The EC announced their nomination of Mr Boštjan Jazbec as a member to the Single Resolution Board (SRB) in a press release on Wednesday 14th of February. Though Mr Jazbec has proven experience with monetary policy issues, for instance as the Governor of the Bank of Slovenia, critics cite his involvement in the Slovenian “institutional robbery of the century” as incompatible with his nomination to the SRB. The Pan-Slovenian Investors’ & Shareholders’ Association (VZMD) - a member organisation of BETTER FINANCE - wrote a scathing criticism on Tuesday, blaming Mr Jazbec for “...billion-euro damages incurred directly to over 100 000 Slovene small investors”, also adding his role in the additional losses endured by all Slovene citizens and taxpayers during the national efforts to overcome the financial crisis.
The story dates back to Mr Jazbec`s efforts as the Governor of the central bank of Slovenia in 2013-2014. In the midst of the financial crisis, public efforts to rescue five Slovenian banks through burden-sharing were undertaken following the publication of the EC’s banking communication. The controversial evaluations by auditing firms of the banks’ net worth according to VZMD were not in accordance and incompatible with IFRS standards and resulted in the wipe-out of non-insider investors’ shares and bonds without compensation. Additional overcapitalisation of banks by taxpayers’ money ensued. Following suspicions of wrongdoing and a police raid of the Bank of Slovenia, a court case with the CJEU found that, contrary to the central bank of Slovenia's claim, the EC had no power then to force it to impose this "bail-in" on non-insider investors. This is because the EU Bail-in Directive is in force only since the beginning of 2016.
Those opposing Mr Jazbec`s appointment argue that the subordinated bonds that rescued banks often sold to their retail clients, should not have been nullified, and that investors could not have known the real level of risk of their investments.
At the SRB Mr Jazbec will now be responsible for the development of the bail-in option, an area in which he certainly has a proven track record, but a very controversial one indeed. The VZMD, seeking recognition of wrongdoing in 2013, now rests its hopes on the European Parliament fighting Mr Jazbec’s nomination.
Please find earlier BETTER FINANCE publications on the issue here and here.