The Slovenia Times

Manipulation, Corruption in Central Bank?


"If it is true that Banka Slovenije doctored documents, I would expect someone to show the original and the forgery. We only have the original that you have seen," he told reporters.

The gist of the allegations is that negative equity at banks had been overrated in order to allow for the bail-in of junior bond holders so as get the European Commission's approval for a bailout of Slovenia's largest banks in late 2013.

If anyone thinks Banka Slovenije has the power to get the entire Eurosystem to carry out tests showing that Slovenian taxpayers must put more money into banks than necessary, "you have a very vivid imagination", he said.

Jazbec suggested the perceived differences may stem from valuations which had been conducted at liquidation prices applicable to undertakings subject to bankruptcy, not international accounting standards, which only apply to companies defined as a "going concern".

The scandal erupted after a central bank whistleblower claimed for the business daily Finance that the methodology for the assessment of the capital shortfall had been tampered with and that even documents had been backdated and doctored.

Jazbec provided a detailed account of the communication in the run-up to the bailout, defending the central bank's conduct throughout the entire procedure.

His statements referred to the specific allegation that the central bank had backdated certain measures to preclude an intervention by the Constitutional Court, but he said all evidence shows no such thing happened.

As for the alleged difference in capital assessment, Jazbec pointed out that external auditors had thoroughly checked bank balance sheets and came up with figures independently of the central bank.

After the bailout bank stress tests were conducted again in 2014 as part of an EU-wide exercise. "If someone gets the same mark is likely the test was carried out correctly," according to Jazbec.

Jazbec noted that the implication of media reports appear to be that the capital shortfall was intentionally made just big enough to allow for the erasure of junior bondholders.

But he rejected this notion as impossible, noting that it was not the central bank which weighed the capital, it was auditors and assets appraisers. "Ask them," he said.

He simply does not see why the central bank would fabricate anything nor what its motive for such conduct could be.

The governor also noted that the central bank's task is to preserve the stability of the bank system, a goal that has been achieved. Nobody lost a euro of savings and the banks are now in state ownership.

Overall, he pointed out several times that the matter - the bail-in of junior bondholders - was being processed by courts, including the Constitutional Court, which he hopes will reach a decision soon.

It is legitimate and understandable that every junior bondholder wants to get their money back, but "the only thing I can that the central bank has done nothing unlawful."

The central bank has also come under fire for refusing to disclose key documentation, a point raised by both the Information Commissioner and Transparency International Slovenia.

According to Jazbec, the banking act and the freedom of information act counteract each other in terms of disclosures, which is why the matter is now being analysed by courts.

He hopes that judges will soon decide the admissibility of publication of information on individual claims and borrowers.


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