STA, 28 October 2019 - The National Council unanimously vetoed the government-sponsored bill designed to provide legal recourse for holders of subordinated bank liabilities wiped out in the 2013 bank bailout, with the interest group proposing the suspensive veto arguing that the bill does not regulate the issue appropriately.
Following the veto from the upper chamber of parliament, the bill, which was passed in a 46:34 vote in the National Assembly last week, will now have to undergo a re-vote and get an absolute majority to be confirmed.
The National Council voted 24 votes for and none against to suspend the implementation of the bill, which aims at providing easier access to recourse for up to 100,000 potential plaintiffs, both shareholders and holders of junior bonds wiped out on instruction of the EU.
But it may take a while before the erased investors are compensated as, in addition to the opposition from the National Council, the central bank had announced a constitutional review.
The veto in the upper chamber had been proposed by the interest group representing employees, which argues that the bill does not provide effective recourse, as councillor Maja Lah reiterated at the session today.
The bill relates to the ruling of the Constitutional Court in 2016, which says that the affected subordinated creditors and shareholders did not have sufficient access to recourse under existing legislation.
Involving up to EUR 963 million, the bill has been a controversial topic.
The proponents of the veto claim the government-sponsored bill falls short of what the Constitutional Court ordered.
When it proposed its own version of the bill in April, the upper chamber said that excessive procedural costs would discourage potential plaintiffs from suing the central bank Banka Slovenije.
The National Council argues that the bill fails to address reservations regarding the exclusive jurisdiction of the Maribor District Court in procedures related to disputes under the bill, as well as the issues related to determining court fees.
It believes the bill also does not address the issues related to the protection of personal information of plaintiffs and the issue of out-of-court settlement with the payment of a lump-sum compensation to the former holders of subordinated bank liabilities.
Lah said that Banka Slovenije as the regulator who had insight into all details of the functioning of the banking system had a professional, personnel and information advantage over a typical small investor.
Such imbalance could significantly affect the realistic chances of plaintiffs to be successful in lawsuits, she said, adding that the group was also critical of the intention to incentivise plaintiffs to group themselves by lowering court fees.
"This results in an unjustified differentiation between 30 or more plaintiffs, who would file a lawsuit together and have a joint representative, and other plaintiffs who would not meet conditions to do so," the veto proposal says.
This could also constitute a violation of the right to free selection of the representative, as plaintiffs who want to reduce their costs for court fees would be forced to agree on a single, joint representative.
Arguing against the veto, Finance Ministry State Secretary Metod Dragonja said that the bill was "protecting the taxpayers and budget", noting that potential damages would have to be paid by Banka Slovenije from its reserves.
Regarding the disclosure of personal information of the former holders of subordinated bank liabilities, he said that the public interests superseded their interest, as the funds for damages would be secured from public sources.
The bill envisages lump-sum compensations of up to EUR 20,000 to uninformed investors. "This is a civilised option of out-of-court settlement for those who waive the right to use further legal remedies," Dragonja added.
National councillor Matjaž Gams meanwhile pointed to the alleged overestimation of the shortage in the state-owned banks, estimated at the time at EUR 1.5 billion.
He wondered who would be held responsible for that given the fact that this resulted in money being taken away from holders of subordinated bank liabilities.