Opinion of the European Central Bank of 9 October 2017 on judicial relief granted to holders of qualified bank credit (CON/2017/41)
Date: 2017-10-09
Institutions: European Central Bank
Subjects: Slovenia, central bank, damages, judicial proceedings, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 9 October 2017  

on judicial relief granted to holders of qualified bank credit 

(CON/2017/41) 

Introduction and legal basis 

On 11 September 2017 the Slovenian Ministry of Finance reconsulted the ECB on a draft Act on judicial 

relief granted to holders of qualified bank credit (hereinafter the ‘draft law’). The ECB already delivered an 
opinion on an earlier version of the  draft law1.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  (hereinafter ‘TFEU’) 
and the third  indent of Article 2(1) of Council Decision 98/415/EC2 as the draft law relates to a national 

central bank (NCB). 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  objective  of  the  draft  law  is  to  remedy  the  unconstitutionality,  as  declared  by  the 

Slovenian Constitutional Court, of certain provisions of the Slovenian Banking Act (hereinafter the 
‘ZBan-1’)3 governing Banka Slovenije’s liability for damages with respect to extraordinary measures 

imposed by Banka Slovenije. These provisions authorised Banka Slovenije to adopt extraordinary 

measures to write-down or convert qualified liabilities during the reorganisation of banks that failed, 

or  were  likely  to  fail,  to  meet  the  minimum  requirements  for  capital  and  liquidity  to  an  extent  that 

would justify the withdrawal of their banking authorisation.  

1.2 

In its second consultation request the Slovenian Ministry of Finance has informed the ECB that due 

to a significant divergence of views among the key stakeholders, the draft law has been subject to 

further  consultation  and  changes,  and  the  Ministry  has  therefore  requested  an  additional  ECB 

opinion.  The  Ministry  has  also  stated  that  Opinion  CON/2017/16  has  already  been  taken  into 

account to the greatest extent possible in the new version of the draft law. 

1.3  The  main  purpose  of  the  draft  law  remains  unchanged,  namely  to  remedy  the  unconstitutionality 

declared  by  the  Slovenian  Constitutional  Court.  The  key  changes  to  the  new  version  of  the  draft 

law, as compared with the version of the draft law on which the ECB was previously consulted, are 

summarised below.  

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2  

3 

See Opinion CON/2017/16. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
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). 
Banking Act (Zakon o bančništvu), Official Gazette of the Republic of Slovenia no 131/06. 

 
 
 
 
 
 
 
                                                 
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1.4  Compared with the previous version4, the draft law now provides that the action for the recovery of 

damages may only be filed only against Banka Slovenije, since the Republic of Slovenia only acts 

as  a  third-party  intervener  in  the  procedure.  Thus,  the  compensation  will  always  be  paid  to  the 

eligible plaintiffs by Banka Slovenije. Even though the draft law states that Banka Slovenije is liable 

for damages, it also provides that the Republic of Slovenia will, based on a special agreement to be 

concluded between Banka Slovenije and the Republic of Slovenia, temporarily advance to Banka 

Slovenije the funds for the full amount needed to pay the compensation to plaintiffs declared to be 

eligible for compensation based on a final court decision. These amounts (together with the interest 

on  late  payment  accrued)  must  be  reimbursed  by  Banka  Slovenije  to  the  Republic  of  Slovenia 

within  six  months  of  the  compensation  being  paid  unless  Banka  Slovenije  files  an  action  against 

the  Republic  of  Slovenia  within  the  same  six-month  period  and  proves  in  a  separate  court 

procedure  that  Banka  Slovenije  is  not  liable  for  the  damages  resulting  from  the  imposition  of  the 

extraordinary measures. In this respect, Banka Slovenije must prove that Banka Slovenije and any 

persons  acting  on  its  behalf  had  acted  with  the  due  diligence  of  an  expert  when  adopting  the 

extraordinary  measures  and  had  reasonable  grounds  to  believe  that  the  conditions  for  activating 

the  extraordinary  measures  laid  down  in  the  relevant  provisions  of  ZBan-1  were  fulfilled.  In  such 

situations Banka Slovenije does not need to provide any of its own financial resources to pay the 

compensation,  provided  that  it  proves  that  its  actions,  which  resulted  in  the  write-down  of 

subordinated liabilities, were not unlawful. The burden of proof was already on Banka Slovenije in 

the  previous  version  of  the  draft  law,  which  stated  that  Banka  Slovenije  had  to  prove  its  due 

diligence  in  relation  to  specific  actions.  However,  it  is  now  envisaged  that  the  question  of  the 

lawfulness  of  Banka  Slovenije’s  actions  willnot  be  determined  in  proceedings  initiated  under  the 

draft  law  by  the  affected  parties  but  in  a  separate  procedure  between  Banka  Slovenije  and  the 

Republic of Slovenia. 

