Banking Law & Financial Institutions

EU banking law is based on a harmonized framework of regulations and directives designed to create a single market for financial services. Key legal instruments include the Capital Requirements Regulation (CRR), the Capital Requirements Directive (CRD), the Bank Recovery and Resolution Directive (BRRD), and the Single Supervisory Mechanism (SSM). These instruments aim to enhance financial stability, ensure prudential oversight, and create a level playing field for credit institutions.

Under the SSM, the ECB is the primary supervisor of significant credit institutions in the Eurozone. It grants banking licenses, conducts supervisory reviews, and imposes capital and liquidity requirements. The ECB also monitors systemic risks and enforces corrective measures when institutions breach prudential standards.

In Slovenia, banking law is implemented under the Banking Act (ZBan-3), which aligns with EU directives and empowers the Bank of Slovenia as the national competent authority. It governs the licensing, operation, governance, and supervision of credit institutions operating domestically.

Credit institutions must obtain authorization from the competent supervisory authority to operate. Within the EU, licensed institutions benefit from passporting rights, allowing them to offer services in other member states under the principles of mutual recognition and home-host supervision.

Credit institutions are subject to minimum capital requirements (Pillar 1), internal risk assessments (Pillar 2), and disclosure obligations (Pillar 3) under the Basel III framework, as transposed into EU law through CRR and CRD. These requirements are intended to ensure solvency, risk sensitivity, and transparency.

Banks must maintain sound governance arrangements, including fit and proper management, risk management frameworks, and internal controls. The 'three lines of defense' model is widely applied to separate operational, risk, and audit functions.

Credit institutions are obliged to conduct customer due diligence, report suspicious activities, and implement internal AML policies. These obligations derive from EU AML Directives (e.g., 5AMLD, 6AMLD) and are enforced locally through national transpositions and the supervision of Financial Intelligence Units (FIUs).

Banking law mandates transparent disclosure of terms, fair lending practices, and mechanisms for resolving customer complaints. The EU Consumer Credit Directive and Payment Services Directive (PSD2) govern key rights related to transparency, data usage, and dispute resolution.

Institutions must prepare recovery and resolution plans to ensure continuity of critical functions in distress scenarios. The BRRD sets out resolution tools such as bail-in, sale of business, and bridge institutions, overseen by national resolution authorities and the Single Resolution Board (SRB).

Under the Deposit Guarantee Schemes Directive (DGSD), member states must maintain schemes that protect eligible deposits up to €100,000 per depositor. Slovenia’s scheme is administered by the Deposit Guarantee Fund (Sklad za jamstvo vlog).

Institutions must submit regular reports on capital, liquidity, exposures, and governance to supervisory authorities. Common Reporting (COREP) and Financial Reporting (FINREP) frameworks are standardized across the EU to ensure comparability and transparency.

Supervisory colleges facilitate coordination between home and host regulators in cross-border banking groups. The European Banking Authority (EBA) provides guidelines for consistent supervisory practices, while the ECB exercises direct supervision over significant institutions.

National macroprudential authorities, including the Bank of Slovenia, may impose additional capital buffers, loan restrictions, or systemic risk measures to protect financial stability. These tools complement microprudential supervision.

Banking law provides for administrative and judicial remedies in cases of supervisory actions or institutional misconduct. Institutions and individuals may appeal decisions, and enforcement actions include fines, license revocation, or criminal liability under financial law.

Banks are bound by strict confidentiality rules concerning customer information. However, disclosures are permitted under specific legal exceptions, including AML obligations. Compliance with the General Data Protection Regulation (GDPR) is essential for lawful data processing.

As banking services digitize, regulatory frameworks adapt to cover e-money, virtual assets, and fintech platforms. The EU Digital Finance Strategy and upcoming Markets in Crypto Assets (MiCA) Regulation aim to create safe innovation zones without compromising consumer protection or financial integrity.

Banking professionals must act with integrity, diligence, and in the best interests of clients and markets. Fiduciary obligations extend to internal compliance, customer relations, and risk management, particularly in investment and advisory services.

Slovenian courts have adjudicated key banking disputes involving abusive lending terms, foreign currency loans, and consumer rights. Jurisprudence helps shape the interpretation of domestic banking law in alignment with EU principles and directives.