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Slovenia’s 2013 Bank Rescue Challenged

Slovenia’s 2013 Bank Rescue ChallengedSlovenia’s 2013 Bank Rescue Challenged

In 2013, Slovenia rescued its failing banks by wiping out stock investors and holders of about €600 million ($700 million) of debt. Now some of those investors want their money back, Bloomberg reported. While their appeals have had limited success so far, a shake-up at the central bank and a ruling from the nation’s Constitutional Court suggest the matter is far from closed. The investors are pushing for a law that would enable them to recoup losses, while putting the tiny Balkan state on a collision course with the European Union and European Central Bank. “The passing of a law like this would be like opening Pandora’s box,” said Otilia Dhand, senior vice president for central and eastern Europe for Brussels-based Teneo Intelligence. “There would be a risk of national reviews in every country that executed a bail-in.” Slovenia won permission from European authorities for the €3.2 billion rescue of its largest banks by agreeing that investors—not just taxpayers—would feel the pain. The bailout, coming near the end of the eurozone’s sovereign-debt crisis, allowed the Alpine nation of two million people to avoid a Greece-style international rescue program.

 

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