1.5  The draft law retains the provisions in the previous version pursuant to which Banka Slovenije must 

publish  on  its  website:  (1)  the  decision  on  the  imposition  of  an  extraordinary  measure,  (2)  the 

estimation  of  the  value  of  the  assets  prepared  in  accordance  with  the  relevant  provisions  of  the 

ZBan-1 and (3) documents reflecting the contractual relationship between Banka Slovenije and the 

person who submitted the valuation of the assets. All personal and confidential information must be 

redacted before such publication. Following the publication of this information, the applicants may 

also  file  a  motion  to  the  court  to  oblige  Banka  Slovenije  (and  certain  other  entities)  to  submit 

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In  the  previous  version  of  the  draft  law  it  was  envisaged  that  any  compensation  for  damages  resulting  from  the 
extraordinary measures would be paid either by Banka Slovenije or the Republic of Slovenia. If no liability could be 
attributed  to  Banka  Slovenije,  then  compensation  would  be  paid  by  the  Republic  of  Slovenia.  In  particular,  Banka 
Slovenije  would  be  partly  or  wholly  free  from  liability  if  it  could  prove  that  it  had  acted  with  due  diligence  when 
adopting the extraordinary measures and had, in the light of the facts and circumstances available at the time the 
extraordinary measures were adopted, reasonable grounds to believe that the conditions for the use of extraordinary 
measures were fulfilled. If Banka Slovenije was only partly free from liability, then Banka Slovenije would have been 
nonetheless  obliged  to  pay  damages  to  former  holders  of  qualified  liabilities,  whereas  financial  resources  for  the 
compensation  exceeding  the  liability  of  Banka  Slovenije  would  have  been  provided  by  the  Republic  of  Slovenia 
within three months of the publication of the court decision in the Official Journal. The ECB stated in its opinion that a 
requirement  that  Banka  Slovenije  must  pay  compensation  for  damages,  to  the  extent  that  it  results  in  Banka 
Slovenije assuming the liability of the State, would not be in line with the monetary financing prohibition laid down in 
Article 123 of the Treaty. See paragraph 2.1 of Opinion CON/2017/16. 

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evidence to the court without redacting personal or confidential information. The procedure for the 

submission  and  disclosure  of  evidence  to  the  court  has  been  redefined.  Compared  with  the 

previous version of the draft law, Banka Slovenije is no longer obliged to publish on its website and 

disclose  to  the  applicants  the  reports  on  the  asset  quality  review  (hereinafter  the  ‘AQR  reports’). 

However, the draft law still provides that a redacted valuation of the assets of the affected banks is 

to  be  published,  and  plaintiffs  fulfilling  certain  preconditions  may  request  the  court  to  order  full 

disclosure of these documents.  

1.6  When  determining  whether  a  claimant  has  a  right  to  compensation,  the  court  must  establish 

whether extraordinary measures relating to qualified liabilities were adopted by Banka Slovenije in 

accordance with the conditions laid down in the ZBan-1. The court must, inter alia, verify whether 

the assessment of the conditions necessary for imposing extraordinary measures, as laid down in 

Article 253.a of the ZBan-1 and whether the valuation of the respective bank’s assets as laid down 

in Article 261.b of the ZBan-1, were correctly carried out or not. In this respect, the previous version 

of the draft law referred to the standards of banking supervision adopted by the ECB, the European 

Commission  and  the  European  Banking  Authority  (EBA)  that  are  to  be  taken  into  account  by  the 

court when determining whether the conditions for imposing extraordinary measures were fulfilled. 

