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Small banks should pay less for bailout fund -EU expert group
July 21, 2014 / 5:22 PM / 3 years ago

Small banks should pay less for bailout fund -EU expert group

FRANKFURT, July 21 (Reuters) - Small banks should be exempted from large contributions towards a planned bank resolution fund, European Union experts have proposed in a compromise move to make pan-European bailouts more palatable, a document obtained by Reuters shows.

Lawmakers have worked on ways to make a 55 billion euro bailout fund, known as the Single Resolution Mechanism (SRM), more acceptable, after encountering opposition from countries with a high proportion of small banks, including Germany.

Banks with liabilities of less than 300 million euros and assets below 1 billion euros should be asked only to make small contributions towards the bank fund, the expert group said.

A bank’s contribution is determined on the basis of an institution’s total liabilities minus own funds and covered deposits, the document showed.

The European Commission services’ Note to the Expert Group on Banking, Payments and Insurance on July 16 proposed introducing a six-category system for classifying small banks capping their annual contribution to the common bailout pot at between 2,500 and 60,000 euros.

Germany had lobbied for all banks with assets below 500 million euros to be excluded from making any contribution to the common fund while the European lawmakers lobbied against having any exceptions.

Germany’s savings banks have criticised plans to include small banks in any pan-European bailout mechanism, saying such a system favoured large banks as smaller lenders were unlikely to need a pan-European rescue.

Reporting by Andreas Kröner; writing by Arno Schuetze and Edward Taylor, editing by David Evans

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