Opinion of the European Central Bank of 11 November 2014 on banking regulation (CON/2014/79)
Date: 2014-11-11
Institutions: European Central Bank
Subjects: EU banking union, Slovenia, banking supervision, credit institution, financial intervention, financial stability, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 11 November 2014 

on banking regulation 

(CON/2014/79) 

Introduction and legal basis 

On 1 October 2014, the European Central Bank (ECB) received a request from the Slovenian Ministry of 
Finance for an opinion on a draft law on banking1 (hereinafter the ‘draft law’). On 20 October 2014, the 
ECB received certain revised provisions of the draft law2. 

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/EC3,  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 draft law regulates, inter alia, the conditions for the establishment, operation and winding up of 

credit  institutions,  the  powers  and  procedures  for  supervising  the  activities  of  credit  institutions, 

and the powers and procedures for managing macro-prudential and systemic risks relating to credit 
institutions4. 

1.2  The  draft  law  is  a  recast  of  the  current  Law  on  banking5.  The  main  purpose  of  the  amendments 

made  by  the  draft  law  is  to  transpose  or  adapt  national  law  to  Union  legislation  prepared  in  the 

context of and as a response to the recent financial crisis. In particular, the draft law implements 
Directive 2013/36/EU of the European Parliament and of the Council6 (hereinafter ‘CRD IV’) and 

adapts  national  law  to  Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the 

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Predlog zakona o bančništvu (ZBan-2). 
The revised provisions are Articles 400 to 406 of the draft law. 
Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
See Article 1(1) of the draft law. 
Zakon o bančništvu (ZBan-1) (Official Journal of the Republic of Slovenia, no. 99/10 – official consolidated text, 52/11 - 
corr., 9/11 - ZPlaSS-B, 35/11, 59/11, 85/11, 48/12, 105/12, 56/13, 63/13 - ZS-K and 96/13). 
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit 
institutions  and  the  prudential  supervision  of  credit  institutions  and  investment  firms,  amending  Directive  2002/87/EC 
and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). 

 
 
 
 
                                                 
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Council7  (hereinafter  the  ‘CRR’).  Certain  elements  of  Directive  2014/59/EU8  (hereinafter  the 

‘BRRD’)  are  transposed  by  the  draft  law,  including  provisions  relating  to  early  intervention 

measures, recovery plans and intra-group financial support. In the light of the establishment of the 

single  supervisory  mechanism  (hereinafter  the  ‘SSM’),  the  draft  law  also  adapts  national  law  to 
Council Regulation (EU) No 1024/20139 (hereinafter the ‘SSM Regulation’) and Regulation (EU) 
No 468/2014 of the European Central Bank10 (hereinafter the ‘SSM Framework Regulation’). This 

adaptation includes, inter alia, the reflection of changes to the distribution of powers between the 

authorities involved in banking supervision. 

1.3  Similarly to current requirements under the Law on banking with respect to the members of banks’ 

boards of management, the draft law introduces a requirement to obtain the authorisation of Banka 
Slovenije in order to perform the functions of a member of the supervisory board of a bank11. The 

draft  law  also  transfers  from  the  Slovenian  banking  association  to  Banka  Slovenije  the 

responsibility  to  maintain  the  system  for  the  exchange  of  bank  information  on  client 
creditworthiness12. 

1.4  The draft law envisages the adoption of further legislation to regulate the winding up and resolution 

of banks, and to regulate the deposit guarantee scheme. According to the explanatory memorandum 

to  the  draft  law,  such  future  legislation  is  intended  to  fully  transpose  the  BRRD  and  Directive 
2014/49/EU13  (hereinafter  the  ‘new  DGS  Directive’)  into  national  law.  Until  the  adoption  of  this 

legislation,  the  winding  up  and  resolution  of  banks,  and  the  deposit  guarantee  scheme  will  be 

regulated by the current Law on banking, as amended and extended in the recast effectuated by the 

draft law. The new amendments in this respect are as follows. 

The deposit guarantee scheme 

1.5   The  draft  law  introduces  changes  to  the  current  deposit  guarantee  scheme14.  It  provides  for  the 

transition from a scheme financed ex post to a scheme financed ex ante by establishing a deposit 

guarantee  fund  within  Banka  Slovenije.  Pursuant  to  the  draft  law,  the  assets  of  the  deposit 

guarantee fund will have a target level of 0.8% of the total guaranteed deposits in all banks. The 

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Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements 
for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1). 
Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the 
recovery  and  resolution  of  credit  institutions  and  investment  firms  and  amending  Council  Directive  82/891/EEC,  and 
Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, 
and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 
12.6.2014, p. 190). 
Council  Regulation  (EU)  No  1024/2013  of  15  October  2013  conferring  specific  tasks  on  the  European  Central  Bank 
concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p.63). 
Regulation  (EU)  No  468/2014  (ECB/2014/17)  of  the  European  Central  Bank  of  16  April  2014  establishing  the 
framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national 
competent authorities and with national designated authorities (SSM Framework Regulation) (OJ L 141, 14.5.2014, p. 1). 
Article 55 of the draft law.  
Articles 407 to 409 of the draft law in conjunction with Article 390.a of the Law on banking, as well as Article 397(3) of 
the draft law. 
Directive  2014/49/EU  of  the  European  Parliament  and  of  the  Council  of  16  April  2014  on  deposit  guarantee  schemes 
(OJ L 173, 12.6.2014, p. 149). 
The current deposit guarantee scheme is governed by Chapter 8 of the Law on banking. 

