Brussels, 21/05/2014 (Agence Europe) - All the EU member states apart from Sweden and the United Kingdom signed the intergovernmental treaty on Wednesday 21 May on which the bank resolution fund (SRF), set up within the framework of banking union, will in part be based (see EUROPE 11077).
The treaty stipulates how eurozone bank contributions to the SRF will be pooled after the fund is set up in 2016. With intervention capacity estimated at €55 billion (at least 1% of covered deposits) after the eight-year phase-in period, the SRF will initially comprise 19 national compartments (the 18 eurozone countries plus Lithuania from 1 January 2015 onwards) into which bank contributions will be paid, depending on the country where the bank is registered. The cash in the national compartments will gradually be pooled; 40% of it in 2016, a further 20% in 2016 and 10% a year in the remaining years until 2023.
Each bank's individual contribution will depend on its size, the proportion of assets to total assets (not including capital requirements and covered deposits) and weighted according to its risk profile. Probably in September, the Commission will issue a draft implementing measure for the Council of Ministers to endorse (see EUROPE 11061 and 11043).
The 26 SRF countries issued a number of statements pledging to complete the national treaty ratification processes before the SRF comes on stream on 1 January 2016. They say that, if a bank goes bust, the SRF will only provide aid once a bail-in of bank shareholders and lenders has been carried out. The ministers say that the SRF will have additional finance, if required, during the phase-in period from national resolution funds or the European stability mechanism. They say that, during the phase-in, the parties to the intergovernmental treaty shall introduce a financial backstop to make it easier for the SRF to borrow from the money markets. (MB)