ECB Opines on Abolition of Special Levy on Certain Banks in Slovakia
ECB published an opinion (CON/2020/28) in response to a request from the Ministry of Finance of the Slovak Republic for an opinion on a draft law abolishing a special levy on selected financial institutions and on certain measures in connection with this abolition. The abolition of the levy may contribute to an increase of the capital generation capacity of credit institutions and support lending to the real economy. In its opinion, ECB welcomed the intended use of part of the collected funds for strengthening the Slovak Deposit Protection Fund and the Slovak Crisis Resolution Fund, which will contribute to improving the resilience of, and confidence in, the financial sector.
The draft law stipulates that balances of the collected levies will remain State financial assets in accordance with Law No 523/2004 on general government budgetary rules and amending certain laws. The explanatory memorandum to the draft law states that the intention is to use these assets to fund the activities of the Slovak Development Fund, which will focus on supporting and financing development programs of the Slovak Government. A smaller part of the funds will also be used to strengthen the Slovak Deposit Protection Fund and the Slovak Crisis Resolution Fund and to reimburse eligible expenses of the Crisis Resolution Council, pursuant to Law No 371/2014 on resolution in the financial market and on amendments to certain laws.
ECB is of the view that the use of a large portion of levies already collected for purposes unrelated to financial stability would weaken the overall robustness of the financial sector if no concomitant safeguards to enhance the stability are put in place. An example of such a safeguard would be a mechanism designed to allow all the funds that have been already collected from the financial sector to be available in the event of a crisis. Law No 384/2011 imposes an obligation on banks and branches of foreign banks operating in Slovakia to pay a special levy. The proceeds of this special levy are State financial assets with the designated purpose of covering costs related to the resolution of financial crises in the banking sector and protecting the financial stability of the Slovak banking sector, including the replenishment of the Deposit Protection Fund necessary for expenses due to the payment of compensation for unavailable deposits. The draft law abolishes the special levy on selected financial institutions as of January 01, 2021 and repeals Law No 384/2011.
Related Link: Opinion (PDF)
Keywords: Europe, Slovakia, Banking, Resolution Framework, Special Levy, Opinion, Resolution Fund, Deposit Protection, ECB
Previous Article
EBA Publishes Opinion on Consideration of ML/TF Risks in SREPRelated Articles
APRA Finalizes Guidance on Management of Climate Change Risks
The Australian Prudential Regulation Authority (APRA) released the final Prudential Practice Guide on management of climate change financial risks (CPG 229) for banks, insurers, and superannuation trustees.
European Council Adopts Position on Digital Finance Package Proposals
The European Council adopted its position on two proposals that are part of the digital finance package adopted by the European Commission in September 2020, with one of the proposals involving the regulation on markets in crypto-assets (MiCA) and the other involving the Digital Operational Resilience Act (DORA).
PRA Proposes Rulebook Changes; BoE Extends BEEDS Testing Window
The Prudential Regulation Authority (PRA) is proposing, via the consultation paper CP21/21, to apply group provisions in the Operational Resilience Part of the PRA Rulebook (relevant for the Capital Requirements Regulation or CRR firms) to holding companies.
EC Proposes New Measures Under Capital Markets Union Package
The European Commission (EC) has adopted a package of measures related to the Capital Markets Union.
EBA Publishes Standards to Calculate Risk-Weights of CIUs Under CRR
The European Banking Authority (EBA) published the final report on draft regulatory technical standards for the calculation of risk-weighted exposure amounts of collective investment undertakings or CIUs, in line with the Capital Requirements Regulation (CRR).
FED Outlines Lending Conditions and Supervisory Activities in H1 2021
The Board of Governors of the Federal Reserve System (FED) published a report that summarizes banking conditions in the United States, along with the supervisory and regulatory activities of FED.
APRA Expects Boards to Strengthen Ability to Oversee Cyber Resilience
The Australian Prudential Regulation Authority (APRA) recently completed two pilot initiatives in its 2020-2024 Cyber Security Strategy, which was published in November 2020.
FSB Updates List of Global Systemically Important Banks
The Basel Committee on Banking Supervision (BCBS) published further information related to its 2021 assessment of global systemically important banks (G-SIBs), with additional details to help understand the scoring methodology.
FASB Proposes Improvements to Credit Losses Standard
The Financial Accounting Standards Board (FASB) is consulting on an Accounting Standards Update and the associated taxonomy improvements for requirements on troubled debt restructurings and vintage disclosures under the credit losses standard (for financial instruments) topic 326.
US Agencies Issue Statement on Crypto-Asset Policy Initiatives
US Agencies issued a statement that summarizes the work undertaken during the interagency policy sprints focused on crypto-assets and provides a roadmap of future work related to crypto-assets.
