Investors Wiped-Out as Part of the Slovenian Bank Bail-in Are Supported by a Favorable Ruling From the European Court of Justice

The PanSlovenian Investors' & Shareholders' Association (VZMD), has been fighting on behalf of investors expropriated as part of the Slovenian bail-in for the past 30 months.  The European Court of Justice (CJEU) supported these expropriated junior investors, including retail investors, in its July 19, 2016 judgment

The CJEU ruled that the banking communication from the European Commission on the application of State aid rules to support measures in favor of banks in the context of the financial crisis (‘Banking Communication") must be interpreted as meaning that it is not binding on EC member states.

"We are very satisfied with the ruling," said Mr. Kristjan Verbic, President of VZMD. "VZMD and Better Finance - The European Federation of Investors and Financial Services Users consider this decision to be a victory for investors.  The European Court of Justice ruled that 'expropriations of and encroachment upon shares and bonds of Slovenian banks were neither necessary nor unavoidable for the restructuring of the banking system and allocation of state aid.'  VZMD has maintained this was the correct analysis since the very beginning."


VZMD, representing the rights of small, expropriated debt-holders, filed the underlying case, Kotnik e.a. at the Constitutional Court of Slovenia (Constitutional Court) on December 4, 2013. The Constitutional Court subsequently referred this case to the CJEU for guidance on the validity and interpretation of the Banking Communication. In the Slovenian bail-in, subordinated debt-holders of six banks, including all three systemic banks in the country, were totally wiped-out. The Slovenian government relied on the Banking Communication to justify its complete expropriation of subordinated debt-holders, taking the position that the EU required it to impose disproportionate “burden-sharing” as a precondition to winning approval for state aid measures. The valuations that purportedly justified the bail-in remain strictly confidential to this day. 

The PanSlovenian Investors’ & Shareholders’ Association (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.

Source: The PanSlovenian Investors' & Shareholders' Association (VZMD)