The draft law omits the reference to the standards of banking supervision adopted by the ECB, the 

European Commission and the EBA in cases where the court determines that the valuation of the 

assets of the bank referred to in Article 261.b of the ZBan-1  was incorrect. However, pursuant to 

the draft law the court will need to verify whether the methods and the basic premises underlying 

the methods used in assessing the conditions necessary for imposing extraordinary measures, as 

laid  down  in  Article  253.a  of  the  ZBan-1,  contravened  the  ZBan-1  and  the  standards  of  banking 

supervision adopted by the ECB, the European Commission and the EBA. 

1.7  For  complex  questions  requiring  specialist  knowledge  the  court  may,  either  in  addition  to,  or 

instead of, an expert appointed in accordance with the rules of civil proceedings, appoint a special 

committee  of  experts  composed  of  five  members  selected  through  a  public  tender  procedure, 

which  will  deliver  an  opinion  to  the  court.  The  selection  procedure  and  the  criteria  for  selecting 

members of the special committee of experts arefurther elaborated in the draft law. Compared with 

the previous version, it no longer provides that the European Commission, the ECB and the EBA 

will be informed of the public tender procedure by the court. 

1.8  An exemption from the mandatory application of the draft law, whichwas not present in the previous 

version,  is  introduced  in  situations  where  a  criminal  offence  has  been  declared  to  have  been 

committed in relation to Banka Slovenije’s decision on an extraordinary measure by a final criminal 

court  judgement.  In  such  cases,  the  general  rules  for  the  recovery  of  damages  and  the  general 

procedure will apply instead of the special provisions of the draft law. 

1.9  The  draft  law  still  provides  the  same  standardised  formula  for  calculating  compensation,  but  the 

procedure for payment has been amended. Following the finality of the court decision establishing 

that the plaintiffs are eligible for compensation, the affected stakeholders file a separate application 

to  Banka  Slovenije  requesting  the  calculation  and  payment  of  the  compensation  from  Banka 

Slovenije.  Compared  with  the  previous  version,  the  request  for  payment  is  decided  via  an 

administrative  procedure  involving  two  entities,  whereby  the  plaintiff  may  challenge  Banka 

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Slovenije’s decision if the plaintiff does not agree with the calculation. The Ministry of Finance willl 

decide on any appeal against Banka Slovenije’s decision on the calculation of compensation, which 

may be further challenged via the judicial review process for administrative acts. 

2. 

Observations 

2.1  As noted in the ECB’s opinion on the previous version of the draft law, the draft law must comply 

with Article 123 of the Treaty, which prohibits overdraft facilities and any other type of credit facility 

with  the  national  central  banks  of  Member  States  in  favour  of  the  public  sector,  including  central 
governments or other public authorities. Article 1(1)(b)(ii) of Council Regulation (EC) No 3603/935 

defines ‘other type of credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-

à-vis third parties’. Consequently, a requirement that Banka Slovenije must pay the compensation 

for  damages,  to  the  extent  that  it  results  in  Banka  Slovenije  assuming  the  liability  of  the  State, 
would not be in line with the monetary financing prohibition laid down in Article 123 of the Treaty6. It 

is  understood  that  Banka  Slovenije  would  only  be  liable  for  the  damages  which  the  court 

establishes  as  being  caused  by  and  directly  attributable  to  Banka  Slovenije  not  acting  with  the 
required  due  diligence7.  It  is  assumed  that  when  making  this  assessment  on  Banka  Slovenije’s 

liability  in  accordance  with  Article  27.1  of  the  draft  law  all  relevant  elements  for  determining  the 

scope of its liability will be taken into account.  

2.2  The  arrangement  envisaged  by  the  draft  law,  whereby  Banka  Slovenije  would  need  to  initiate  a 

court procedure in order to establish the liability of the Republic of Slovenia, in order to prove that 

Banka Slovenije had acted with the required due diligence, needs to include sufficient and effective 

safeguards  concerning  the  standard  against  which  Banka  Slovenije’s  due  diligence  is  to  be 

ascertained.  The  effective  reversal  of  the  burden  of  proof,  to  assume  wrongdoing  on  the  part  of 

Banka  Slovenije  unless  proven  otherwise,  combined  with  the  absence  of  such  safeguards,  could 

render the envisaged arrangement inconsistent with the monetary financing prohibition in so far as 

it might result in Banka Slovenije assuming the liability of the Republic of Slovenia for damages that 

were not directly attributable to Banka Slovenije. 

