Brussels, 09/12/2014 (Agence Europe) - On Tuesday 9 December, the Ecofin Council formally decided upon the way eurozone bank contributions for the Single Resolution Fund (SRF) will be calculated. The SRF is the resolution arm of Banking Union.
All the details have been settled, explained French Finance Minister Michel Sapin, pleased that a good Brussels-style compromise had been reached that would lead to almost equal contributions from French and Germany banks in a range of between €15 billion and €16 billion.
Backed by Germany and France but criticised by a number of other countries such as Belgium and Portugal (see EUROPE 11210 and 11211), the draft compromise prepared by the Italian Presidency of the Council of the EU has been endorsed by the member states after a few marginal adjustments were made.
The Council's implementation legislation introduces a correction mechanism whereby bank contributions from countries with a very concentrated banking sector (such as France) will not see a sudden hike in their contributions when the amount they pay is no longer calculated using the BRRD Directive that applies for the EU in 2015, but rather using the SRM Directive establishing the SRF for the eurozone from 2016 onwards.
Spain, Portugal and Belgium had concerns, admitted Sapin, and in order to win them over (the three countries's banks have large amounts of savings), bank contributions raised in 2015 under the BRRD Directive will be reduced from the amount paid by each bank for the 2016-2023 period as the SRF is phased in over eight years and gradually reaches €55 billion.
Financial Stability Commissioner Jonathan Hill promised on behalf of the European Commission to treat each country fairly when the Commission assesses the possibility for a country that requests it to be allowed to reduce by savings covered by the national deposits (savings) guarantee fund from 0.8% to 0.5%.
Another adjustment introduced is in relation to the option of a bank providing payment commitments rather than hard cash. The use of such commitments, restricted to 30% of a bank's annual contributions, will be more automatic than initially planned. This measure will restrict the room for manoeuvre of the Single Resolution Board, the future body that will manage the SRF and mobilise it if a big bank collapses. (MB)