Brussels, 07/11/2014 (Agence Europe) - Germany is opposing application of the transitional scheme to correct bank contributions to the single resolution fund (SRF) aspect of Banking Union.
At the end of last month, the European Commission put forward a bank contribution calculation methodology, which includes a transitional correction mechanism that would come into force in 2016 for the first eight years of the SRF phase-in (see EUROPE 11181). Under the mechanism, banks would contribute to the SRF partly by applying the Banking Union calculation method (under the SRM regulation) and partly by applying the method that applies to the European Union as a whole (under the BRRD Directive). The amount paid in this way will depend on the rate at which the SRF is pooled (40% in 2016, rising to 60% in 2017 and so on).
The mechanism aims to even out the contributions for banks in eurozone nations with a highly concentrated bank sector (France, for example), which have higher deposits.
At the EU Council of Ministers, the majority of member states are reported to favour the proposal, but some small countries query the legality of measures not included in first level EU legislation (in other words, not set out in a regulation or directive, but included instead in a second level implementing measure from the Council of Ministers).
Moreover, the correction mechanism requires the single resolution board (SRB), which will be overseeing the SRF, to grant banks in the countries concerned the option of providing payment commitments (IOUs) rather than hard cash as long as the commitments are easily accessible in the event of an emergency. There is greater opposition to this option, explains an expert, adding that Germany opposes it because it will have a negative effect on the contributions to be made by German banks (and also for reasons of accounting).
The Council and EP have three months to decide on the methodology proposed by the Commission.
SRB chairmanship. The Juncker Commission may decide on the final shortlist of applicants to chair the SRB next week. A source said the final shortlist may be decided upon in the next few days and the European Parliament is prepared to act speedily to ensure the chair and vice-chair take up their posts before the Christmas holidays. The MEPs will hold hearings of the candidates put forward by the Commission. On Friday 7 November, German newspaper Handelsblatt mentioned in this connection Elke König, director of the German financial markets authority (BaFin), Luc Coene, governor of the Bank of Belgium, and Philippe Maystadt, former head of the EIB and former Belgian finance minister. We understand that Maystadt is the front-runner. (MB)