November 22, 2019 / 6:35 AM / 2 months ago

Slovenia passes law requiring central bank to cover losses from 2013 banking overhaul

LJUBLJANA, Nov 22 (Reuters) - The Slovenian parliament said it passed for the second time a law on Friday requiring the Bank of Slovenia to cover all possible repayments to those who lost their investments during the country’s 2013 bank overhaul.

The move overruled a veto of the law last month by the State Council, the upper house of parliament, which said the law did not give investors efficient legal protection.

Although the law was passed, 47 to 41, its enforcement is expected to be delayed as the Bank of Slovenia, backed by the European Central Bank (ECB), had said it would challenge it at the country’s Constitutional Court.

The Bank of Slovenia and the ECB say making the central bank liable for damages from court cases related to the bank rescue violates European Union’s monetary financing rules.

The Finance Ministry, which prepared the law, argues that it is in line with a 2016 Constitutional Court ruling that urged the parliament to give greater legal protection to investors who lost their assets during the bank rescue.

In 2013 the government poured more than 3 billion euros into mostly state-owned banks to prevent them from collapsing under bad loans. That allowed the country to narrowly avoid the need for an international bailout.

But 600 million euros’ worth of subordinated bonds issued by the troubled banks were scrapped, as well as bank shares held by some 100,000 shareholders.

The rescued banks were later privatised. (Reporting By Marja Novak. Editing by Gerry Doyle)

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