The Slovenia Times

Legislative Changes Giving More Power to Central Bank

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The changes will introduce a special legal regimen to resolve problems faced most frequently by the Slovenian banking sector due to limited financing possibilities. The changes were drafted by Banka Slovenije.

Under the changes, Banka Slovenije will be able to act much sooner than now. It will be able to step in based on an estimated probability that a certain bank is failing to control risks or is failing to do so in an appropriate manner, said Šušteršič.

As part of bank oversight, Banka Slovenije will be able to introduce special measures, which include appointing an extraordinary management, preventing the banks to sell their assets, demand a reorganisation plan or order a compulsory sale of the bank's shares.

"Unless any owner but the state agrees to recapitalise a bank, Banka Slovenije will be able to order a compulsory recapitalisation carried by the owner," said Šušteršič.

Moreover, the changes introduce an exception from the takeover act. "When bank recapitalisation will be ordered by the regulator, [the owner] will not be required to issue a takeover bid," said the minister.

"If somebody would acquire a stake exceeding 33% in NKBK, Abanka or NLB banks, they would not have to issue a takeover bid. Instead, they would have two years to either issue the takeover bid or reduce their share," said Šušteršič.

He expressed hope that this would help with cases when there is only one owner willing to recapitalise a bank but does not want to issue a takeover bid for the entire bank.

The central bank will also be able to demand a transferral of assets and liabilities of the bank to a takeover company, which will then take over the healthy core of the bank.

Moreover, to reduce the possibility of a conflict of interest, the banks will have to request permission from the central bank if they want to a acquire a stake in a financial services company.

If the changes are passed, the central bank will also be able to dismiss bank supervisors who fail to meet the conditions required by law or fail to meet obligations.

"This is a very good proposal for us, as we will be able to provide an appropriate structure of supervisory boards," said the minister. The government did however not adopt a provision under which only licensed supervisors could be appointed to banks' supervisory boards.
 

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