Opinion of the European Central Bank of 28 May 2015 on amendments to the legal framework governing the Slovenian Bank Asset Management Company (CON/2015/16)
Date: 2015-05-28
Institutions: European Central Bank
Subjects: Slovenia, aid for restructuring, banking, capital increase, financial stability, issue of securities, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 28 May 2015  

on amendments to the legal framework governing the  

Slovenian Bank Asset Management Company 

(CON/2015/16) 

Introduction and legal basis 

On  24  April  2015  the  European  Central  Bank  (ECB)  received  a  request  from  the  Slovenian  Ministry  of 

Finance  for  an  opinion  on  a  draft  law  amending  the  Law  on  Slovenia’s  measures  to  strengthen  bank 

stability (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/EC1,  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  Law  on  Slovenia’s  measures  to  strengthen  bank  stability2  (hereinafter  the  ʻLaw  on  bank 

stabilityʼ) entered into force in December 2012. With the objective to strengthen the stability of the 

Slovenian  financial  system,  it  provided  for  the  establishment  of  the  State-owned  Bank  Asset 

Management Company (BAMC) and a number of stabilisation measures including: (i) the transfer 

of banks’ impaired assets to the BAMC; (ii) the issuance of State guarantees for the liabilities of the 

BAMC; and (iii) the recapitalisation of banks by the State. Detailed rules implementing the Law on 

bank  stability  were  laid  down  in  secondary  legislation,  specifically  the  Regulation  on  the 
implementation  of  measures  to  strengthen  bank  stability3  (hereinafter  the  ʻRegulationʼ).  Both 
legislative acts were the subject of consultations with the ECB4. 

1.2  The  stabilisation  measures  provided  for  in  the  Law  on  bank  stability  have  been  implemented  in 

certain  distressed  Slovenian  banks.  According  to  the  explanatory  memorandum  to  the  draft  law, 

although  the  impaired  assets  have  been  removed  from  the  balance  sheets  of  these  banks,  and 

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2  

3  
4  

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). 
Zakon  o ukrepih Republike Slovenije  za krepitev stabilnosti bank (ZUKSB) (Uradni list RS, Nos 105/2012,  63/13 – 
ZS-K and 23/14 – ZDIJZ-C). 
Uredba o izvajanju ukrepov za krepitev stabilnosti bank (Uradni list RS, No 103/13). 
See ECB Opinions CON/2012/71, CON/2013/21, CON/2013/67 and CON/2013/86. All ECB Opinions are published 
on the ECB’s website at www.ecb.europa.eu. 

 
 
 
 
                                                 
ECB-PUBLIC 

they  have  been  recapitalised,  this  is  not  enough  to  ensure  that  they  operate  successfully  as,  to 

provide credit, banks also need restructured companies with sound business plans. It is therefore 

important  to  actively  and  comprehensively  pursue  the  restructuring  of  companies  and  the  BAMC 

plays an important role in this process.  

1.3 

In order to further improve the efficient functioning of the BAMC in that role, the draft law introduces 

a number of adjustments and amendments to the Law on bank stability, in particular to better clarify 

the  legal  framework  of  the  BAMC  and  of  its  activities.  The  draft  law  specifies  more  clearly  the 

objectives of the Law on bank stability, in particular the role of the BAMC in corporate restructuring. 

The  draft  law  sets  out  the  criteria  under  which  the  BAMC  may  engage  in  the  restructuring  of 

companies  of  which  it  is  a  shareholder  or  creditor,  and  allows  the  BAMC  to  carry  out  any  legal 

transaction necessary for the successful restructuring of such companies, including providing loans 

to  its  debtors  or  guaranteeing  its  debtors’  liabilities.  The  draft  law  sets  out  the  conditions  under 

which  the  BAMC  may  establish,  and  purchase  new  shares  in,  companies,  including  special 

purpose vehicles, also with a view to achieving a more economical or specialised management and 

disposal  of  the  BAMC’s  assets.  In  addition,  the  draft  law  provides  that  the  BAMC  may  require  a 

bank,  which  was  previously  subject  to  stabilisation  measures  under  the  Law  on  bank  stability,  to 

transfer  to  the  BAMC  claims  against  or  shares  in  a  company  in  which  the  BAMC  already  holds 

shares or against which the BAMC already has claims, in exchange for cash compensation equal 

to the market value of the assets being acquired. The draft law also extends the BAMC’s mandate 

from 2017 until 2022, with the aim of maximising returns on public funds. 

