BetterFinance, 20.10.2015
The Court of Justice of the European Union (CJEU) in Luxembourg is preparing a preliminary ruling in response to questions from the Constitutional Court of the Republic of Slovenia on the matter of the cancellation of subordinated bonds in all recapitalised Slovenian banks. To this end oral proceedings will now focus on claims by the Bank of Slovenia (BS) in support of its 2013 decision to expropriate holders of subordinated bonds and shares of Slovenian banks.
The District Court of Ljubljana had already found that “the disputed legal provisions” that the BS put forth “pose a disproportionate violation of private property” and referred the matter to the Constitutional Court of the Republic of Slovenia who found that the Banking Act entailed “a severe violation of existing entitlements thus contradicting the principles of legitimate expectations”. The Higher Court also questioned “whether such drastic violation of private property is truly proportionate to the public benefit pursued by the measures”.
The matter is now in the hands of the CJEU who will be investigating the claim by the BS that the Banking Communication by the European Commission dating back to August 2013 is binding and that the legal provisions in question are merely enacting these rules. The oral proceedings will examine whether the European Commission's Banking Communication is indeed binding and whether it actually invalidates additional legal provisions pertaining to investor rights.
According to VZMD, the Pan Slovenian Shareholders' Association and member of Better Finance, to further defend the expropriation, the Bank of Slovenia, the State Attorney's Office and the National Assembly of the Republic of Slovenia have stated a number of blatant falsehoods about the extent of catastrophic situation in which Slovenian banks supposedly found themselves in December 2013.
VZMD states that the ‘Banking Communication’ of the European Commission was suddenly deemed binding (only in Slovenia and only at that time) and conveniently interpreted as to justify the wholesale cancellation of all subordinated bonds in all recapitalised banks. To the same end, the dismal macroeconomic situation was also significantly exaggerated, even though, as early as 4 December 2013 and just a couple of weeks before the official statement announcing the expropriation, an official statement was published on Eurostatannouncing that the quarterly GDP of Slovenia remained stable.
VZMD adds that further assertions by the BS exaggerating the capital deficit of Slovenian banks, following evaluations by inexperienced consulting companies that did not adhere to accounting standards and principles, were taken at face value by the National Assembly of the Republic of Slovenia and the State Attorney's Office and reinforced the view that the situation in Slovenia in December 2013 called for a drastic legal interpretation of the European Commission's Banking Communication.