Financial Crime World

Banking and Financial Regulations in the Republic of Slovenia: Key Definitions

The following article provides an overview of key definitions related to banking and financial regulations in the Republic of Slovenia. These definitions are crucial for understanding the context and scope of these regulations.

1. State Aid

  • Definition: Aid granted by a Member State or through state resources that distorts or threatens to distort competition by favoring certain undertakings or the production of certain goods.
  • Impact: State aid can have significant effects on the market, leading to unfair competition and potential harm to consumers.

2. Supranational Fiscal Support

  • Definition: Support given at the European Union level that would be considered state aid if it were given at the national level, with the aim of maintaining or restoring a bank’s operations, liquidity, or solvency.
  • Purpose: Supranational fiscal support is designed to promote financial stability and prevent the collapse of banks.

3. Commission

  • Definition: The European Commission, which is responsible for enforcing EU laws and regulations.
  • Role: The Commission plays a crucial role in ensuring that member states comply with EU regulations and laws.

4. Small and Non-Complex Bank

  • Definition: A bank with total assets worth €5 billion or less, as defined in Regulation 575/2013.
  • Characteristics: Small and non-complex banks are subject to specific regulatory requirements due to their size and complexity.

5. Model Risk

  • Definition: Potential losses that a bank could incur due to errors in the development, implementation, or use of internal models.
  • Consequences: Model risk can have significant financial implications for banks and may lead to regulatory action.

6. Supervisory Authority

  • Definition: An agency responsible for supervising financial sector entities, excluding competent authorities (e.g., Banka Slovenije and the Agency responsible for insurance supervision and financial markets).
  • Responsibilities: Supervisory authorities play a critical role in ensuring that banks comply with regulatory requirements.

7. Internal Approach

  • Definition: Methods used by banks to assess their risk, including internal ratings-based approaches, internal models, own estimates, advanced measurement approaches, internal model methods, and internal assessment approaches.
  • Importance: The internal approach is a key component of a bank’s risk management framework.

8. Financial Stability Board (FSB)

  • Definition: An international body established to promote global financial stability and coordinate macroprudential supervision of the financial system.
  • Objective: The FSB aims to prevent future financial crises by promoting cooperation and coordination among regulatory authorities.

9. Supervisory Board

  • Definition: A bank’s supervisory board in a two-tier governance system or non-executive members of a single-tier board who oversee the management of the bank’s operations.
  • Role: The supervisory board plays a crucial role in ensuring that a bank is managed prudently and in accordance with regulatory requirements.

10. Management Board

  • Definition: The bank’s management board in a two-tier system or executive directors authorized to manage the bank’s operations in a single-tier system.
  • Responsibilities: The management board is responsible for implementing the strategic direction of the bank and ensuring its overall performance.

11. Resolution Authority

  • Definition: An entity responsible for resolving and winding up banks, such as Banka Slovenije or the Single Resolution Board.
  • Role: The resolution authority plays a critical role in maintaining financial stability by resolving failed banks.

12. Immediate Family Member

  • Definition: A person related by marriage, long-term partnership, blood relationship (parent, child, adopted child), guardianship, or adoption to another individual.
  • Importance: The definition of an immediate family member is crucial for understanding the requirements related to conflict of interest and insider trading.

13. Gender-Neutral Remuneration Policy

  • Definition: A policy ensuring equal pay for men and women performing equal work or of equal value.
  • Objective: The purpose of a gender-neutral remuneration policy is to promote fairness and equality in the workplace.

14. Significant Bank

  • Definition: A bank designated as significant by Banka Slovenije due to its size or systemic importance.
  • Characteristics: Significant banks are subject to more stringent regulatory requirements due to their size and potential impact on the financial system.

15. Competent Authority

  • Definition: An entity authorized to exercise prudential supervision over credit institutions, such as Banka Slovenije or the European Central Bank (ECB) under Regulation 1024/2013.
  • Role: The competent authority plays a critical role in ensuring that banks comply with regulatory requirements.

16. Third-Country Group

  • Definition: A group with a parent undertaking established in a non-EU country.
  • Characteristics: Third-country groups are subject to specific regulatory requirements due to their foreign ownership and potential impact on the financial system.

These definitions are essential for understanding the context and scope of banking regulations in the Republic of Slovenia.