2.3  Regarding the question of whether Banka Slovenije and any persons acting on its behalf acted with 

the  due  diligence  of  an  expert  when  adopting  the  extraordinary  measures,  the  ECB  recalls  that, 

earlier this year, the ECB was consulted, and issued an opinion, on a draft law amending the Bank 

of  Slovenia  Act  and  establishing  rules  for  the  auditing  of  Banka  Slovenije’s  operations  by  the 
national  Court  of  Audit  (hereinafter  the  ‘draft  audit  law’)8.  The  draft  audit  law  established  a  legal 

basis  for  auditing  any  actions  taken  by  Banka  Slovenije  over  the  past  ten  years.  As  noted  in 

Opinion  2017/24,  the  draft  audit  law  can  be  regarded  as  having  a  retroactive  character.  As 

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6  
7  

8  

Council  Regulation  (EC)  No  3603/93  of  13  December  1993  specifying  definitions  for  the  application  of  the 
prohibitions referred to in Articles 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 

See paragraph 2.1 of Opinion CON/2017/16. 
This is without prejudice to the involvement of the CJEU in relation to the interpretation of Union law (including Article 
123  of  TFEU)  with  regard  to  the  issues  raised  by  the  court  proceedings  to  be  initiated  by  Banka  Slovenije  on  the 
basis of the draft law.     
See Opinion CON/2017/16.  

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previously noted by the ECB9, introducing measures with a retroactive effect could undermine legal 

certainty  and  may  not  be  in  line  with  the  principle  of  legitimate  expectations.  The  prohibition 

regarding the retroactive effect of legal acts, which is derived from the principle of legal certainty, is 

also protected by principles of Union law. However, the principle of legal certainty is not absolute 

and  could  incorporate  limited  and  well  defined  exemptions  where  the  purpose  to  be  achieved 

requires them, as long as the legitimate expectations of those concerned are duly respected. In this 

respect,  the  ECB  continues  to  question  whether  a  provision  that  allows  the  auditing  of  Banka 

Slovenije’s  actions  over  the  past  ten  years  –  or  potentially  even  longer  -  is  compatible  with  the 

principle of legal certainty. 

2.4  The proposed reimbursement structure also raises concerns from the perspective of the principle of 

financial  and  personal  independence  as  enshrined  in  the  Treaties  and  Article  2  of  the  Law  on 

Banka  Slovenije,  as  Banka  Slovenije  is  de  facto  obliged  to  file  a  claim  against  the  Republic  of 

Slovenia  in  order  to  prove  that  the  necessary  due  diligence  was  exercised  when  issuing  the 

extraordinary measures.  

2.5  Even though this is not explicitly stated in the draft law, the ECB understands the provisions in the 

first paragraph of Article 27 to mean that no interest is payable by Banka Slovenije to the Republic 

of  Slovenia  unless  Banka  Slovenije  fails  to  reimburse  the  Republic  of  Slovenia  for  the  amount 

advanced to it within the six month deadline, in which case Banka Slovenije must,in addition to the 

amount advanced, also be liable to pay the Republic of Slovenia late payment interest starting from 

the expiration of the six month deadline. 

2.6  As  previously  noted  in  Opinion  CON/2017/16,  national  legislation  should  fully  respect  the 
provisions  of  Directive  2013/36/EU  of  the  European  Parliament  and  of  the  Council10  as  regards 

professional secrecy. In this context the ECB notes that, notwithstanding the requirement under the 

draft  law  to  redact  personal  and  confidential  information  prior  to  any  disclosure  of  information  on 

Banka  Slovenije’s  website,  the  asset  valuations  relating  to  individual  supervised  banks  are  to  be 

regarded  as  confidential  information.  In  addition,  these  documents  may  contain  confidential 

information pertaining to each bank’s customers or other counterparties, which have been obtained 

by  Banka  Slovenije  from  the  banks  and  external  service  providers  through  the  exercise  of  its 

supervisory  powers.  Public  disclosure  of  asset  valuations  would  thus  inevitably  contravene  the 

principle  set out in Article 53  of Directive 2013/36/EU, according  to  which  all persons  working  for 

competent  supervisory  authorities  must  be  bound  by  the  obligation  of  professional  secrecy. 

