With the texts adopted today, the Commission fulfils the mandate it received from the European Parliament and the Member States to specify the methodology for the banks' contributions in order to meet the target levels for the resolution funds set by the Bank Recovery and Resolution Directive (BRRD) and by the Single Resolution Mechanism Regulation (SRM).
To ensure the availability of medium-term funding support so that a bank can continue operating while it is being restructured, resolution authorities will need liquidity. To that end, the BRRD sets up national resolution funds to which all banks have to contribute. The target level of these funds is of at least 1% of the amount of covered deposits of all the institutions authorised in its territory by 31 January 2024. In the Banking Union, the Single Resolution Fund (IP/13/674) will also have a target level of at least 1% of the amount of covered deposits of all the institutions authorised in the euro area.
1. The delegated act supplementing the Bank Recovery and Resolution Directive
This delegated act will determine how much individual credit institutions will have to pay each year to their respective resolution funds according to the bank's size and risk profile by setting out in detail:
-
the fixed part of the contribution, which is based on the institution's liabilities (excluding own funds and guaranteed deposits), as the starting point for determining the contribution; so the larger the bank, the higher the fixed part of the contribution
-
how the basic contribution is adjusted in accordance with the risk posed by each institution. The proposal includes a number of risk indicators against which the risk level of each institution will be assessed
Finally, the Delegated Regulation applies the principle of proportionality by providing for a special lump-sum regime for small banks. This reflects the fact that, in most cases, small institutions have a lower risk profile and are less likely to use resolution funds. Banks representing 1% of the total assets would pay 0,3% of the total contributions (in the Euro area)
2. Draft proposal for a Council implementing act
For the financial institutions in the Banking Union, the Commission has drafted a proposal for a Council implementing act to specify the methodology for the calculation of contributions on the basis of the same risk indicators used in the delegated act adopted today.
This draft text adapts the methodology to the specificities of a unified system of contributions pooled in the Fund on the basis of a European target level. In this respect, the Single Resolution Fund will be built up by bank contributions over an eight-year transitional period during which it will be composed of national compartments.
Press release
Full document
© European Commission
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article