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banks’  contributions  to  the  deposit  guarantee  fund  will  be  collected  over  time  and  will  include 

regular  and,  if  necessary,  extraordinary  contributions.  The  contributions  paid  into  the  fund  will 

reduce the amount of liquid assets that the banks are required to hold for the purposes of the deposit 

guarantee  scheme.  Although  it  will  have  no  legal  personality,  the  deposit  guarantee  fund  will  be 

separate from Banka Slovenije and the latter will not be liable for the obligations of the fund. If the 

contributions from the banks and their liquid investments are insufficient or not available in time to 

cover  the  obligations  of  the  deposit  guarantee  fund,  the  draft  law  envisages  that  alternative 

financing, including loans, or temporary financial assistance from the State, may be obtained by the 

fund to cover the financial shortfall.  

In  addition  to  providing  for  the  availability  of  the  deposit  guarantee  fund  to  repay  guaranteed 

deposits where a bank becomes bankrupt, the draft law also provides for the fund’s availability in 

the  context  of  bank  resolution.  According  to  the  draft  law,  where  resolution  measures  grant 

depositors  access  to  their  guaranteed  deposits  and  it  is  in  the  interest  of  financial  stability,  the 

deposit guarantee fund may be available in the resolution process up to the amount of the estimated 

loss that the fund would suffer in the event of bankruptcy proceedings. 

The  deposit  guarantee  fund  will  be  established  within  and  managed  by  Banka  Slovenije.  Banka 

Slovenije  will  bear  no  liability  for  the  obligations  of  the  fund  and  the  costs  of  Banka  Slovenije 
relating to the management of the fund are to be recovered from the fund itself15. 

The resolution fund 

1.6   The draft law also provides for the establishment of a resolution fund. The banks will be required to 

make a capital investment in the resolution fund, in the form of cash, within a maximum period of 

three  months  from  the  entry  into  force  of  the  draft  law.  This  capital  investment  is  to  amount  to 

2.3% of the total guaranteed deposits in all banks. The banks’ investment in the resolution fund will 

not  be  transferable  and  will  only  be  repaid  to  a  bank  if  the  bank  is  voluntarily  or  compulsorily 

liquidated, or if it commences bankruptcy proceedings. 

Pursuant to the draft law, Banka Slovenije may decide to activate the resolution fund where banks 

are in resolution if this is necessary for financial stability reasons. Activation of the resolution fund 

where a bank is in resolution may take the form of: (a) purchase of capital instruments of a bridge 

bank or of another bank in resolution; (b) a contribution to a transferee to cover a financial shortfall 

specifically arising from the transfer to it of the assets and liabilities of the bank in resolution; (c) a 

contribution to the compensation of shareholders and other creditors of the bank following bail-in, 

where the losses of the shareholders and other creditors of the bank are greater than they would be 

in the event of bankruptcy proceedings; and (d) loans, guarantees and the provision of other types 

of security interest to the bridge bank or another bank involved in the resolution process. 

In  a  similar  manner  to  the  deposit  guarantee  fund,  the  resolution  fund  will  be  established  within 

Banka Slovenije. The resolution fund will have no legal personality but, according to the draft law, 

it will be liable for the obligations it assumes in the sense that assets in the fund will be available to 

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Articles 400 to 402 and 405 (as revised), in conjunction with Article 397(3) of the draft law. 

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meet such obligations. Accordingly, the draft law states that Banka Slovenije will have no liability 

for  the  obligations  of  the  resolution  fund  and  that  the  costs  incurred  by  Banka  Slovenije  in 
managing the fund will be covered by the fund itself16. 

Other amendments 

1.7   Other measures introduced by the draft law include: (a) a new resolution tool – the bridge bank17; 

(b)  the  possibility  of  early  repayment  of  a  bank’s  liabilities  where  the  bank  is  in  the  process  of 
winding  down  gradually18;  and  (c)  certain  proposed  amendments  to  the  rules  on  the  ranking  of 
creditors’ claims in the event of a bank becoming bankrupt19. 

2. 

General observations 

2.1  The draft law aims to integrate the Slovenian national banking supervisory structure into the SSM 

and to ensure that no legal obstacles arise under national law in relation to the performance by the 

ECB, with the assistance of the national competent authority, of its banking supervisory tasks under 

the SSM Regulation. The ECB understands that the rules are not intended to narrow or amend the 

scope of the SSM Regulation and the SSM Framework Regulation, which are directly applicable. 

In  this  regard,  the  ECB  welcomes  Articles  9  and  235  of  the  draft  law,  which  make  general 

reference  to  the  division  of  powers  under  the  SSM  Regulation  between  Banka  Slovenije  and  the 

ECB. 

