Annual Report 2009 Združenje bank Slovenije The Bank Association of Gospodarsko interesno združenje Šubičeva ulica 2 1000 , Slovenia Phone: +386 (0)1 24 29 700 Fax: +386 (0)1 24 29 713 E-mail: [email protected] www.zbs-giz.si

Editor: Aleksandra Žibrat

Design: Edi Berk / KROG

Translation: Vesna Mršič

Printed in Slovenia Ljubljana 2010

ISSN 1580-4666 2 Statement by the Chairman of the Supervisory Board 4 Introduction 6 The composition of the Supervisory Board 7 Selected data for the Slovenian macroeconomic landscape and banking sector

9 Activities of the Bank Association in 2009 9 Banking industry issues 10 Strategic matters 10 Payment services and the SEPA project 12 SISBON project 13 Social partnership 14 Retail banking 16 Legal affairs 17 Treasury 17 Operations with financial instruments 18 Anti-money laundering 19 Credit institutions and safety and security issues 19 Informatics 20 Training Centre 22 Bančni vestnik and publishing activity 25 Leasing industry 26 Settlement Council 27 International affairs 28 Documentary banking operations 29 Slovenian S.W.I.F.T. working group

30 Member institutions 31 Professional team The Bank Association of Slovenia 2 Annual Report 2009

Statement by the Chairman of the Supervisory Board

The effects of an unprecedented state of tur- The report prepared by the Bank Association moil in the banking sector have dented for 2009 provides a full-blown operations in 2009. As for 2010 industry picture of the tasks performed, of which the outlook, the storm clouds of the economic following could give an idea of their scale crisis with global impact still loom on the and scope: adherence to the common SEPA horizon. The uncharted waters into which infrastructure, the overhaul of the reporting Slovenia’s real sector and the banking sec- system for the , the fine-tuning of tor sailed in 2009 could be equally treach- the SISBON system to the modifications erous in 2010 as the differences in the fore- made in banking legislation, social agree- casts made by macroeconomic institutes for ment, a number of high quality professional economic growth indicate. In short, we education programmes, the on-line resource should count with the headwinds that were – eBilten, and the only journal for the profes- blowing in 2009 as we follow our bearings sionals in the banking industry in Slovenia in 2010 and keep our focus in order to with an enviable tradition – Bančni vestnik. A leave these treacherous waters behind. We great deal of the activities scheduled in the are confident that our efforts will be at least Association’s programme of work for 2010 as effective as they were during the year will refer to the aforementioned projects and under review. in the light of the fact that the goals and tar- gets set are good and ambitious, we remain confident that we are firmly on track to achieve the set goals. The Bank Association of Slovenia Annual Report 2009 3

The objective identified as one of the most institutions will have to have more capital to important ones for the banking industry is the pursue the business of banks, and this require- commitment of credit institutions to their ment will affect the expected profitability of clients, that is, their customers. The right thing operations as a significant indicator of how to do is to harness the experience and knowl- successful corporate entities are in their busi- edge obtained by steering though the crisis ness. As far as the pending legislative when contemplating the future business deci- changes are concerned, we do hope that at sions, and the right way to go about it is to the end of the day the regulatory framework keep in mind the social impact: what’s good will ensure that banks will be in a position to for customer is also good for banks. In order effectively carry out the role of financial inter- to give impetus to the development of the mediation. Slovenian banking industry, it is of paramount importance to keep our customers informed In conclusion, allow me to draw attention to and to educate them in order to improve their endeavours invested in the talks led about financial capability and financial manage- the new social agreement that should pro- ment skills, and benefit from exposure to other vide for the fulfilment of interest of both par- financial services and products by having a ties involved. A successful operation over a clear picture of the features of the services long period of time is a result of responsible and products offered to them. By being sensi- work and good co-operation. I have no tive to financial inclusion, we are able to con- doubt that as bank officers we will raise to tain the so-called information asymmetry and the occasion and cope with the current cir- consequently help create the possibilities for cumstances and challenges that lie ahead. the desired expansion of the volume of busi- ness. In the future, the banking business will be determined also by the expected changes Božo Jašovič, M.Sc. to the capital regulatory framework, liquidity Chairman of the Supervisory Board and risk management. In the field of the capi- of the Bank Association of Slovenia tal regulatory framework it is clear that credit The Bank Association of Slovenia 4 Annual Report 2009

Introduction

Most of our activities conducted during the As regards the SEPA project, the promulga- year under review were directly or indirect- tion of the new Payment Services and ly connected with a financial crisis soon to Systems Act (ZPlaSS) in 2009 is yet another grow to a full-scale economic crisis that hit milestone on the road to improve cash flow, hard the balance sheets of the domestic reduce costs and facilitate the access to new banks. markets. The new Act together with the reso- lutions passed by the European Payments As a consequence of the uncertainty in the Council (EPC) has provided the legal frame- international financial markets, the focus of work for the extension of the deadline when the banking sector is on adapting to the all branches of banks in the euro zone must changed market environment. Small wonder be reachable for the SEPA Direct Debit that in 2009, the growth in bank lending to Scheme (SDD) from 1 November 2009 to 1 the real sector was halted in its tracks. The November 2010. issues that during 2009 were at the forefront for the Bank Association of Slovenia include the measures to overcome the credit crunch and the liquidity position of our members. The Bank Association of Slovenia Annual Report 2009 5

Under the SISBON project, at the Bank Through the Ministry of Finance, we have Association of Slovenia we have started to received the initiative given by the European charge the users of the system for the servic- Commission for the preparation of a finan- es of the Credit Bureau and we have made cial education programme as a crucial step the first corrections to the fee system by tak- for consumers in developing their know- ing into account experiences gained in the ledge and understanding of financial servic- first year of operation. While the modifica- es and products. The programme is sched- tions and amendments to the Banking Act uled to take place over the next two to three were in the parliamentary procedure, we years and will be one of the most important proposed the conditions for the expansion activities of the Bank Association of Slovenia of the system to users other than banks in in the coming period. collaboration with the legislator and the stakeholders, and in agreement with the members of the system (Credit Bureau). Dušan Hočevar Director of the Bank Association of Slovenia In addition, we have addressed to the Ministry of the Economy a number of com- ments on the provisions of the draft text of the new Consumer Credit Act (ZPotK). The Bank Association of Slovenia 6 Annual Report 2009

