Slovenian Politics Rise Against Fina, Calling for State Holding Support

The pre-election campaign for the parliamentary elections in Slovenia scheduled for March next year has evidently already begun, judging by the political strike against the takeover of the Zagreb Stock Exchange. Three Slovenian parliamentary parties, the Freedom Movement led by current Prime Minister Robert Golob, the Social Democrats, and the Left, submitted a request on October 24 for the convening of an urgent meeting of the Finance Committee of the National Assembly with only one agenda item.

It reads: Will the takeover of the Zagreb Stock Exchange, and thus the Ljubljana Stock Exchange by Croatian state authorities jeopardize the national interests of the Republic of Slovenia? Therefore, the politics demand that the Government investigate the possibility for the Slovenian Sovereign Holding to acquire shares in the Ljubljana Stock Exchange.

The culmination of intolerance

Let us recall, the Financial Agency (Fina) announced at the beginning of August that it intends to make an offer to acquire the remaining shares of the Zagreb Stock Exchange. Fina currently holds 10 percent of the shares, so the offer would relate to 2.08 million shares that it does not (yet) control. The announcement of the offer is preceded by obtaining regulatory approvals for the takeover. Fina currently has the green light from the Croatian Financial Services Supervisory Agency (Hanfa) and the Macedonian Securities Commission since the Zagreb Stock Exchange also holds a third of the shares in the Skopje Stock Exchange.

For this essentially hostile takeover, Fina is still waiting for approval to acquire a qualifying stake from the Slovenian Financial Services Supervisory Agency (ATVP). However, Slovenian politics and the business public are reluctantly viewing yet another entry of Croatian capital (and furthermore, state-owned) into the country, and the request for convening a meeting of the parliamentary committee confirms and culminates that thinking.

As evident from the explanation published on the National Assembly’s website, Slovenian politics believes that behind Fina’s offer de facto stands the Croatian state. – What is Fina? It is a public agency in state ownership that performs a combination of financial, informational, and public administrative services. In terms of characteristics, it is a unique hybrid institution that has no comparable counterpart in the Slovenian context – moreover, it represents a combination of several Slovenian institutions – states the explanation.

The danger that, according to the parties from the left-liberal spectrum, threatens Slovenia’s security lies in the modern history of Slovenian-Croatian relations. Thus, Freedom, SD, and the Left remind of the dispute from the early 90s regarding the depositors of the then Ljubljana Bank and the fact that Croatia prevented that bank from collecting claims on loans from Croatian companies.

– Slovenia, after two decades of unsuccessful legal attempts, filed a lawsuit against Croatia at the European Court of Human Rights in 2016, demanding almost half a billion euros in damages, but the Court decided four years later that it was not competent for the lawsuit – states the explanation.

Preventing Slovenian interests

A key role in this was played by Fina, according to Slovenian politicians, or its predecessor, the Payment System Institute (ZAP). Namely, the Ljubljana Bank had final decisions on debt collection, but ZAP technically did not implement them. The argument of the Croatian payment operator was that the Ljubljana Bank had no right to collect since its operations were transferred to a new entity, the New Ljubljana Bank (NLB). – The decisions of Fina, or the then ZAP, were allegedly coordinated with the Croatian state according to various sources.

Fina, which today intends to become the owner of the Ljubljana Stock Exchange, thus played a significant role in preventing the interests of the Slovenian state and the Ljubljana Bank – states the explanation.

That this is a plan of the Croatian Government to dominate the Slovenian capital market is seen by the initiators of the meeting in the fact that Hanfa unusually quickly issued approval for acquiring a qualifying stake, already on August 29. Otherwise, the Ljubljana Stock Exchange first changed ownership in mid-2008, during the first government of Janez Janša, when the Vienna Stock Exchange became the owner of 81 percent of the shares. According to Slovenian media reports, the Austrians paid 37 million euros for that package.

During the term of the government of Miro Cerar, in 2015, the Zagreb Stock Exchange purchased the stake of the Vienna Stock Exchange, and after recapitalization and the remaining shares, it became 100 percent owner of the Ljubljana Stock Exchange. Financial circles in Slovenia believe that the Zagreb Stock Exchange gained full control over the Ljubljana Stock Exchange for two million euros. That the control of the Croats over the Slovenian stock exchange is ahead of economic logic is evidenced by the fact that the Zagreb Stock Exchange received offers to sell the Ljubljana Stock Exchange but did not want to accept them.

As an additional argument, the three parties refer to recent media statements by Igor Štemberger, the director of the investment company Ilirika. He believes that it is not impossible that after Fina’s takeover, Slovenian companies could be listed in Zagreb, that those shares could be settled in the Croatian depository, and that dividends could be paid through Croatian banks. Therefore, it is proposed to the Finance Committee that the Government, through the Slovenian Sovereign Holding (SDH), acquire a stake in the Ljubljana Stock Exchange. SDH is the umbrella manager of the investments of the Slovenian Government, with stakes in more than 50 companies, and the total value of those stakes exceeds 13 billion euros.