Slovenia is setting up a bad bank. It's a sign of the times in Europe that you have to pay attention to bad banks in Slovenia. The European Central Bank has issued a couple of legal opinions on the Slovenian case. They include comments on the role of the national central bank in the arrangements --
[September 2012] Banka Slovenije as the banking supervisor should be more actively involved in the activities of the BAMC (the bad bank), in particular in any procedure identifying the banks drawing on the measures under the draft law as well as identifying and defining the value of the assets to be transferred to the Fund. The draft law could clarify how the measures under the draft law fit into the system of supervisory measures taken by Banka Slovenije within its supervisory competence pursuant to the Law on banking. The ECB would therefore suggest explicitly providing for an appropriate role of Banka Slovenije either in the draft law or in any other relevant legal act3.
[March 2013] In Opinion CON/2012/71 (i.e. the above), the ECB noted that Banka Slovenije should be more actively involved in the BAMC, in particular in any procedure identifying the banks that would be eligible to draw on the measures. Against this background, it should not be the Government or the Committee, but rather Banka Slovenije assessing and deciding whether the stability of the financial system is threatened20. Banka Slovenije should also be given a role in the valuation of assets to be transferred to the BAMC or any dedicated company. Article 16(2) provides that the long-term real economic value of assets is assessed by the bank and the assessment confirmed by an authorised independent auditor. While the ECB welcomes the involvement of an independent auditor, Banka Slovenije should be given a prominent, if not leading, role in determining the long-term real economic value, with the valuation to be confirmed by such auditor.
Ireland's National Asset Management Agency (NAMA) -- the Celtic Tiger's bad bank -- meets none of these requirements in terms of the role of the Irish Central Bank. Zero. Zilch. Nada.
It would be nice to know even after the fact why this was allowed to be the case and whether it actually matters.
[September 2012] Banka Slovenije as the banking supervisor should be more actively involved in the activities of the BAMC (the bad bank), in particular in any procedure identifying the banks drawing on the measures under the draft law as well as identifying and defining the value of the assets to be transferred to the Fund. The draft law could clarify how the measures under the draft law fit into the system of supervisory measures taken by Banka Slovenije within its supervisory competence pursuant to the Law on banking. The ECB would therefore suggest explicitly providing for an appropriate role of Banka Slovenije either in the draft law or in any other relevant legal act3.
[March 2013] In Opinion CON/2012/71 (i.e. the above), the ECB noted that Banka Slovenije should be more actively involved in the BAMC, in particular in any procedure identifying the banks that would be eligible to draw on the measures. Against this background, it should not be the Government or the Committee, but rather Banka Slovenije assessing and deciding whether the stability of the financial system is threatened20. Banka Slovenije should also be given a role in the valuation of assets to be transferred to the BAMC or any dedicated company. Article 16(2) provides that the long-term real economic value of assets is assessed by the bank and the assessment confirmed by an authorised independent auditor. While the ECB welcomes the involvement of an independent auditor, Banka Slovenije should be given a prominent, if not leading, role in determining the long-term real economic value, with the valuation to be confirmed by such auditor.
Ireland's National Asset Management Agency (NAMA) -- the Celtic Tiger's bad bank -- meets none of these requirements in terms of the role of the Irish Central Bank. Zero. Zilch. Nada.
It would be nice to know even after the fact why this was allowed to be the case and whether it actually matters.