PARLIAMENT passed a revision to the Bank Act, which should implement EU standards. The new rules, approved on July 3, grant greater regulatory powers to the National Bank of Slovakia.

The legislation comes in response to shortcomings in bank operations revealed during the financial crisis. EU directives focus on sanctions, decreasing dependence on external ratings and reducing pro-cyclical mechanisms in the financial system by using capital reserves. The revision will be effective as of August 1, 2014, and some of its provisions as of January 1, 2015 or January 1, 2016, the SITA newswire reported.

The revised legislation gives the National Bank of Slovakia (NBS) more supervisory powers. The NBS will be able to demand specific reports or scrutinise banks’ plans. On the other hand, the NBS will have to create a schedule of bank inspections based on the results of their stress tests.

Finance Minister Peter Kažimír said that the adopted legislation aims to make banks act more responsibly, to create so-called capital cushions and become less dependent on high-risk operations, according to SITA.

“By implementing more strict demands for banks and broker-dealers, the risk of their failure will decrease,” says the Finance Ministry’s report to the revision, as quoted by the TASR newswire. “It will contribute to the higher stability of the financial system in Slovakia and the whole European Union.”

Changes in the Bank Act will also affect construction savings banks, which will be obliged to inform clients about the expiration of a fixed interest rate or interest rate changes two months in advance. Furthermore, they will be banned from charging early repayments of whole or partial credit after the expiration of a fixed interest rate, TASR reported.

The Finance Ministry incorporated these rules into the revision since construction savings banks have started to provide credit with varying interest rates.

“The Finance Ministry wants to secure legislative protection of finance consumers of the same product of construction savings banks as it does in the case of banks’ credit,” Finance Minister adviser Radko Kuruc told TASR.