The composition of the Supervisory Board

As of 1 May 20101

CHAIRMAN MEMBERS Božo Jašovič, Vera Dolinar, Nova Ljubljanska banka d.d. KD banka d.d. Dušan Drofenik, DEPUTY CHAIRMANS Banka Celje d.d. France Arhar, Gregor Hudobivnik, Banka Slovenija d.d. deputy member, Abanka Vipa d.d. Matjaž Kovačič, Igor Kragelj, Nova Kreditna banka Maribor d.d. Banka Koper d.d. Klemens Nowotny, Raiffeisen banka d.d. Drago Pišek, Poštna banka Slovenije d.d. Andrej Potočnik, Hypo Leasing d.o.o. Anton Romih, Hypo Alpe–Adria–Bank d.d. Cvetka Selšek, SKB banka d.d. Sibil Svilan, SID banka d.d. Gorazd Trček, Gorenjska banka d.d.

1 The members of the Supervisory Board of the Bank Association of Slovenia nominated for the forthcoming term of office will be elected at the 20th Annual General Meeting of the Bank Association of Slovenia to be held on 8 April 2010. As of 31 December 2009, the Supervisory Board was composed of the following members: Božo Jašovič, Nova Ljubljanska banka – president, deputy presidents France Arhar, UniCredit Banka Slovenija and Matjaž Kovačič, Nova Kreditna banka Maribor; members: Štefan Belingar, Deželna banka Slovenia, Igor Kragelj, Banka Koper, Dušan Drofenik, Banka Celje, Klemens Nowotny, Raiffeisen banka, Romana Pajenk, Probanka, Boris Pesjak, Factor banka, Andrej Potočnik, Hypo Leasing, Cvetka Selšek, SKB banka, Sibil Svilan, SID banka, Gorazd Trček, Gorenjska banka and Aleš Žajdela, Abanka Vipa. The Bank Association of Slovenia Annual Report 2009 7

Selected data for the Slovenian macroeconomic landscape and banking sector

Selected macroeconomic indicators for Slovenia 2008 2009 Real GDP growth p.a. 3.5% – 7.8% Annual inflation rate – consumer prices 2.1% 1.8% Average annual inflation rate 5.7% 0.9% Current account deficit € 312 mn € 452 mn i.e. 3.4% of GDP i.e. 5.2% of GDP Government deficit € 631 mn € 1,915 mn i.e. 1.7% of GDP i.e. 5.5% of GDP Consolidated government debt € 8,389 mn € 12,519 i.e. 22.6% of GDP i.e. 35.9% of GDP

Source: Statistical Office of the Republic of Slovenia (SURS)

Data for the Slovenian (in € mn) (in € mn) growth (in %) banking sector (unaudited) 2008 2009 2008/09 Total assets 47,628 51,441 8.0 Capital 3,996 4,293 7.4 Loans and advances 37,561 39,436 5.0 Liabilities to banks 18,146 15,792 – 13.0 Liabilities to non-banking sector (deposits) 20,612 23,529 14.2 Net interest income 945 920 – 2.6 Gross income 1,360 1,417 4.1 Operating expenses 776 761 – 1.9 Profit before tax 306 161 -47.5

Source: Bulletin of the Bank of Slovenia, January 2010

2008 2009 Number of employees 12.250 12.154

The Bank Association of Slovenia Annual Report 2009 9

Activities of the Bank Association in 2009

Banking industry issues Within the framework of the Accounting Committee, two working groups have been In the field of the banking industry issues, the particularly active: the working group for tax- lion’s share of activities was focused on re- related issues and the working group respon- designing the system for sending reports sible for monitoring the implementation of the (statutory returns) to the national central new system for bank reporting to the central bank, monitoring the modifications and clari- bank. The working group for taxes has pre- fications to International Financial Reporting pared a proposal of changes to be made to Standards (IFRS), and watching closely the the Corporate Income Tax Act (ZDDPO) in developments in the tax legislation area. It is relation to interest charged on transactions worth mentioning that the Ministry of between related parties. In addition, the Finance has made modifications to the working group has provided answers to Mortgage Bond and Municipal Bond Act numerous questions asked by member banks. (ZHKO) in response to the initiative made by the Slovenian banks to recognise the The centre stage task of the group in charge generalised market value of a residential of putting in place the new reporting system property calculated by using the mass real for banks has been to collect questions asked property appraisal method as the eligible by member institutions about the new report- tool to establish the mortgage credit value of ing format. In co-operation with the Bank of the pledged property serving as coverage Slovenia and member institutions, the report- (margin of safety). In autumn 2009, the ing requirements for collateral under Basel II Ministry of Finance and the Bank of and the new reporting system where data Slovenia released the common positions vis- form a matrix of business lines and attributes _-vis the implementation of the Mortgage have been harmonised. The central bank has Bond and Municipal Bond Act (ZHKO). adopted a common reporting scheme using the matrix method as a basis for the chart of accounts. Furthermore, the Accounting Committee has set up a support group for off- balance sheet items, which together with the Bank of Slovenia has addressed the unre- solved issues of the matrix reporting for that part of the balance sheet. The Bank Association of Slovenia 10 Annual Report 2009

