Slovenia’s government is attempting to find a central bank governor to replace Boštjan Jazbec, who quit after coming under severe political pressure over a bank bail-in.
Jazbec announced his resignation as Bank of Slovenia governor on March 20, saying he had come under “intolerable” pressure, including death threats, over the decision to “bail in” shareholders and bond-holders of several major banks in 2013 and 2014. He said he would take up a role with the European Resolution Board.
Slovene lawmakers rejected Jazbec’s deputy governor as his successor after he was nominated by the Slovene president Borut Pahor. The president then nominated Boštjan Vasle as governor on November 30. Vasle served as head of the Slovenian government’s economic research institute, Umar, from 2007 until November 29.
Vasle must be confirmed by a simple majority in a secret ballot of the lower house of the country’s parliament. The vote must be held before December 30, according to a Reuters report.
Slovenia is a member of the European Community and uses the euro. Its central bank governor sits on the European Central Bank’s governing council.
First nominee rejected
President Pahor first nominated Primoz Dolenc, who has served as Bank of Slovenia deputy governor since 2016, to take over as governor, in September. But he was rejected by lawmakers the following month. Dolenc won only 30 votes of a necessary 46 from the 90 members of Slovenia’s national assembly. Another 39 lawmakers voted against him in a secret ballot.
Conservative lawmaker Jozef Horvat told the Slovene parliament that he did not believe the central bank had properly carried out its supervisory functions, according to a Reuters report.
Former governor attacked presidential adviser
Jazbec, in a statement on March 22, specifically criticised an adviser to president Pahor as having behaved improperly over the bank bail-in.
Jazbec said presidential adviser France Arhar had published an article saying he had told the president that every candidate for central bank governor must consider how to deal with the bank bail-in. Arhar also called the bailed-in shareholders and bond-holders “injured parties”, a description the then-governor strongly rejected.
The most dramatic incident in connection with the bank bail-ins came in July 2016, when Slovenian police raided the central bank. The police said they were investigating possible irregularities in the central bank’s conduct in 2013. Jazbec was informed by prosecutors that he was under formal investigation for his role in the bail-in.
ECB president Mario Draghi issued a formal protest to the Slovene government, saying the raid was “unlawful”, and demanding the return of computers containing information about the Eurosystem. Draghi also wrote a public letter to European Commission head Jean-Claude Juncker asking him to take further action if the Slovene authorities did not respond in a satisfactory manner. The Slovene authorities returned the computers to the central bank.
Slovenia’s then-finance minister, Dusan Mramor, resigned in protest over the raid, calling it an “attack” on the central bank.
ECB intervenes on central bank laws
The ECB has used official opinions to strongly criticise a series of attempts by the former Slovene government to change laws governing the central bank and its handling of the bail-ins. In May 2017, and then in October of the same year, the ECB warned against a proposed system of compensating bailed-in bondholders and shareholders.
The two draft laws would put the burden of proof on the central bank in legal cases where shareholders and bondholders were arguing they had been unfairly treated, the ECB said. The laws could also lead to the unjustifiable disclosure of classified information, it said. The laws have not been passed by Slovenia’s parliament.
Former governor Jazbec also criticised several of the draft laws, saying they would harm central bank independence.
Changes in government
The Slovene government from September 2014 to March 2018, during the period when the central bank became embroiled in the dispute over the bail-ins, was a centre-right coalition. It was led by prime minister Miro Cerar, head of the Centre Modern party.
Cerar continues to serve as deputy prime minister after a new ruling coalition was formed in September 2018. His party is the third-largest in the coalition.
The new government is led by prime minister is Marjan Šarec, who leads a party named after himself. Šarec became prime minister in August after his party became the country’s largest in elections held in June.
President Pahor is a member and former leader of the Social Democrats, currently the second-largest party in the country’s coalition government. He was Slovenia’s prime minister from 2008 to 2012, when he was elected to the largely ceremonial role of president. He won election to a second five-year term in 2017.