5.13 The case of the Slovenian banks

This case concerned the burden-sharing measures that were taken by Slovenia in line with points 40 to 46 of the 2013 Banking Communication. These provisions of the Banking Communication require burden-sharing by shareholders and subordinated creditors.

On 17 December 2013, the Central Bank of Slovenia adopted a decision concerning extraordinary measures and ordered five Slovenian banks – Abanka, NLB, NKBM, Probanka and Factor Banka – to write off all eligible liabilities. These measures were contested before the Ustavno sodigoe (i.e. the Constitutional Court of Slovenia). According to the Ustavno sodigoe, while the objections of the applicants in the main proceedings were directed against provisions of the Slovenian law on the banking sector, their actual target was the 2013 Banking Communication. This was because the purpose of the Slovenian law on the banking sector was to establish a legal framework for burden-sharing in accordance with the requirements of the Banking Communication. The Ustavno sodigoe therefore asked for a preliminary ruling. On 19 July 2016, the Court rendered its judgment.1

One of the questions was whether the Banking Communication was binding on Member States. As explained in section 3.4.3, this question was answered in the negative by the Court.2 Another question was whether points 40 to 46 of the 2013 Banking Communication – which require burden-sharing by shareholders and subordinated creditors – were compatible with Articles 107 TFEU, 108 TFEU and 109 TFEU. This question will be explained in more depth in chapter 12.

Another noteworthy question was whether points 40 to 46 of the 2013 Banking Communication were compatible with several provisions of Directive 2012/30 (a recast of the Second Company Law Directive). This Directive provides that any increase or reduction in the capital of a public limited liability company must be subject to a decision by the general meeting of the company.

The Court noted that Directive 2012/30 is intended to reassure investors that their rights will be respected by the governing bodies of the companies in which they have invested, particularly when a company is formed and when its share capital is increased and reduced. Consequently, the measures provided for by Directive 2012/30 in order to guarantee that protection relate to the normal operation of public limited liability companies. By contrast, the burden-sharing measures constitute exceptional measures. They can be adopted only in the context of there being a serious disturbance of the economy of a Member State and with the objective of preventing a systemic risk and ensuring the stability of the financial system. The Court concluded that Directive 2012/30 does not preclude measures relating to share capital being adopted, in certain specific circumstances, such as those mentioned in the 2013 Banking Communication, without the approval of the general meeting.3