The Risk Management Committee has pre- Strategic matters pared its expert opinion on the need for the preparation of ratings to assess creditworthi- The committee in charge of strategic matters ness for private individuals by using the data addressed in 2009 the issues associated collected for the SISBON system (Credit with the Contract on the Establishment of the Bureau). The working group for collateral Bank Association of Slovenia and the issues that operates within the framework of the related to the further development of the SIS- Risk Management Committee has proposed BON system – credit scoring/Credit Bureau. to modify the Regulation governing credit Furthermore, the committee members dis- protection in connection with the Regulation cussed the measures taken by the on the assessment of credit risk losses of Government of the Republic of Slovenia with banks and savings banks. the aim to give impetus to the lending activi- ties in favour of the country's real sector and The members of the Internal Audit Committee focused effort on the issues in relation to col- have participated in the process of harmoni- lective bargaining in the banking sector. sation of the changes made to Position 8 of the Slovenian Institute of Auditors (Slovenski Payment services and the SEPA project inštitut za revizijo), which elaborates on the issue of additional audit reviews of compli- The main objective of the SEPA direct debit ance with the risk management rules in banks sub-project (SDD) has been to prepare the and savings banks, and by co-operating with basis for reachability for direct debits in con- the Bank of Slovenia, the Committee has formity with the SEPA direct debit scheme obtained clarifications with regard to the (the SDD scheme) including the e-mandate scope of engagement of internal auditors – a prerequisite for the Slovenian banks and when conducting audit reviews of the find- savings banks to accede to the SDD scheme ings made by external auditors before the by 1 November 2010 at the latest. modification to the Regulation governing the minimum scope and content of an audit As a result of a delay in the approval of a review and an auditor’s report. new version of the SDD Core Direct Debit Rulebook by the European Payments Council, the implementation guidelines have not been prepared yet. In addition, which rules will apply – the ones currently in effect or the new ones to be eventually adopted – when the Slovenian credit institutions adhere to the SDD scheme will depend on the func- tionality of the infrastructure used by credit institutions to conduct payment transactions under the SDD scheme. The Bank Association of Slovenia Annual Report 2009 11

The main objectives of the sub-project for the The working group for cash has addressed migration of credit transfers (SCT) have been: the following issues: recycling of euronotes, to determine the terms for the migration of professional cross-border transportation of credit transfers executed under the NPI euro cash and euro coins. The most impor- scheme to the SEPA credit transfer scheme tant activity in the cash payments area in (the SCT scheme) and to adopt the necessary 2009 was the issue of fostering the profes- modifications and amendments to the sional cross-border transportation of euro Payment Services and Systems Act (ZPlaSS) cash by laying out options for rendering together with the concept of a universal pay- cross-border transport feasible in the ment order (univerzalni plačilni nalog – UPN) European Commission's White Paper on pro- – the instrument planned to replace shortly fessional cross-border euro cash transporta- the payment forms currently in use. tion by road between the member states in the euro area. In collaboration with the working groups for the SEPA Credit Transfer Scheme (SCT), The committee in charge of payment services SEPA Direct Debit Scheme (SDD) and the having a mandate to play the role of the Universal Payment Order (UPN), a pro- National Committee for the implementation gramme for communicating with SEPA for of the SEPA project at the Bank Association the year 2009 was prepared and it is the of Slovenia, has focused attention also dur- integral part of the project documentation ing the year under review to the matters rela- for two sub-projects: SEPA direct debits and ted to SEPA. A special working group of the the migration of credit transfers. Committee has worked together with the Agency for Public Legal Records and Unlike the SEPA credit transfer scheme and Related Services (AJPES) in the area of col- the SEPA direct debit scheme, the SEPA lecting and passing on the data compiled Cards Framework (SCF) is founded on the within the framework of payment services. modifications and alignments of the existing rules and conditions, while particular atten- The working group appointed to address the tion has been paid to the card standardisa- issue of e-Invoicing has prepared a number tion, the certification process and security. of documents in relation to e-Invoicing, prima- rily the General Terms and Conditions for the exchange of e-invoices, the Agreement on the method of exchange of e-invoices through the e-Invoice system and the Technical Specification and standards for e- invoices. The Payment Services Committee has endorsed the bid submitted by the compa- ny for payment instruments processing Bankart for taking the role of a central processor. The Bank Association of Slovenia 12 Annual Report 2009

In addition, the working group for the har- SISBON project monisation of the standardised contract for credit transfers of pension benefits through During the year under review, considerable commercial banks for payments by making time and energy went into the alignment of direct debit payments and the working the SISBON system (the Slovenian Credit group with a mandate to lay the foundations Bureau) to the Slovenian and European leg- for setting up a register of bank accounts islation. In March 2009, the National (TRRs) have been operating within the Assembly enacted the modification to the framework of the Payment Services Banking Act, which primarily addressed the Committee. spate of information that can be compiled in the SISBON and a novelty that introduced The working group with a mandate to facili- the circle of institutions included in the system. tate debt collection by enforcing court Specifically, alongside banks and savings orders has worked together with the repre- banks, also the leasing companies and the sentatives of the Tax Administration of the issuers of payment cards will join the system, Republic of Slovenia (DURS) on the elec- the latter as voluntary members. The expert tronic exchange of data referring to enforce- working group SISBON has prepared a ment, but the collaboration has been sus- detailed plan of activities for the realisation pended by the Tax Administration. In addi- of the necessary amendments, which have tion, the members of the working group co- called also for the upgrade and modifica- operated with the representatives of the tions to the SISBON application. In accor- Slovenian courts in effort to facilitate dance with the modifications to the Banking enforcement judgements and the co-opera- Act, at the Bank Association of Slovenia we tion has resulted in the adoption of a stan- have prepared the adequate amendments to dard that will serve as a platform for further the Agreement on setting up and use of the activities, such as enlarging the circle of the information technology SISBON system with participating institutions to the institutions attachments. that hand down the judgments i.e. execution orders into the electronic exchange of enforcement orders. The Bank Association of Slovenia Annual Report 2009 13

