Financial stability

Resolution of banks

The Resolution and Compulsory Winding-Up of Banks Act (RCWBA), which entered into force on 25 June 2016, transposes Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms (the BRRD) into Slovenian law, and sets out in detail the implementation of Regulation (EU) No 806/2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund.

Under the aforementioned law and Regulation (EU) No 806/2014, the Bank of Slovenia exercises powers and tasks in connection with resolution, other than the powers and tasks for which the Single Resolution Fund is competent and responsible in accordance with Regulation (EU) No 806/2014.

The RCWBA regulates:

  1. the powers of the Bank of Slovenia and the procedures it conducts as the bank resolution authority;
  2. bank resolution planning;
  3. resolution procedures and authorisations in connection with the implementation of resolution measures;
  4. the procedure for the compulsory winding up of a bank; and
  5. a mechanism for the collection and transfer of ex-ante and extraordinary ex-post contributions by banks established in Slovenia to the Single Resolution Fund (SRF).

The most important resolution principles

In applying the resolution actions, the Bank of Slovenia shall comply with the following principles:

  1. the shareholders of the bank in resolution proceedings shall be the first to cover the losses;
  2. after the shareholders of the bank in resolution proceedings, other holders of capital instruments of this bank shall cover the losses, followed by other creditors in the reverse order of priority than that which applies to the payment of claims against the resolution entity under normal insolvency proceedings;
  3. the management body and senior management of a bank in resolution proceedings shall normally be replaced, except when it is appropriate in the circumstances and necessary for the achievement of the resolution objectives that the management body and senior management maintain their functions, in whole or in part;
  4. the management body and senior management of a bank in resolution proceedings must provide all assistance necessary for the achievement of the resolution objectives;
  5. the liability of individuals and legal persons for bank failure shall be enforced in accordance with the general rules on contractual, damage and criminal liability;
  6. the creditors of the same priority class shall be treated equally, except in cases for which this Act provides otherwise;
  7. taking into account Article 76 of this Act, no creditor of the bank or of the entity referred to in points 2 to 4 of paragraph one of Article 2 of this Act shall bear greater loss than they would have borne if the bank was wound up in accordance with normal insolvency proceedings;
  8. covered deposits are fully protected.