1.4  Some  of  the  proposed  amendments  under  the  draft  law  incorporate  legislative  provisions  which 

were  originally  contained  in  the  Regulation,  which  is  secondary  legislation,  into  the  Law  on  bank 

stability,  the  national  primary  legislation.  These  proposed  amendments  refer,  in  particular,  to  the 

BAMC’s  borrowing,  its  debt  management,  limitations  on  the  payment  of  its  dividends  and  the 

provision of information on the BAMC’s activities to the ECB. 

1.5  The  draft  law  also  includes  an  explicit  requirement  that  the  BAMC  operates  in  a  transparent, 

economical, efficient and effective manner, and contains further provisions to this end. In addition, 

it aims to ensure the independence of the BAMC in managing its assets, inter alia, by clarifying that 

the supervisory competences of the Ministry of Finance encompass the lawfulness of the BAMC’s 

operations.  For  this  purpose  the  Ministry  of  Finance  may  issue  guidelines  to  the  BAMC  to  be 

followed,  which  must,  however,  be  general  and  may  not  constitute  instructions  for  action  in 

individual cases. The draft law also explicitly clarifies that the responsibility for the management of 

the BAMC rests with its executive directors. 

1.6  Additionally,  the  draft  law  removes  the  liability  of  the  State  for  all  liabilities  of  the  BAMC.  This 

amendment is not in any way related to, and does not affect, the guarantees that the State issues 

for  the  BAMC’s  bonds  in  the  context  of  a  stabilisation  measure  provided  for  by  the  Law  on  bank 

stability. 

1.7  The draft law  also contains amendments to other provisions  of the  Law on bank stability. Among 

others, it removes the requirement for the BAMC to set up a ‘fund’ without legal personality, which 

proved  to  be  an  obsolete  requirement  and  leaves  creating  such  a  fund  optionally.  The  draft  law 

also  provides  for  certain  exemptions  for  the  BAMC  in  the  application  of  various  national  laws. 

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Finally,  the draft law clarifies the consultative role  of Banka Slovenije  in  the adoption of the rules 

implementing  the  Law  on  bank  stability.  Accordingly,  when  Banka  Slovenije  is  to  be  consulted  in 

the preparation of acts implementing the Law on bank stability, the Ministry of Finance shall explain 

any deviation from Banka Slovenije’s opinion. 

2. 

General observations 

The ECB recognises the effort to enhance the role of the BAMC  in facilitating the restructuring of 

companies. This should ultimately help improve access to credit for the corporate sector, facilitate 

lending  to  it  by  the  banking  sector,  as  well  as  support  the  recovery  and  functioning  of  the  real 

economy.  The  ECB  also  notes  and  supports  the  effort  to  ensure  that  the  BAMC  operates  in  a 

transparent,  economical,  efficient  and  effective  manner,  with  a  view  to  maximising  the  recovery 

value of assets acquired and, thus, minimising the costs borne by the public. As noted in previous 
Opinions 5,  conforming  with  a  comprehensive  and  transparent  asset  management  and  divestiture 

strategy,  observing  internationally  recognised  best  practice  as  regards  corporate  governance, 

including maintaining independent management of the BAMC, is important for achieving the targets 

the BAMC has been set. 

3. 

Specific observations 

3.1.  Provision of information to the ECB and Banka Slovenije, BAMC’s cash protocol and the eligibility 

of bonds in Eurosystem operations  

3.1.1  In  its  previous  Opinions  the  ECB  recommended,  in  the  context  of  a  financial  plan,  that  the 

necessary  legal  arrangements  are  provided  to  ensure,  in  a  transparent  manner,  the  timely 

redemption  of  State-guaranteed  BAMC  bonds  and  other  financial  instruments  or  credit  claims  of 
transferring  banks  (hereinafter  the  ‘cash  protocol’) 6.  This  recommendation  has  been  followed  by 
the Slovenian authorities in the Regulation and the ECB notes that several of its observations 7 are 

reflected  in  the  final  text  thereof.  The  ECB  further  notes  that  such  final  text  also  included  a  new 

provision according to which the BAMC may share with the ECB the information on its operations. 

3.1.2  The draft law incorporates certain provisions from the Regulation that constitute the framework for 

the  BAMC’s  cash  protocol  and  permit  the  BAMC  to  provide  information  on  its  operations,  within 
their  respective  areas  of  competence,  to  the  ECB  and  Banka  Slovenije8.  The  ECB  understands 

that  these  proposed  amendments  are  aimed  at  increasing  legal  certainty  and  that  the  provisions 

regarding  the  detailed  elements  of  the  cash  protocol  in  the  Regulation  remain  unchanged  in 

substance.  