In the light oft the fact that the Consumer Social partnership Credit Act has been modified in order to transpose the provisions laid down in the One of the most important issues addressed amended EU Directive on Consumer by the Bank Association of Slovenia in Crediting by harmonising credit rules and 2009 have been the activities carried out in allowing consumers to choose the best deal the field of collective bargaining, that is, and which provides access to a part of infor- social partnership. In January 2009, the mation also to other lenders, at the Bank attachment to the Collective Agreement for Association of Slovenia, we have proposed the Activity of Banks and Savings Banks in adequate amendments to the Slovenian legis- the Republic of Slovenia (KPDb) with the tar- lation governing this area. By making amend- iff was amended to reflect the change. ments to legislation would lay the foundations Specifically, the starting wage/salary for the for the credit scoring of customers with the first tariffs class under the Collective access provided also to other creditors. Agreement for the Activity of Banks and Savings Banks increased by 1.15 per cent. The Information Commissioner of the Republic of Slovenia instigated in 2009 the At the beginning of the year under review, legal inspection of the SISBON with the aim the Bank Association of Slovenia laid before to verify whether the provisions laid down the trade unions its final position stating that the Personal Data Protection Act (ZVOP) the employers were not prepared to negoti- had been duly observed and the findings of ate the proposals made in September 2008 the inspection have shown that there has due to the fact that the economic situation been no violation of the Act. and the financial sector worldwide in the coming period was difficult to predict. The recommendations given on the basis of Furthermore, the Bank Association of the ordinary independent auditor’s annual Slovenia adopted the position that the review of the system in 2008 have been car- increase of the starting wage/salary of 2.3 ried out as instructed. The findings of the per cent for August 2009 for banks and sav- 2009 ordinary independent auditor’s annu- ings banks would not apply. Both trade al review of the system will be known in unions turned down the possibility of skip- 2010. Furthermore, during the year under ping the starting wage/salary increase for review, at the Bank Association of Slovenia, August 2009 in the agreed percentage. we started with reviewing complaints Therefore, the Bank Association of Slovenia lodged vis-a`-vis the SISBON system on a accepted the initiative made by the trade regular basis. unions for mediation, but despite the efforts made, the parties failed to agree and no amicable dispute resolution could be reached. By failing to settle the dispute ami- cably, the mediation collapsed at the end of The Bank Association of Slovenia 14 Annual Report 2009

the year, and collective labour dispute pro- Retail banking ceedings have been instigated before court by the Trade Union of the Banking Industry The following working groups have been of Slovenia. engaged in different areas within the frame- work of the Committee for retail banking: the The Bank Association of Slovenia terminated working group for the introduction of stan- the Collective Agreement in September and dards for POS terminals installed at the mer- laid before the trade unions a new Collective chants’ premises, the working group for the Agreement for the Activity of Banks and preparation of positions for customer relation- Savings Banks in the Republic of Slovenia ship management, the working group for the (KPB), as a collective agreement designed to creation of a financial model, the working provide a higher degree of flexibility and to group for the credit scoring model – SISBON, delegate more power to the so-called shop the working group for the adjustment of the or entrepreneurial agreements. In addition, recommendations for switching bank two meetings between the management of accounts, and the working group for draft- the Bank Association of Slovenia and the ing the recommendations for banks to be fol- management of the trade unions were organ- lowed in a case of cyber crime. ised and at the December meeting it was agreed, among other, that both sides should The Committee and its working groups have re-examine their September proposals with addressed the strategy of and the agree- the bottom line being a convergence of the ment about the SISBON credit scoring sys- social partners’ positions and a commence- tem. As regards the harmonisation of bank- ment of collective bargaining as early as ing operations with the Recommendations of practicable. However, the social dialogue the Bank of Slovenia for charging interest on was not resumed during 2009 since the retail transactions, in co-operation with the trade unions’ have distanced themselves central bank we have resolved some operat- from it. Furthermore, it has been agreed that ing problems associated with the changes to an ad hoc expert working group should start the rates of interest. In the field of POS termi- work on redesigning the wage model. nals at the merchants’, due to a change to the standards and the necessary adjustments in the business, we have been forced to pre- pare a text containing the guidelines for merchants and we have organised work- shops for the business community to facili- tate the change. The Bank Association of Slovenia Annual Report 2009 15

We have drafted the positions for the com- We have drawn up with the Bank of munication of banks with their customers Slovenia a new text for the flier serving as a serving as a scheme for the implementation notice to depositors about the guarantee for of financial education for the public. By their deposits placed with credit institutions adopting these positions, we have estab- in Slovenia. lished the standards, the principles and the communication principles and shortlisted the At the end of 2009, an ad hoc working target groups, contents and the persons group was appointed on the initiative made responsible for carrying out the activities. by the Supervisory Board to examine vari- ous aspects of cyber crime and its members The European Commission and the European started to prepare the text of the recommen- Banking Federation have drawn up the core dations for the steps to be taken by credit principles for switching a bank account; there- institutions in the case of suspicion that a fore the Rules and procedures for switching a bank’s electronic banking channel has been bank account in place in the Republic of abused and that unauthorised monetary Slovenia had to be amended. We have pre- transactions have been made. pared the remarks regarding the text of the Decree on implementing of the Republic of Slovenia Guarantee Scheme Act for Natural Persons (lending) and laid it before the Ministry of Finance.

The Ministry of the Economy has launched the procedure for the incorporation of the provisions laid down in the European direc- tive on consumer credits into the national legislation. We examined the first working paper within the framework of the member institutions and addressed the remarks to the Ministry of the Economy, and at the end of the year we attended the meetings to con- verge positions with regard to some of the most important provisions. The Bank Association of Slovenia 16 Annual Report 2009

Legal affairs The experts of the Legal Affairs Committee have participated in fine-tuning the tools for The experts engaged in the Legal Affairs the implementation of the provisions of Committee have played an important role Articles 122 and 122.a of the Financial within the framework of SEPA project mostly Operations, Insolvency Proceedings and the by liaisoning with the support group for the Compulsory Dissolution Act (ZFPPIPP) and in SEPA-related legal issues. They have pre- the preparation of the wording of Articles 8 pared answers to the questions made to and 9 of the Consumer Credit Act (ZPotK). other working and support groups regard- ing the adherence of banks to the SEPA pay- During the year under review, the members of ment schemes, the new Payment Services the Legal Affairs Committee have endorsed Directive in the single market and the new the modifications and amendments to the Payment Services and Systems Act. As the instructions on the implementation of court legal affairs experts, we have been included judgements for debt collection by enforce- also in recasting the general terms and con- ment and they have addressed the issues in ditions for banks for direct debits, that is, the relation to opening of fiduciary accounts. The new payment instruments. representatives of the Committee have also joined the working group of the Bank The members of the Legal Affairs Committee Association of Slovenia for internet fraud have participated in redesigning the agree- (cyber crime). ment about the establishment and use of the credit-scoring SISBON system (Credit Bureau) and the rules that govern the sys- tem, as well as in the resolution of certain legal issues with regard to the protection of personal data. We have played a pro- active role in modifying the wording of Article 390.a of the Banking Act, which has redefined the SISBON system.

