Brussels, 03/12/2014 (Agence Europe) - On Wednesday 3 December, the member states discussed a proposed compromise of the Italian Presidency of the Council of the EU on the methodology to calculate the eurozone banks' contributions to the Single Resolution Fund (SRF), with a view to an agreement at the Ecofin Council on Tuesday 9 December.
At the end of October, the Commission tabled a methodology to calculate the banks' contributions to the SRF (EUROPE 11181). Amongst other things, a corrective mechanism has been brought in, which will apply from 2016, for the eight years in which the funds will be built up, in order to smooth the contributions of banks established in the countries of the eurozone with a banking sector which is concentrated (such as France) and has a higher level of deposits.
The member states approve. The banks will contribute to the SRF in application of both the calculation methodology valid for banking union (SRM regulation) and the one which applies to the whole of the EU (BRRD directive), where the amounts calculated by applying the two methodologies will depend on the pace of the mutualisation of the SRF. This means that in 2016, 60% of a bank's contribution will be calculated on the basis of the BRRD directive and 40% in line with the SRM regulation. Over the next seven years, the ratios will develop as follows: 40%/60% in 2017; 33.33%/66.67% in 2018; 26.67%/73.33% in 2019; 20%/80% in 2020; 13.33%/86.67% in 2021; 6.67%/93.33% in 2022; 0%/100% in 2023.
Agreeing the methodology proposed by the Commission, the Italian Presidency clarifies that “the contributions received in 2015 under the BRRD directive will be taken into account individually at the level of a bank, such that the banks will bear a smaller burden over the period 2014-2016,” according to a proposed compromise of which EUROPE has had sight.
Payment commitments. Despite initial German reluctance (EUROPE 11193), the member states have accepted the idea that the Single Resolution Board (SRB), which will manage the SRF, will give the banks concerned the option to provide irrevocable payment commitments instead of cash. These commitments will be guaranteed by low-risk assets, will not exceed 30% of the total amount of a bank's contribution and may under no circumstances affect the financial capacity or liquidity of the SRF.
Small banks with total assets below €3 billion, which will enjoy preferential treatment whilst the SRF fund is being built up, will pay a fixed contribution of €50,000 for the first tranche of €300 million of their balance sheet (not including own funds and covered deposits). The Italian Presidency's compromise removes the provision whereby losses resulting from this preferential treatment would be taken into account by the other banks feeding into the national compartment of the SRF corresponding to the eurozone country in which they are established. (MB)