Slovenian Leader Sets Collision Course With ECB Over Bailout Law
Slovenian Leader Sets Collision Course With ECB Over Bailout Law
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Slovenia isn’t backing away from its collision course with the European Central Bank over compensating investors who lost money in a 2013 bank bailout that may violate euro-area rules, Prime Minister Marjan Sarec said.
The law is the focus of a criminal probe and demands by investors who accuse Slovenia’s central bank of sticking them with losses during the 3.2 billion-euro ($3.6 billion) rescue of the Balkan state’s banks. The European Commission and the ECB allowed the taxpayer-funded bailout only on the condition that investors share the burden, leading to a write-off of more than 900 million euros worth of stocks and bonds.
Lawmakers in the euro-area nation of 2 million endorsed the draft law in the first of three readings, agreeing the central bank should pay if courts rule in favor of investors. The ECB has warned that would violate a ban on euro-area central banks to pay liabilities for a state -- and is threatening to take the matter to the European Court of Justice should Slovenia proceed.
“Wounds from the bank rescue are still open,” Sarec said in an interview in his office in Ljubljana on Tuesday. “The investors didn’t have judicial protection, and the law is seeking to remedy that. The law doesn’t automatically mean the investors will get their money back -- it just gives them an opportunity to go to court. Until now this hasn’t been possible.”
The legislation comes as central banks from the U.S. to Ukraine face an increase in politicians’ efforts to influence their actions that have drawn criticism for challenging the monetary authorities’ independence.
Sarec said he expects whoever replaces ECB President Mario Draghi when EU leaders pick new names for the bloc’s top posts later this year to respect that “size doesn’t matter” when deciding policy.
“I hear the next candidate will come from the North," he said of the future ECB president. "For Slovenia, it’s important that all nations, small or big, are treated the same. We want a governor for the ECB who would respect that.”
Slovenia’s last ECB Governing Council member, Bostjan Jazbec, had a difficult time with authorities in Ljubljana. Opposed to the revision of the bailout, he resigned as governor last year amid anonymous threats and a police probe over allegations that he and his team mishandled the bank rescue.
The investigation included the seizure of documents during a police raid at the central bank that the ECB condemned as violating the institution’s autonomy.
Bostjan Vasle, who took over as central bank governor in January and has a seat on the ECB’s Governing Council, said in May that the draft must be amended as it now violates euro-area rules. On the other side of the argument is a group of investors whose identities are shielded because their holdings in the bailed-out banks were via Luxembourg-based custodial accounts.
Sarec, a 41-year-old actor, comedian and former mayor who won national elections last year, inherited the push to roll back the bailout when he became premier in August. He’s now walking a balancing act at the head of a five-party minority government whose biggest achievement to day has been tax cuts for lower-income citizens and a proposal to raise the minimal wage.
He shrugged off ECB’s and Slovenian central bank’s concerns, criticizing the central bank’s role in the 2013 bailout, saying the recapitalization of the banks was “too expansive.”
“Everyone is entitled to their opinion,” Sarec said of the ECB’s warning over the bailout law. “This is a problem I had nothing to do with, and we are trying to solve it the least painful way possible.”
To contact the reporters on this story: Jan Bratanic in Ljubljana at jbratanic@bloomberg.net;Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net
To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Michael Winfrey
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