Confidential information which such persons receive in the course of their duties may be disclosed 

only in summary or aggregate form, thus individual credit institutions may not be identified, without 
prejudice to cases covered by criminal law11.  

9  

10  

11  

See paragraph 3.2.2 of Opinion CON/2015/32, paragraph 3.1.2 of Opinion CON/2016/39, paragraph 3.2 of Opinion 
CON/2016/50 and paragraph 2.4 of Opinion CON/2017/24. 
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 paragraph 2.3 of Opinion CON/2017/16. 

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2.7 

In order to establish a framework which safeguards both confidential information and the legitimate 

interest of investors affected by Banka Slovenije’s extraordinary measures, the ECB recommends 

that an alternative approach should be considered, which would comply with the principles set out 

in  Articles  53  and  54  of  Directive  2013/36/EU.  In  order  to  ensure  the  adequate  protection  of 

confidential supervisory information and to safeguard the principles set out in Article 53 of Directive 

2013/36/EU,  the  disclosure  of  the  asset  valuations  should  be  limited  only  to  the  shareholders  or 

creditors who were directly affected by the extraordinary measures taken by Banka Slovenije and 

therefore have a legitimate legal interest as defined by the Constitutional Court of the Republic of 
Slovenia12.  

2.8  Regarding  the  draft  law’s  requirement  to  verify  whether  the  methods  and  the  basic  premises 

underlying  the  methods  used  in  the  assessment  of  the  conditions  necessary  for  imposing 

extraordinary  measures,  as  laid  down  in  Article  253.a  of  the  ZBan-1,  were  consistent  with  the 

standards  of  banking  supervision  adopted  by  the  ECB,  the  European  Commission  and  the  EBA, 

the ECB reiterates its previous recommendation that in order to provide legal certainty the draft law 

should  specify  in  more  detail  the  relevant  legal  sources  (e.g.  legal  acts  and  best  supervisory 
practices) relevant in this context13. 

2.9  Finally, the ECB notes that, pursuant to Article 33 of Council Regulation (EU) No 1024/201314, from 

3 November 2013 onwards, in view of the imminent assumption of its prudential supervisory tasks 

under Regulation (EU) No 1024/2103, the ECB  was authorised to require the national competent 

authorities, including Banka Slovenije, together with credit institutions, financial holding companies, 

mixed  financial  holding  companies  and  mixed-activity  holding  companies  of  euro  area  Member 

States, as well as persons belonging to these entities and third parties to whom these entities had 

outsourced  functions  or  activities,  to  provide  all  relevant  information  for  the  ECB  to  carry  out  a 

comprehensive  assessment,  including  a  balance-sheet  assessment,  of  credit  institutions  in  euro 

area  Member  States.  The  comprehensive  assessment  conducted  by  the  ECB  in  this  context 

comprised  two  components,  including  an  asset  quality  review  (AQR),  which  was  a  point-in-time 

assessment of the accuracy of the carrying value of banks’ assets as at 31 December 2013. The 

AQR  was  undertaken  by  the  ECB  and  the  national  competent  authorities,  including  Banka 

Slovenije,  and  was  based  on  a  uniform  methodology  and  harmonised  definitions.  The 

comprehensive  assessment  was  based  on  Regulation  (EU)  No  575/2013  of  the  European 
Parliament and of the Council15 and Directive 2013/36/EU16. The ECB notes that the judicial review 

of  the  comprehensive  assessment,  including  the  underlying  uniform  methodology,  conducted  by 

the  ECB  in  this  respect  falls  outside  the  competence  of  the  national  courts,  and  falls  exclusively 

12  
13  
14  

15  

16  

See paragraph 2.4 of Opinion CON/2017/16. 
See paragraph 2.5 of Opinion CON/2017/16. 
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  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). 

See  pages  2-4  of  the  European  Central  Bank,  Aggregate  Report  on  the  Comprehensive  Assessment:  Summary 
(October 2014), available on the ECB’s website at www.ecb.europa.eu. 

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within the competence of the Court of Justice of the European Union. It would be useful, to avoid 

any possible doubt on this issue, to introduce a provision into the draft law to clarify this particular 

point, so that any possible discrepancies between the draft law and Union law in this respect can 

be avoided. 

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

Done at Frankfurt am Main, 9 October 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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