Press release: Early repayment of Factor banka and Probanka deposits

On 13 August 2015 the Bank of Slovenia issued Factor banka d.d. and Probanka d.d. with instructions to make early repayment of guaranteed deposits pursuant to the third paragraph of Article 310 of the ZBan-1 (Official Gazette of the Republic of Slovenia, Nos. 99/10 [official consolidated version], 52/11 [correction], 9/11 [ZPlaSS-B], 35/11, 59/11, 85/11, 48/12, 105/12, 56/13, 63/13 [ZS-K], 96/13 and 25/15 [ZBan-2]; hereinafter: the ZBan-1) and the deposits taken into account in the determination of guaranteed deposits pursuant to the third paragraph of Article 310 of the ZBan-1 in the amount in excess of EUR 100,000. In simple terms, this is the early repayment of all the deposits of depositors whose deposits were classed as guaranteed, irrespective of the amount.

The early repayment is to help meet the objectives pursued by the Bank of Slovenia via the special administrations: the orderly wind-down of the banks, and the repayment of the claims of the banks’ creditors to the greatest possible extent. At the same time the risks that would have been entailed by winding up the banks via ordinary bankruptcy proceedings will be appropriately reduced, and with them the cost to taxpayers.

The early repayment of deposits is regulated by the Banking Act (Official Gazette of the Republic of Slovenia, no. 25/15; hereinafter: the ZBan-2), which entered into force on 13 May 2015. Article 364 of the ZBan-2 stipulates that if, during the imposition of special administration, the Bank of Slovenia determines with respect to the implementation of a reorganisation plan that the conditions have been met for the repayment of a bank’s specific liabilities prior to maturity on the basis of the orderly wind-down of the bank, such a bank with special administration has the right to make early repayment of those liabilities and the right to deduct interest for the period from the date of payment to maturity, notwithstanding the general rules on the right to early repayment specified by the law or by the contract.

The conditions for the early repayment of liabilities are deemed to have been met if on the basis of measures to liquidate the bank’s assets a sufficient level of liquid assets is ensured and early repayment will not jeopardise the objectives of the extraordinary measures at the bank. The two banks have sufficient liquid assets at their disposal for the early repayment of the deposits taken into account in the determination of guaranteed deposits in their entire amount, without endangering their ability to ensure the regular repayment of liabilities as they mature in accordance with contractual provisions, and without jeopardising the objectives of the extraordinary measures.