2013 Bank Bailout: Two Wiped-Out Investors Get Full Refund

By , 23 Aug 2019, 12:34 PM Business
2013 Bank Bailout: Two Wiped-Out Investors Get Full Refund abanka.si

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STA, 23 August 2019 - A higher court has upheld a ruling under which Abanka has to fully refund two clients whose subordinated debt was wiped out as part of the December 2013 national bank bailout, interest included.

The Celje District Court's ruling from June 2018 has thus become final, so it must be implemented even if Abanka appeals at the Supreme Court, several media outlets reported on Friday.

The clients who took Slovenia's No. 3 bank to court in 2017 are two well-known lawyers from Celje. In 2007, Igor and Marija Karlovšek bought junior securities to the tune of EUR 1.1 million, the Siol news portal reported.

The spouses claimed in the suit that Banka Celje, which merged with Abanka in 2015, had failed to properly inform them about the risks involved.

The courts argued Banka Celje should have told them they could lose the money even if the bank does not go bankrupt.

Ever since 2001, the option of erasing subordinated bondholders if the central bank orders measures to reorganise the bank has been part of Slovenian legislation, Siol said, citing the latest ruling.

The portal also quoted the ruling in saying that when buying the subordinated debt, the plaintiffs "justifiably assumed they had bought ordinary, not subordinated bonds".

Siol reported that the Karlovšeks, who declined to comment on the ruling for the portal, had already received the money back, unofficially around EUR 2 million.

Abanka was ordered to pay them the principal plus interest, yet not since the day of the erasure, but since the day of the purchase.

The Karlovšeks were one of the the biggest individual owners of erased subordinated debt and are among the eight plaintiffs who have turned to the European Court of Human Rights for justice, according to Siol.

Abanka declined to comment on the latest ruling for the newspaper Delo. But the Higher Court confirmed a proposal for review had been filed in the case, with a decision still pending.

Delo speculated the proposal may well have come from Abanka, which said it would protect its interests and which had appealed against the first-instance court ruling.

Last year, Delo reported the ruling handed down by the Celje District Court was the first in cases brought against Slovenian banks after the junior debt erasure.

In 2013 and 2014, Slovenia bailed out its major banks with billions of euro in taxpayer money, but also with a bail-in involving subordinated debt of private investors.

Following years of efforts by the erased holders of subordinated debt, the government drafted a bill designed to provide them with legal recourse after it was ordered to do so by the Constitutional Court.

After almost 80 amendments were filed to improve it, the bill got stuck at second reading in parliament last June.

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