Slovenia’s finance minister resigned on Wednesday evening, citing “entirely personal reasons”, amid international criticism of a probe into the country’s costly 2013 bank rescue.
Dusan Mramor, a technocrat appointee who won praise for cutting the country’s stubborn fiscal deficit, stepped down days after a dramatic police raid on the central bank’s offices on July 6. Mr Mramor had joined Slovenia’s central bank and the European Central Bank in condemning the police seizure of Banka Slovenije documents and computers.
The raid was carried out as part of an investigation examining how an official assessment of one bank, in receipt of a government bailout, allowed it to scrap €257m of subordinated bonds and subordinated debt. Four unnamed officials are suspected of abuse of office and official duties but none have been arrested or charged.
The police action prompted a written rebuke from ECB chief Mario Draghi, protesting against what he called the “unlawful seizure of ECB information” and calling on police to “remedy the infringement”. The ECB believes data were taken from the computer of Bostjan Jazbec, the bank’s governor, who sits on the ECB’s rate-setting governing council.
Mr Mramor publicly backed Mr Draghi’s criticism — on Tuesday evening he described the raid as “a direct attack” on the bank’s independence, which is protected by EU law. Within 24 hours Prime Minister Miro Cerar announced his finance minister’s departure and named development minister Alenka Smerkolj his temporary replacement.
“In spite of this change the government will continue with its planned policy and will follow the strategy till 2020 which was laid out by minister Mramor and his team,” Mr Cerar told reporters.
The ECB has referred the matter to the European Commission and Mr Draghi said the bank was exploring possible legal action under Slovenian law. Frankfurt issued a similar rebuke in June 2015 when Cypriot authorities raided the central bank in Nicosia as part of an investigation.
An official said the EU rules were designed to protect sensitive economic projections and policy planning documents, adding that police would be asked to promptly return seized documents to Slovenia’s central bank. The ECB made no comment on the broader investigation.
Mr Mramor, a 62-year old university professor, was appointed in 2014, a year after Slovenia pumped more than €3bn into four lenders.
Once known as the Balkan Switzerland, Slovenia skirted financial ruin in 2013 but managed to fund its bank rescue without recourse to international lenders. A bitter dispute over the cost to Slovene taxpayers and junior bondholders has consumed its political system ever since.
At the heart of the current inquiry is a question that has dogged European countries since the onset of the 2009 financial crisis: who should pay when banks need to be rescued?
The European Court of Justice is expected to deliver a ruling on the decision to impose “haircuts” on junior bondholders in Slovenia next week. Lawyers representing thousands of Slovenian plaintiffs have claimed the subordinated bonds and shareholders’ capital in banks should not have been erased.
The controversy is echoed in tortured political debate in other European countries about how systemically important banks were rescued during the financial crisis and how to implement tough new EU rules on so-called bank bail-ins.
In January Ireland concluded a year-long parliamentary inquiry into the country’s €64bn taxpayer-funded bailout of its collapsing banks, which dragged the sovereign into an EU-IMF bailout programme. Three bankers have been jailed on charges related to the country’s banking collapse.
Italy’s government is considering how to rescue its beleaguered banks without contravening the new European rules on bank recapitalisation.
Analysts said Mr Mramor’s resignation could delay the sale of state-owned Nova Ljubljanska Banka, planned for 2017. The news is likely to add to uncertainty around the stuttering pace of privatisation of other state-owned assets — the government cancelled the privatisation of Telekom Slovenije last year, after receiving a sole bid from Cinven Group.