The Constitutional Court turned down in 2009 the petition lodged by the Slovenian banks in 2006 for the constitutional review of those provisions of the Banking Act, which stipulate than credit institutions have to pro- vide data to various authorities and institu- tions of the Republic of Slovenia free-of- charge. The Bank Association of Slovenia Annual Report 2009 17

Treasury There are three working groups that operate within the framework of the Committee: the The members of the Treasury Committee working group for the introduction of fiduci- were very active at the beginning of the ary accounts as laid down in Article 255 of year particularly in addressing the issue of the Financial Instruments Market Act, the the structural liquidity of the Slovenian bank- working group for custody operations, and ing system, while during the year they most- the working group for qualified intermedi- ly watched the measures adopted by the aries. Bank of Slovenia and their impact on the liq- uidity position of credit institutions. Both The Committee has participated in the activ- issues were hot in 2009 when the effects of ities of the European Banking Federation the financial crisis were most felt in the hard- (EBF) during the preparation of the com- hit banking sector. ments for the paper with the title: »Market Standards for Corporate Actions Processing Operations with financial instruments (CAJWG) «. The co-operation with the secu- rities clearing corporation, KDD d.d., when The committee responsible for back-office the modifications requested within the frame- and custody matters in relation to operations work of modifications to The Tariffs of KDD that involve financial instruments (OZSV) d.d. was an important step. The Committee met to discuss the findings of the working has also examined the issue of statutory groups with the aim to monitor the develop- reports sent to various regulators in the case ment of the clearing and settlement systems, of a foreclosure on securities pledged as and the Committee members have taken collateral. part in the national user group for the imple- mentation of the Target 2 Securities (T2S). The collaboration in the area of the activities for the introduction of fiduciary accounts permitted by virtue of Article 255 of the Financial Instruments Market Act (ZTFI) has been highly important. The members of the Committee have participated in the prepara- tion of the analyses of the adjustment consid- ered necessary for the implementation of the two-tier ownership system and they have examined the proposal for the modification of the tax procedure with regard to fiduciary accounts. The Bank Association of Slovenia 18 Annual Report 2009

Anti-money laundering In collaboration with the Office for Money- Laundering Prevention, the procedure for The Anti-money Laundering Committee has analysing the indicators that should help prepared a comparison in 2009 of the recognise suspicious transactions has been European Directive on the prevention of the launched. The Committee is planning an use of the financial system for the purpose of overhaul of the suspicious transaction indica- money laundering and terrorist financing tors after the promulgation of the act and the and the Slovenian Prevention of Money harmonisation of the guidelines issued by the Laundering and Terrorist Financing Act and Bank of Slovenia for the implementation of has established that the requirements laid the measures in the banking sector. down in the national law do not exacerbate the obligations stipulated under the The Committee has prepared the comments Directive. on the text of the new the Prevention of Money Laundering and Terrorist Financing The member institutions have identified a Act, harmonised with the Bank of Slovenia number of problems when trying to establish and with the Office for Money-Laundering who the actual owners of their clients are. To Prevention. An overview of the effects made facilitate the fulfilment of this obligation, a by the amendments to the Prevention of review and a correction of the checklist used Money Laundering and Terrorist Financing to establish the identity of a client’s actual Act has also been made together with the owner have been made and the results pre- hands-on activities. sented at the workshop. On top of that, the members of the Committee have also updat- ed the Recommendations for the information technology support for monitoring client data and transactions to identify suspicious financial activities. The Bank Association of Slovenia Annual Report 2009 19

Credit institutions and safety and Informatics security issues The IT Security Forum (VF) completed the Within the framework of the working group computer forensic project, which dissects for safe and secure operations of credit insti- forensic preparedness and response against tutions, at the Bank Association of Slovenia the backdrop of the findings made in legisla- we have organised a workshop where the tion and through legal practice. modified recommendations for safe and secure operations of the credit institutions The working group for the processing of were presented. standards and best practice in the field of software application development has We have organised a number of meetings amended the methodological part by sub- of the security engineers working in banks mitting a proposal to include a case study as with the representatives of the Bank of a practical example: »The processing and Slovenia, police and other institutions associ- information technology support for the sys- ated with this area. The issues falling within tem handling foreign currency cash and the ambit of security system signal transmis- traveller cheques«. sion, loss events, that is, robberies, attacks on automated teller machines and on night The working group with a mandate to exam- depositories, as well as cases of abuse at ine the impact of Basel II on the processes, Point-of-Sale (POS) terminals. which have been running within the frame- work of information technology departments Furthermore, the positions regarding the at credit institutions and which in the past document with the title: “Framework bank have already prepared a methodology for security policy and the positions vis-a`-vis the assessing and handling information technol- risk analysis and security study” have been ogy risk at credit institutions, has prepared a aligned with the Bank of Slovenia. common operational risk database for the information technology area. The catalogue We have liaisoned with the Ministry of the is based upon the core definition of opera- Interior when the modifications to the rules tional risk under Basel II and its interpreta- of procedure on the professional transporta- tion by the Bank of Slovenia. tion and protection of cash were prepared and we have found common ground regard- ing the Guidelines on the procedures to be followed when a bank security alarm goes off. The working group has started work on defining a protocol on mutual co-operation between credit institutions and police with a focus on establishing best practice. The Bank Association of Slovenia 20 Annual Report 2009

Training Centre In the field of record-keeping and reporting on business events in banks, we have over- The activities in which the Training Centre of hauled and amended the content of the the Bank Association of Slovenia engaged chapters dealing with Leasing and in 2009 were mostly channelled toward the Consolidation in the manual with the title: realisation of the agreed educational pro- “Monitoring business events in accordance gramme, fine-tuning of the curricula to the with IFRS”. At the end of 2009, we pub- current situation in the field of banking indus- lished the manual »Making records of busi- try and financial services, commitment to ness events in banks« with numerous practi- deliver quality in all activities, and to the col- cal examples of making entries into the laboration with sister institutions at the inter- books of account. The manual was distrib- national level. uted to the participants of the conference on accounting held in December and it will We have carried out all longer training pro- serve well also as the study material for sem- grammes such as Banking Operations, inar participants. School for Banking, Payment Services and Financial Analysis of Companies, of which The professional educational and training the programme for the School for Banking programme has been expanded by adding deserves a special place both in terms of the 14 new programmes in the area of regula- number of participants and the high grades tions, payment services, treasury, leasing, they have achieved – among the best over taxation, accountancy, personal and corpo- the past few years. rate finance.