2.2  The  draft  law  transposes  certain  elements  of  the  BRRD,  including  provisions  relating  to  early 

intervention measures, recovery plans and intra-group financial support. The ECB understands that 

the Slovenian authorities will transpose the remaining elements of the BRRD, as well as the new 

DGS  Directive,  in  a  separate  law,  which  is  intended  to  ensure  full  transposition  of  the 

abovementioned  Union  law  into  national  law.  In  this  context,  the  Slovenian  authorities  may  also 

implement  adequate  structural  arrangements  to  ensure  the  separation  between  the  resolution 

function  and  Banka  Slovenije’s  other  functions  considering  that  Banka  Slovenije  is  the  national 
central bank and acts as both supervisory authority and resolution authority20.  

3. 

Supervisory fees and fines 

3.1  Pursuant to Article 239 of the draft law, the banks  are required to pay supervisory fees to  Banka 

Slovenije to fund its supervisory tasks. The annual amount of the fees to be paid to Banka Slovenije 

shall not exceed the actual cost of supervision for that year. Income received from the proceeds of 

fees charged in relation to the issuance of authorisations and the supervisory procedures of Banka 

Slovenije is to be deducted from the cost of supervision. Pursuant to Article 265(6) of the draft law, 

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Articles 403 and 404 (as revised) of the draft law. 
Article  406  of  the  draft  law.  Banka  Slovenije  has  other  resolution  tools  at  its  disposal;  see  Chapter  7.7  of  the  Law  on 
banking. 
Article 398 of the draft law. 
Article 399 of the draft law. 
See Article 3(3) of the BRRD. 

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income received by Banka Slovenije from the proceeds of fines imposed on banks for breaches of 

prudential  requirements  shall  become  the  revenue  of  Banka  Slovenije  and  shall  be  taken  into 

account in determining the cost of banking supervision for the purposes of Article 239 of the draft 

law. 

3.2  Whereas relevant Union law, including the CRD IV, CRR, SSM Regulation and SSM Framework 

Regulation,  does  not  specify  who  should  own  the  proceeds  of  sanctions  imposed  by  national 

competent  authorities,  Article  137  of  the  SSM  Framework  Regulation  provides  that  the  proceeds 

from administrative penalties imposed by the ECB under Article 18 of the SSM Regulation shall be 

the ECB’s property. Those sums will not be deducted from the supervisory fees payable by banks 

to the ECB pursuant to Article 30 of the SSM Regulation. 

4. 

Deposit guarantee fund – role of the State 

4.1  Pursuant  to  Article  401(2)  of  the  draft  law,  where  the  assets  of  the  deposit  guarantee  fund, 

including the regular contributions made by banks, the liquid assets that the banks are required to 

hold for the purposes of the deposit guarantee scheme, the banks’ extraordinary contributions, and 

any borrowings made by the deposit guarantee fund are insufficient to cover the obligations of the 

deposit  guarantee  fund,  Banka  Slovenije  is  to  make  a  proposal  to  the  State  that  the  State 

temporarily  covers  any  shortfall  in  the  deposit  guarantee  fund’s  assets  in  accordance  with  the 

second paragraph of Article 313 of the Law on banking. 

4.2 

It is important to ensure, in the light of the prohibition on monetary financing under Article 123 of 

the Treaty, that the draft law, together with Article 313 of the Law on banking, clearly places an 

obligation on the State to cover any potential financial shortfall in the deposit guarantee fund. 

5. 

Resolution fund – financial stability considerations 

5.1  The  ECB  welcomes  the  establishment  of  a  resolution  fund  in  Slovenia  that  is  financed  ex  ante. 

However, it is unclear how the proposed resolution fund will fit into the framework of the BRRD, 

which  must  be  transposed  into  national  legislation  by  31  December  2014.  The  ECB  understands 

that the Slovenian authorities will fully transpose the BRRD in a separate law and it is important to 

ensure consistency between any such transposition and the draft law. 

5.2  The  aggregate  capital  investment  that  banks  will  be  required  to  make  into  the  resolution  fund 

within three months seems relatively large. It is therefore recommended that the national authorities 

prudently assess how the size of this aggregate capital investment and the timeframe within which 

it  must  be  made  could  affect  the  banks  concerned.  In  particular,  given  the  cash  nature  of  the 

investment and the fact that a bank’s investment cannot be repaid to it unless it is liquidated, the 

authorities  might  wish  to  assess  the  effect  of  the  draft  law  on  the  banks’  liquidity  and  capital 

positions in order to avoid any unintended consequences for financial stability. 

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6.   Deposit guarantee fund and resolution fund – liability of Banka Slovenije 

Banka Slovenije will manage the deposit guarantee fund and the resolution fund in accordance with the 

draft law. Although the draft law states that Banka Slovenije will bear no liability for the obligations of 

these  funds,  Banka  Slovenije’s  possible  liability  with  regard  to  the  management  of  the  funds  does  not 

seem to be fully clear. Taking into account the structure of these funds, as described above, the authorities 

may consider whether the draft law would benefit from clarifying the legal consequences of a potential 

breach of fund management duties by Banka Slovenije. 

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

Done at Frankfurt am Main, 11 November 2014. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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