Small banks to make minimal contribution to euro zone fund - paper

BERLIN/BRUSSELS, July 18 Fri Jul 18, 2014 12:31pm EDT

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BERLIN/BRUSSELS, July 18 (Reuters) - Small euro zone banks will need to pay a minimal annual levy into a bank back-up fund, according to European Commission plans cited by a German newspaper on Friday,

Frankfurter Allgemeine Zeitung said in a pre-publication report from its Saturday edition that banks with total assets of less than 100 million euros were set to pay 5,000 euros a year towards the 55 billion-euro resolution fund. The payments are considered a concession to Germany, which wants to protect its Sparkassen.

EU leaders have decided to complete a banking union with an agency to shut failing euro zone banks and with the 55 billion euro back-up fund, set up over eight years. The German government has said that the costs for its banks will be high.

"This is the position of the Commission, but discussions are ongoing," one euro zone source told Reuters.

A Commission spokeswoman called the report "speculation" and said banks' contributions would be a "combination of size and of other factors such as risk taken."

Very small German banks, such as Sparkassen and Volksbanken, have argued they will not have to make use of the planned fund, since their risk profile is so low.

To protect those banks, Finance Minister Wolfgang Schaeuble has lobbied in Brussels for a threshold below which banks would not have to contribute or would only make small contributions. He wants big banks to shoulder more of the burden.

That has put Germany at odds with other countries, such as France, which want to get the best deal for their big banks.

Reports have mentioned a threshold of 500 million euros of assets below which banks would not have to contribute to the fund. That limit is up from 300 million for Germany's current national fund.

According to the newspaper, banks with total assets of less than 200 million euros would pay 10,000 euros a year and those between 200 and 300 million would pay 15,000 euros.

The German Finance Ministry declined comment. (Reporting by Annika Breidthardt in Berlin, Tom Koerkemeier and Martin Santa in Brussels; Editing by Larry King)

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