Within the framework of the conference that We have co-operated with the Slovenian gathered together human resource officers Institute of Auditors on the issue of the recog- and educators in banks, and in January nition of the professional education pro- 2009 we awarded »European Foundation grammes of the Training Centre of the Bank Certificate in Banking« to the fifth generation Association of Slovenia as supplementary of trainees going in the footsteps of nearly education for the purpose of extending, that 9,000 holders of the EFCB certificates in dif- is, renewing licences of employees working ferent European countries. in the field of accounting, audit, corporate finance, information technology systems and taxes. The Bank Association of Slovenia Annual Report 2009 21

On the initiative of the Institute of the Republic With the Qualobster project, in which for the of Slovenia for Vocational Education and pilot testing also Nova Ljubljanska banka Training, we attended the June meeting with played a part, we took part in the project the representatives of banks, the Centre for presentation in Luxemburg organised in Vocational Training and the Institute of the May 2009 in Bank and at the confer- Republic of Slovenia for Vocational Education ence organised when at the completion of and Training (CPI) where the initiative to start the project in June in Brussels. The the work on the compilation of a catalogue of Qualobster project was also presented at knowledge required for the vocational stan- the Committee for Training through which dards bank commercial clerk at the 4th and at also other member institutions of the Bank the 6th level. Association of Slovenia submitted their pro- posals. As regards international collaboration, the pro-active role played by the experts of the At the end of 2009, the European Training Centre in the activities of the Commission gave the green light to two new European Banking and Financial Services projects that also involve the Training Centre Training Association (EBTN) is noteworthy. of the Bank Association of Slovenia. The first As the EBTN member we have participated project falls within the ambit of the imple- in the meetings with the representatives of mentation of the European Credit System for the European Banking Federation (EBF) and Vocational Education and Training (ECVET), the European Commission, we have partici- a technical framework aimed to facilitate the pated in the Leonardo da Vinci projects and accumulation, transfer and recognition of we have included high-calibre foreign knowledge, skills and competences gained experts in our professional education and by individuals towards a qualification training programmes. adopted by the European Commission and endorsed by the European Parliament in The Training Centre wrapped up in 2009 June 2009, while the second project was the activities within the framework of two about the implementation of the European European projects: in May the EQUALIFISE qualifications framework at the banking sec- Project – European Qualification Assurance tor level to better understand and compare League and Financial Services (a single the qualifications levels of different countries European market for vocational education and different education and training systems and training) and in June the QUA.LOBSTER where we will be working together also with Project - QUality Assurance and Learning the Institute of the Republic of Slovenia for Organisation and the Banking and Financial Vocational Education and Training (CPI). Sector in EuRope (Quality assurance in learning organisation in banking and finan- cial sector in Europe by using the bench- marking method). The Bank Association of Slovenia 22 Annual Report 2009

The activities carried out by the Training Bančni vestnik and publishing activity Centre of the Bank Association of Slovenia in 2009 and earlier have been crowned by Bančni vestnik the EBTN Quality Award 2009 awarded by During the year under review, the authors the European Banking and Financial contributing to the journal kept abreast of the Services Training Association – EBTN to the developments in connection with the financial best performers in the year. The Training and economic crisis. Most analyses focused Centre of the Bank Association of Slovenia attention on the way out of the crises and has received the award for its performance commented the measures taken within the at the national level where it is committed to framework of monetary and fiscal policy. The achieving convergence of the professional authors probed into the methods used by standards in the banking industry and edu- credit institutions to identify measure and con- cational programmes with the European trol operating and interest-rate risks, they dis- standards and for the participation in the sected the role of dynamic provisioning in the activities carried out within the framework of light of the prevention of procyclical bank the European Banking and Financial credit activities and examined measuring the Services Training Association. value of financial investments against the backdrop of International Financial Reporting Standards. The authors coming from credit institutions commented on the impact of the financial crisis on banks’ performance in the face of the shrinking credit activities and prof- its practically wiped out at year-end. Those authors cast light on the role of the models based on stable demand deposits on liquidity management at credit institutions, gave accounts of the changes made to the report- ing system and collecting information for the management information systems and looked into the decisions taken to steer the ’s when financial shocks left a deep dent on investor confi- dence. The role of the covered bonds and their importance for the Eurosystem has been analysed with particular attention. The Bank Association of Slovenia Annual Report 2009 23

The annual international issue of the Bančni We have reported on the conference of vestnik was dedicated to the impact of the accountants in banks, on the remarks made global financial crisis on the banking sector by banks regarding the draft law on pay- in the countries of the Central and South-east- ment services, on the sessions of ECOFIN ern Europe (CSEEC). The Slovenian and for- Council, the OECD conference on the princi- eign authors have described and demon- ples of corporate governance held in strated through in-depth discourses the Slovenia, the meetings of the Executive extraordinary emergency measures taken by Committee of the European Banking the Federal Reserves FED and the European Federation, as well as day-in-day-out opera- Central Bank (ECB) as non-standard for mon- tions of banking institutions. We have written etary policy. They have analysed the func- about the dilemmas arising from retail bank- tioning of fiscal policy with a special focus on ing, the expectations of treasury officers in Slovenia. Foreign authors have taken under the light of the financial crisis, the SEPA proj- the looking-glass the credit activity of banks ect and the assessments of the Bank of operating in the Central and East Europe Slovenia of the significance of financial sta- and have evaluated the possibilities for the bility for safe and sound bank operations. recession and for the credit crunch in that The roundtable for which authors wrote part of Europe to end fast. papers was dedicated to corporate gover- nance in banks, given the fact that there are Furthermore, we have paid due attention to partly government-owned banks. At the end the tenth anniversary of the introduction of 2009, we held a presentation of the pen- euro in the EU and to the second anniver- sion system and pension fund management sary of Slovenia’s accession to the euro in OECD members. zone. The global financial crisis has con- firmed that the benefits of the single European currency exceed the drawbacks of the limited monetary sovereignty of the Republic of Slovenia. The Bank Association of Slovenia 24 Annual Report 2009

