10 June 2015
The European Banking Authority (EBA) provided today its technical advice to the European Commission on the criteria and principles that will be used to determine the uniform level of contributions by banks in the participating EU Member States to the Single Resolution Fund. Pooling financial resources into this common fund will be crucial for a successful implementation of the Banking Union. The EBA's technical advice will inform a delegated act to be adopted by the Commission on the initial period for the contributions to the Single Resolution Fund.
The key objective of this technical advice is to ensure that the Single Resolution Fund has sufficient means to credibly support resolution measures in the participating EU Member States. In this respect, the advice provides a number of recommendations on which safeguards should be in place to ensure that the target level of the Single Resolution Fund (at least 1% of the amount of covered deposits of all credit institutions authorised in all of the participating EU Member States) is achieved by the end of the initial period. This means by the end of eight years from 1 January 2016 or from the date on which this provision is applicable.
With this aim in view, contributions may, to the extent possible, exceptionally take into account pro-cyclical effects, and vary accordingly instead of being spread out evenly over the initial period. The EBA's technical advice recommends a number of indicators for determining the phase of the business cycle and the risk of pro-cyclical effects and specifies constraints for the variations of the contribution level.
Finally, this advice also specifies the criteria for determining the contribution level after a significant amount of the fund has been used to support resolution measures and the Single Resolution Fund needs to be replenished. In this case, similar considerations as for the initial build-up of the fund apply. However, the process may be speeded up quite significantly to ensure that the target level is achieved as soon as possible. This may result in contributions of up to twice the amount of the contributions made in previous years.
The idea behind the single resolution fund is that it would be financed by bank levies raised at national level and, as part of the Banking Union, it will gradually merge the national resolution funds across the EU Member States participating in the Single Resolution Mechanism.
Article 69 of Regulation (EU) No 806/2014 establishes uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund (SRMR). In this respect, it contains the mandate for three sets of delegated acts to be adopted by the Commission relating to the target level and the initial period for the contributions to the Single Resolution Fund for which the Commission has requested the EBA to provide its technical advice.
Franca Rosa Congiu