By: C.R.
Matej Avbelj (Full Professor of European Law, New University), Luka Podlogar (President of the Management Board, Generali Investments), Blaž Brodnjak (CEO, NLB and President of AmCham Slovenia), and Francis Malige (Managing Director, Financial Institutions EBDR) commented today on how we can ensure or destroy stability ourselves and what is the impact of extraordinary international events on the business environment. They emphasised the importance of a predictable legal and institutional framework in a functioning rule of law and the importance of attracting investors and talent for the country’s economic success.
Nevenka Črešnar Pergar, co-chair of the AmCham Investment Promotion Commission and Director, NP Consulting started the conversation with the most pressing topic now, aggression against Ukraine, highlighting NLB’s rapid response to the takeover of Sberbank’s subsidiary. Blaž Brodnjak pointed out that in this case it was a matter of predictability of unpredictability. He emphasised that all those involved had shown that the concept of a banking union played a major role. By stabilising the situation in two days in the event of the takeover of Sberbank’s subsidiary and by taking appropriate measures, they have thus managed to maintain the confidence of savers, which is crucial. “The concept of a banking union makes sense and the institutions within the banking union work.” Brodnjak praised the cooperation with the Bank of Slovenia and publicly thanked for the efforts of Boštjan Jazbec, who within the Single Bank Resolution Committee worked to save the Slovenian Sberbank, as its original plan was liquidation.
Francis Malige emphasised the importance of the European framework for rescuing banks, which proved to be effective, adding that there was still too much state ownership in Slovenia, and called for stronger private investment. He is convinced that the conditions for them are corporate governance, a good regulatory environment, a developed capital market, and professional institutional investors.
Dr Avbelj further emphasised the importance of a predictable institutional framework. “A functioning judiciary is a basic testament to economic freedom and predictability of the business environment.” He notes that the problem is holistic, as the legislator has three serious legislative shortcomings in our country, namely: legislative hypertrophy, legislative particularism, and legislative instrumentalism. As an example, he pointed out the law on resolving the issue of loans in Swiss francs, adopted in February, the implementation of which was suspended by the Constitutional Court. Brodnjak added that the NLB alone had several million in damages, as several foreign investors had given up their ownership of the bank after the law was passed and had great difficulty in gathering interest in issuing subordinated bonds. He quoted the words of some investors: “You are not investible”. Francis Malige also expressed his opposition to the law from the point of view of the international environment, as it is retroactive, representing potential damage to the banking system and the economy. He also called for an out-of-court settlement of the remaining disputes between borrowers and banks.
Luka Podlogar pointed out the fact that all successful countries have a strong financial and institutional market. Stronger pension funds could encourage the accumulation of capital, which can be used for the development of Slovenian companies and support wider economic activity in Slovenia. He pointed out the need for pension reform as one of Slovenia’s key tasks, with the introduction of mandatory contributions to the second pension pillar and tax reform, which should encourage people to invest in the third pension pillar. In this way, exceptional results could be achieved in a short period of time at low cost. Brodnjak also agreed with the tax and pension reform, and Avbelj called for the release of private initiative, as the state has hampered development with its current activities when it wants to act as the biggest capitalist.