board (OJ L 331, 
15.12.2010, p. 1). 

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substance and timeline of the actions taken to address such risks at national level10. Furthermore, it 

would  be  beneficial  for  financial  stability  to  establish  an  effective  macro-prudential  policy 
framework at a national level, where Banka Slovenije plays a key role11, 12. 

3.4  Prompt and efficient action 

Under  the  draft  law,  Banka  Slovenije  may  impose  measures  in  relation  to  a  bank’s  share  capital 

increase, subject to a procedure involving shareholders and the Ministry of Finance before and after 

imposition of the measure. The ECB is of the view that the procedures for imposing such measures 

should be as short and simple as possible to allow for prompt and efficient supervisory action.  

3.5  Bank share capital increase against non-cash contributions 

The  draft  law  clarifies  when  an  increase  of  banks’  share  capital  using  non-cash  contributions  is 

allowed.  In  addition,  Banka  Slovenije’s  prior  approval  must  be  obtained  for  non-cash 

recapitalisation,  with  such  approval  being  based  on  the  eligibility  criteria  for  non-cash 

contributions.  These  criteria  are  to  be  set  out  in  an  implementing  regulation  adopted  by  Banka 

Slovenije. In Opinion CON/2012/48, the ECB recommended specifying eligibility criteria for non-

cash contributions as these will be used as the exemption to the general rule requiring banks’ shares 

to  be  paid  in  cash.  In  this  context,  the  ECB  welcomes  the  proposed  clarification,  but  notes  that 
issuance of shares against cash contributions is preferred for financial stability reasons13. 

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

Done at Frankfurt am Main, 7 December 2012. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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11 

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See Opinion CON/2012/44. 
See Recommendation ESRB/2011/3 of the European Systemic Risk Board of 22 December 2011 on the macro-prudential 
mandate of national authorities (OJ C 41, 14.2.2012, p. 1). 
See Opinion CON/2012/80. 
See paragraphs 4.1.1 and 4.1.2 of Opinion CON/2012/48. 

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