Response to consultation on draft revised guidelines on methods for calculating contributions to deposit guarantee schemes

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Question 7: Do you have comments on the proposed changes to the minimum weights of core indicators and the maximum weight of any indicator, as set out in section 4.5 (ii) of the Guidelines?

The EBA’s performance analyses of core indicators showed that especially, amongst others, the (low) Return on Assets (RoA) provides good indications of a DGS intervention while the (high) TREA/TA provides little indication of a DGS intervention.

Consequently, EBA proposes to higher the weight of the RoA (having a high becomes more important) and lower the weight of the TREA/TA (having a high TREA/TA becomes less important). In our opinion, this is counterintuitive. We advocate for a balanced risk weight for both indicators. Low risks are priced lower, hence low risk banks have a low TREA and consequently a low RoA.

In its current proposal, EBA unduly favors high risk banks and ignores the fact that low risk remains the principal reason to avoid DGS intervention.

Question 12: Do you have any further comments regarding the proposed revised Guidelines?

With the aim to increase the member institutions’ understanding of their risk profile, and how the fee is calculated, the DGS should be required to disclose a description of the institution’s contribution to the DGS. Such communication could also encourage the institutions to lower its risk profile where necessary, which could contribute to the general stability in the financial sector. For that reason, we propose an additional paragraph 90 in the guideline, as following:


4.10. Transparency and data confidentiality
87. The DGS should disclose to the public at least the description of the calculation method and the parameters of the calculation formula, including risk indicators but not necessarily their respective weights.
88. In contrast, the DGS should disclose the results of the risk classification and its components for a particular member institution only to that member institution and not to the public.
89. The DGS should keep confidential the information used for calculating contributions which is not otherwise publicly disclosed.

90. The DGS should disclose a detail description of the calculation of the institution’s contribution to the DGS to each particular member institution. This description shall enable the institution to fully understand both the level of its contribution and the change of the contribution compared to the previous period.

Name of the organization

WSBI-ESBG