The Slovenia Times

Parliament Grilling Central Bankers as Pressure Escalates


Amidst increasing pressure on the regulator and allegations of impropriety, Governor Boštjan Jazbec lashed back at the critics, reiterating that there has been no wrongdoing.

Responding to claims, including by an alleged central bank whistleblower, that Banka Slovenia had manipulated figures so as to ensure that junior bondholders would have to be bailed-in, Jazbec said this was not true.

The motive for such claims may be the desire to prevent or stop bank privatisation. "This is a big risk," he said, noting that it was not until banks were bailed out that Slovenia's borrowing costs returned to sustainable levels.

Turning to the second set of accusations, Jazbec said it was difficult to understand those who claim Slovenia pumped too much money into banks. "We paid in the money so we still have Slovenian banks. The money is still there."

Critics of the bailout also claim the measures have done nothing to kick-start lending, with banks now simply sitting on the bailout money without extending credit to business.

But Jazbec considers the criticism disingenuous, as this is not the central bank's job.

The debate, which is expected to last well into the night, features several other members of the central bank governing board as well as Uroš Čufer, the former finance minister, and Tadej Kotnik, the Finance columnist who broke the whistleblower story.

The session is the apex of the week-long escalation of pressure on the bank regulator, propelled by the anger of junior bondholders and shareholders that lost all of their money in the bank bailout.

While all parties initially joined the chorus of criticism against the central bank, the ruling SMC party today said it trusted the governor.

His statements "confirm that the processes were conducted transparently, responsibly and are varifiable," deputy group leader Simona Kustec Lipicer told reporters prior to the committee session.

Nevertheless, she said it was paramount that all competent authorities get comprehensive information about all procedures Banka Slovenije carried out "so that all processes can proceed and that any wrongdoing is immediately disclosed and sanctioned."

But the ruling party appears to be the only one trusting the central bank at this point. Its coalition partners are much more critical and both the Social Democrats (SD) and Pensioners' Party (DeSUS) plan to sign an opposition initiative to hold an extraordinary session of parliament dedicated to the matter.

The motion is spearheaded by New Slovenia (NSi), whose deputy group leader Matej Tonin said it was designed to force the central bank to finally disclose the legal basis it applied in bailing-in holders of subordinated bonds.

The opposition Democrats (SDS), meanwhile, plan a broader approach. Not only will the party demand an inquiry commission, it will also seek legislative changes regarding the central bank's status.

"The problem did not emerge during this government, Banka Slovenije has been a holy cow from the start and has avoided oversight under all governors," SDS leader Janez Janša said.

While there has been rumour that some parties would push for a recall of the governor, that could prove difficult.

Under the law, a governor can only be dismissed on his request, if he is found to no longer meet the job criteria, or in the case of "grave violations".

However, such grave violations need to be determined by the governing board based on its own rule book. Even in that case the dismissal vote would still require a two-thirds majority in parliament.


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