3.1.3  The  draft  law  infers  that  the  cash  protocol  arrangements  for  the  BAMC  and  the  provision  of 

information  on  its  operations  to  the  ECB  and  Banka  Slovenije  are  aimed  at  ensuring  that  the 

5  
6  
7  
8  

See second subparagraph 7 of the Opinion CON/2013/21. 
See paragraph 6 of the ECB Opinion CON/2013/21 and paragraph 7 of the ECB Opinion CON/2013/67. 
See paragraphs 4.1, 4.3 and 4.4 of the ECB Opinion CON/2013/86. 

See Article 4(7), Article 10a(9) to (15) and Article 12(3) of the Law on bank stability, as amended by the draft law. 

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ECB-PUBLIC 

BAMC’s State-guaranteed bonds qualify as eligible collateral for ECB monetary policy operations 9. 

The ECB reiterates that it remains the prerogative of the Eurosystem to decide, on the basis of any 

information  it  may  consider  relevant  within  the  legal  framework  laid  down  in  and  according  to 

Article 18.1 of the Statute of the European System of Central Banks and of the European Central 

Bank, whether the relevant financial instruments and credit claims fulfil the criteria of its collateral 
framework10. 

3.2  Transfer  of  assets  from  banks  at  market  value,  granting  loans  and  providing  guarantees  by  the 

BAMC 

3.2.1  The ECB understands that the purpose of the option under the draft law for the BAMC to require 
the transfer of certain assets from banks11 is to enhance its ability to concentrate claims and equity 
participations  in  particular  companies 12  within  the  BAMC  in  order  to  strengthen  the  BAMC’s 

position relative to other creditors and/or shareholders in those companies, and with a view solely 

to facilitating the restructuring processes of those companies. In this regard the ECB notes that the 

BAMC  should  not  require  such  transfers  where  it  could  lead  to  non-compliance  by  the  original 

asset  holder  with  prudential  requirements  as  laid  down  in  Regulation  (EU)  575/2013  of  the 
European  Parliament  and  of  the  Council13  and  Directive  2013/36/EU  of  the  European  Parliament 
and  the  Council 14.  In  this  regard  the  ECB  recommends  implementing  a  provision  requiring  the 

consultation of the competent supervisory authority prior to a request for the transfer of assets. The 

ECB further notes that any transfer of assets to the BAMC must comply with EU State aid rules and 

the applicable valuation standards in determining the market value of the asset. In this context, the 

determination of the market value in accordance with the International Valuation Standards by an 

independent appraiser is important. 

3.2.2  According to the draft law, the BAMC may grant loans and provide guarantees to debtors in whose 
restructuring  it  has  participated15.  In  this  context,  the  ECB  notes  that  the  BAMC  is  not  subject  to 

prudential regulation or supervision, nor does it aim to perform any activities which would require a 
licence for the  provision of banking services  within Slovenia or  abroad16. However, as the BAMC 

may,  by  requesting  assets,  granting  loans  and  providing  guarantees,  be  exposed  to  significant 

credit  risks,  the  ECB  recommends  that  the  draft  law  provides  safeguards  preventing  the  BAMC 

from  incurring  losses  due  to  an  inappropriate  management  of  that  credit  risk.  In  this  regard,  the 

ECB expects the BAMC to grant loans and provide guarantees to its debtors only on the basis of 

9  
10  
11  
12  

13  

14  

15  

16  

See the explanatory memorandum and Article 10a(15) of the Law on bank stability as amended by the draft law. 
See paragraph 5.5 of ECB Opinion CON/2012/71 and paragraph 5 of ECB Opinion CON/2013/21. 
See Article 11(2) of the Law on bank stability as amended by the draft law. 

I.e. in those companies, in which the BAMC already holds shares or against which the BAMC already has claims as 
a  result  of  having  received  those  claims  and  shares  when  their  transfer  to  the  BAMC  was  implemented  as  a 
stabilisation measure under the Law on bank stability,  
Regulation  (EU)  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  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). 
See  Article  10a(5)  of  the  Law  on  bank  stability  as  amended  by  the  draft  law  and  the  explanatory  memorandum 
thereto. 

See Article 11(9) of the Law on bank stability as renumbered by the draft law. 

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sound  economic  criteria  and  a  rigorous  assessment  of  the  borrowers’  creditworthiness,  avoiding 

any distortion to markets. 

ECB-PUBLIC 

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

Done at Frankfurt am Main, 28 May 2015. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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