Publishing activity and the website the first time. Since then, the number of visi- Within the framework of the publishing activ- tors has ranged between 1400 and 1700 ity we published the Annual Report of the visitors per month, whereas between Bank Association of Slovenia for 2008. In January and May there were 600 visitors December, we took part in publishing the per month on average. new leaflet and a poster with information about the credit-scoring system SISBON On the website of the Bank Association of serving the member institutions of the Bank Slovenia open to the general public, we Association of Slovenia to inform their cus- published 12 announcements for the public tomers. in 2009 mostly bringing the news about the payment services area and the implementa- On the Extranet we have posted minutes of tion of the SEPA schemes. In July last year, the meetings, invitation and notices, materi- we installed a new software application of als and documents of the committees and the website named eArhiv (electronic working groups of the Bank Association of archives) of the Bančni vestnik, the journal Slovenia. We have put on the Net several for money and banking. The digital archives new websites and formed new user groups: comprises the electronic versions of all arti- the website of the Editorial Board of the cles published in the journal since 1951 Bančni vestnik, the group Accountants and when the first issue was published and it Taxes, and the group of the committee for enables the chosen article to be printed and back-office and custody matters. On the ini- saved. The topics, that is, headings that have tiative of the SEPA office, we have set up the attracted most visitors include: the list of ZPlaSS mailbox. In June, we started to send bank cards credits BanKredit, the presenta- to the extranet users the electronic bulleting tions of the members of the Bank Association – eBilten – to break the news by giving an of Slovenia, the SISBON credit-scoring sys- overview of the news that appeared at the tem, and the monthly announcements of the website of the Bank Association of Slovenia seminars organised by the Training Centre during the past week. of the Bank Association of Slovenia.

The number of the users of the Extranet On the independent national website dedi- increased in 2009 – the most popular cated to SEPA: www.sepa.si, where we post pages were the presentations brought by information for the public in relation to the SEPA, the committees, the ZPlaSS mailbox SEPA activities, we have published five and by the Supervisory Board. The number releases for the public. of visitors surged after June when the elec- tronic bulletin – eBilten – was circulated for The Bank Association of Slovenia Annual Report 2009 25

Leasing industry Within the framework of effort to prevent frauds in car purchase financing, the In 2009, we continued with the activities in Committee members have carried out activi- the tax area in relation with the so-called ties in several fields. They have prepared the »missing traders«. In addition, the Training basis for on-line exchange of information Centre of the Bank Association of Slovenia about the cars offered under car leasing organised a special workshop to address financing arrangements. In addition, when the issue and the reaction of the member examining the mandatory documents for reg- institutions was very good. istering a vehicle, it has become clear that the so-called approval certificates do not pro- The experts of the Training Centre have vide for safe operations; hence, a proposal played a pro-active role in the preparation of has been presented to the Ministry of modifications and amendments to the Transport to introduce the so-called two-part Banking Act that now permit also the quali- certificate of a vehicle registration. In addi- fied leasing companies to exchange informa- tion, we the Committee has circulated the tion about indebtedness of their potential information to the members of the Bank clients and also oblige them to feed the infor- Association of Slovenia, which pursue the mation into the SISBON system in conformity leasing business, of the possibility to check with the rules governing the system. We have beforehand the information regarding legal taken part also in the preparation of the new and material defects and flaws on vehicles to law on consumer credits with the emphasis be financed by leasing. The committee mem- on resolving the open issues in the leasing bers have also prepared comments on the business. In the course of their business, the draft guidelines for the committee responsi- leasing companies have to cope with the ble for anti-money-laundering and terrorist lack of financial discipline. The draft of the financing for the leasing business and these new law on payment services envisaged a guidelines have been taken into account also new approach to cashing in domiciled bills by the Office for the Prevention of Money of exchange, as a step toward resolving the Laundering. The Committee has used the problem. Within the framework of the leasing adopted guidelines to continue with the area, at the Leasing Committee, we were preparation of the necessary documentation wary as to the efficiency of that instrument; and the implementation in the field. hence, we proposed to introduce a new instrument, the so-called acceptance/trade order, considered as an instrument that war- rants efficient and safe collateral for claim. The Bank Association of Slovenia 26 Annual Report 2009

DBS leasing was admitted to membership of Settlement Council the Bank Association of Slovenia at the Annual General Meeting. The Settlement Council established within the framework of the Bank Association of The committee responsible for the leasing Slovenia with a mandate to handle out-of- business took part also in a few international court dispute settlement whenever a cus- projects launched by Leaseurope without tomer and a credit institution do not see sidetracking the activities aimed at keeping things “eye-to-eye”, examined 34 cases in the public informed of the latest developments the course of 2009. The Settlement Council in the leasing business. Moreover, the commit- looked into the complaints regarding bank- tee members worked on the preparation of ing operations with customers who are natu- the layout for the presentation of the leasing ral persons, that is, retail customers in the business in Slovenia as the topic of the month area of payment services, the enforcement of published in the international journal for asset court orders, the amount of cash paid out by finance that provides market intelligence, ATMs, savings accounts, abuse of payment analysis and news – Leasing Life. cards, incorrect calculation of loan instal- ment and the termination of credit contracts. During the year under review, the Settlement Council addressed also more complex issues in the area of the use of payment systems, the plunge of security rates, the cancellation of the power of attorney granted to make pay- ments on the basis of a standing order on a customer’s bank account. In accordance with commitment to transparency, the deci- sions passed by the Settlement Council have been published on the website of the Bank Association of Slovenia. The Bank Association of Slovenia Annual Report 2009 27

