European Commission Treats Addressing Inequities Inflicted on Expropriated Retail Bondholders in Slovenia Like a Hot Potato

Retail Investors in Slovenian Bail-In May Be Considered Too Small to Notice

​ Decision makers in Brussels have yet to make a substantive reply to an open letter penned by Jean Berthon, the Chairman of Better Finance – European Federation of Investors and Financial Services Users, and sent to four members of the EC on February 8, 2016, urging the EC to engage in a search for solutions to compensate retail bondholders who were expropriated as part of the Slovenian bail-in.

So far, none of the four addressees of the letter, including the President of the EC, have agreed to look into the matter.  Instead, on March 16, 2015, the Commissioner for Financial Stability, Financial Services and Capital Markets Union disclaimed direct responsibility and forwarded the letter to the Commissioner for Competition.  A response has not yet been received.

The PanSlovenian Shareholders’ & Investors’ Association (VZMD) on behalf of the expropriated Slovenian bondholders in the case Kotnik e.a., point out that the EC, through its silence, is “once again exhibiting its double standards.”

 “In December 2013, all subordinated bonds of five Slovenian banks were wiped out in a single night,” says Kristjan Verbič, the VZMD President, “and our government claimed that this wipeout was mandated by the EC, and the same fate would thereafter befall bondholders of any European Union bank receiving state aid.”

Despite this pronouncement, bondholders have remained unscathed in a number of banks propped up by EC state governments in 2014 and 2015.  In Ireland, Permanent TSB received state aid in April 2015 with all of its bonds left intact.

In Italy, junior bondholders of Banca Romagna Cooperativa, a recipient of state aid in July 2015, were formally wiped out, but then, in a complete about-face, fully compensated within a week.  In November 2015, four additional banks in Italy were granted state aid (Banca Etruria, Banca Marche, Carife, and Carichieti).  Despite the EC’s insistence that bondholders in these banks be wiped out, Italian authorities persisted in looking for ways to compensate bondholders.  Finally, the EC agreed that compensation be limited to retail bondholders, with preferential treatment for “the elderly and those who have lost the most.”  

While the EC affirms it “is doing its utmost to be of assistance” in Italy, it continues to pass the buck with regard to retail bondholders in Slovenia.  “Apparently the EC considers Slovenia unimportant enough, and Slovenians few enough, to try to wash its hands of the problem,” says Verbič


VZMD, representing the rights of small, expropriated debt-holders, filed Kotnik e.a. on December 4, 2013.   As part of the Slovenian bail-in, subordinated debt-holders of six banks (NLB, Nova KBM, Abanka, Banka Celje, Factor Banka and Probanka) were totally wiped-out.  In stark contrast with reported bail-ins in other European countries, debt-holders in Slovenia lost the entire amount of their investments and received zero compensation in return. 

VZMD,, was founded to protect the rights of minority shareholders and retail investors and is led by its President Mr. Kristjan Verbič []. Mr. Verbič is on the Board of The European Federation of Investors and Financial Services Users,, a member of the Corporate Finance Standing Committee of the European Securities and Markets Authority and a member of World Federation of Investors.