Following the filling of three lawsuits by VZMD, the Slovenian Constitutional Court acknowledged the legal interest of the 293 initiators united by VZMD who were all owners of subordinated bonds of three Slovenian banks who were expropriated on December 18.
VZMD demanded a constitutional review of the Banking Act and the Court accepted the hearing of two VZMD initiatives. However, the suspension of the Act was rejected due to the allegedly misleading claims by the Slovenian Government, the Ministry of Finance and the Bank of Slovenian concerning the “catastrophic consequences” and “jeopardy of the entire financial system in the Republic of Slovenia”, along with the fact that they claim that the holders will only have “material consequences”.
The bonds were cancelled without any explanation or any compensation and the expropriated owners were not allowed to examine the decision about the cancellation. Behind this decision is the Bank Law Amendment adopted in November, establishing that all guarantees of prospects about repayment of bonds are null and that it is forbidden for the expropriated owners to bring lawsuits against the bank whose bonds were cancelled, in turn triggering an administrative dispute and even a constitutional review.
The National Council, as well as VZMD, already stated that some provisions of the Banking Act are not in accordance with the constitutionally guaranteed rights of the citizens. At issue is the provision that enables cancellation of debts of all those bank creditors who could, in case of bankruptcy following the repayment of bank’s liabilities, have their turn after the holders of bank deposits and senior bonds, in case of state bank recapitalization. Questionable are also the two provisions that forbid expropriated creditors to bring a suit against the bank, and a provision annulling guarantees that the risk of non-payment to the holders of subordinated bonds can take place only in case of bank bankruptcy.
The Slovenian Government keeps ignoring this issue as it has already stated that “the challenged articles do not interfere with the rights of investors” and that “procedures of bank assistance will be in contrast with EU legislation about bailouts”.
VZMD expressed its concerns concerning the decision patterns and procedures used by power holders and management bodies and for that reason called on the government of the Republic of Slovenia and the Bank of Slovenia to respect and honor basic democratic principles and starting–points for righteous, stable and successful social–economic activities.
Please read here the VZMD press release.