By definition, the focus of the Settlement International affairs Council has always been on a dispute reso- lution acceptable to both parties involved: During the year under review, the Bank the customer and his or her bank before tak- Association of Slovenia was a particularly ing a legal action. During the year under active participant in the activities carried out review, the Settlement Council was success- by the European Payments Council (EPC) ful in two cases, in 13 cases the dispute res- where our representatives have participated olution gave right to the injured customers in in numerous working groups in the area of the full or in part, and in three cases the cus- SEPA project. We have participated in the tomers managed to come to an understand- meetings of the Economic and Monetary ing with the bank directly. Affairs Committee (EMAC) of the European Banking Federation (EBF) and the meetings of At the end of 2009, the act governing the the Executive Committee of the European establishment and work of the Settlement Banking Federation, as well as the annual Council within the framework of the Bank general meeting of members of the European Association of Slovenia as a body for the Banking Federation. We have attended the out-of-court settlement between a customer general meeting of members of the associa- and a bank was recast to incorporate the tion of consumer credit reference agencies modifications to the relevant legislation with (credit bureaus) and the European effect from 1 January 2010 onward. Federation of Leasing Company Associations - Leaseurope, and we have engaged in the work of the International Chamber of Commerce (ICC) in the field of documentary banking operations and in the European Banking and Financial Services Training Network (EBTN). The Bank Association of Slovenia 28 Annual Report 2009

Documentary banking operations The Committee has endorsed the decisions taken by the Banking Commission in relation The representatives of the Committee for to the unresolved problems associated with documentary banking operations have documentary instruments. We have attended two meetings of the commission for addressed the issues regarding doing busi- banking technique and practice, which ness with the Islamic Republic of Iran and operates under the umbrella of the we have agreed to adopt a common stance International Chamber of Commerce (ICC). vis-a`-vis Iranian banks, the issues in relation When attending the meeting held in to the activities in the field of public procure- Brussels, we have endorsed and approved ment, information in relation with the prepa- the new, revised ICC Uniform Rules for ration of the campaign for the use of the Demand Guarantees (URDG). The Uniform Rules for Demand Guarantees for Committee has participated together with domestic guarantees and the issues with the International Chamber of Commerce by regard to the transfer of service guarantees submitting observations and proposals in the between the Slovenian banks. course of the revisions of the rules scheduled to enter into force on 1 July 2010. As the member of the Commercial Crime Services, we have been receiving the month- ly reports and notifications (FIB E-Bulletin and CCI) on international frauds, we have been issuing warnings for the credit institu- tions whenever there was a looming danger of counterfeited guarantees, letters of credit (L/Cs), cash payments (incasso) and cheques. The Bank Association of Slovenia Annual Report 2009 29

Slovenian S.W.I.F.T. working group Particular attention has also been paid to the issue of compiling the balance of payment As pencilled in the plan of activities of the statistics in the payment systems ("balance of Slovenian SWIFT member group (SSMS), its payment reporting") and the issue of costs in members continued in 2009 with the activi- payment services and the price of infrastruc- ties that ranged from examining the role of ture in these costs. SWIFT in the Slovenian banking environment and the introduction of new SWIFT services, In 2009, the members of the working group to the accession of new members to SWIFT, within the framework of the Slovenian SWIFT the review of the standards in place and the the user group SUGS addressed the issue of preparation of the overhauled training pro- the reorganisation of SWIFT from the posi- gramme for the Slovenian bank employees tion of continuing to provide support for the fine-tuned to the new system in place. The Slovenian SWIFT member banks. The key president of the member group has also par- topics addressed at the meeting comprised ticipated at the regular meetings held in the presentation of the new SWIFT message Slovenia, abroad and the SWIFT user confer- format: MT202 COV to incorporate order- ence – SIBOS 2009. ing party information and beneficiary details, the new standards developed to prevent A brisk pace of activities has characterised money laundering and terrorist access to the area of standards, particularly in the seg- wire transfers in response to the initiative ments related to the payment infrastructure given by the banks from the USA, as well as (the establishment of a single area for pay- the matters in relation to the allocation of ments in euros, securities, pledging real shares in a member-owned cooperative – property in lien, customer relationship man- S.W.I.F.T SCRL. In October, the level of pre- agement). paredness of the Slovenian banks for the new SWIFT standards was checked. The aspects of including new banks have been addressed within the framework of the SSMS. In 2009, KD banka signed up to the SWIFT. The Bank Association of Slovenia 30 Annual Report 2009

Member institutions

As of 8 April 2010 Leasing companies

Abanka Vipa d.d. Aleasing d.o.o. Banka Celje d.d. Daimler AC Leasing d.o.o. Banka Koper d.d. DBS Leasing d.o.o. Banka Sparkasse d.d. Hypo Leasing d.o.o. Banka Volksbank d.d. Immorent Ljubljana Leasing d.o.o. BAWAG banka d.d. KBM – Leasing d.o.o. BKS Banks AG, branch NLB Leasing d.o.o. Delavska hranilnica d.d. Porsche Leasing SLO d.o.o. Deželna banka Slovenia d.d. Probanka Leasing d.o.o. Factor banka d.d. SKB Leasing d.o.o. Gorenjska banka d.d. Sparkassen Leasing d.o.o. Hranilnica Lon d.d. Summit Leasing Slovenia d.o.o. Hypo Alpe–Adria–Bank d.d. Unicredit Leasing, d.o.o. KD banka d.d. VBKS Leasing d.o.o. Nova Kreditna banka Maribor d.d. Nova Ljubljanska banka d.d. Poštna banka Slovenia d.d., banking group of Nova Kreditna banka Maribor Probanka d.d. Raiffeisen banka d.d SID banka d.d. SKB banka d.d. UniCredit Banka Slovenija d.d. Zveza bank, Celovec (Klagenfurt, Austria) The Bank Association of Slovenia Annual Report 2009 31

Professional team

Dušan Hočevar, Bančni vestnik and Director publishing activity Sonja Anadolli, Deputy Director Emil Lah, Jelka Vydra, Head of Publishing Activity Head of Secretariat Aleksandra Žibrat, Novica Novaković, Editor of Special Publications Head of Legal Office and web pages Slavko Cimprič, Head of Retail Banking Training Centre Hermina Govekar Vičič, Head of SISBON Project Viljenka Markič Simoneti, Boris Bajt, Head of the Training Centre Head of Leasing Affairs Mateja Lah Novosel, Borut Tomažič, Senior Programme Specialist for Payment Services and Training Co-ordinator and SEPA Co-ordinator Irena Lavrič, Azra Beganović, Programme and Training Co-ordinator Administrative Clerk Mojca Novak, Organiser Bojan Butolen, Administrator Organiser