Featured Product

    ECB Issues Opinion on A Draft Law Under Resolution Regime in Slovakia

    November 26, 2019

    ECB published an opinion (CON/2019/40) on a draft law from Slovakia that involves increasing the special levy on selected financial institutions. The proceeds of this special levy are state financial assets for covering costs related to the resolution of financial crises in the banking sector and protecting the financial stability of the Slovak banking sector; this includes the replenishment of the Deposit Guarantee Fund necessary for expenses due to the payment of compensation for unavailable deposits. The opinion was issued in response to a request from the Ministry of Finance of the Slovak Republic on a draft law amending Law No 384/2011 Coll. on a special levy on selected financial institutions and on amendments to certain laws. In its opinion, ECB has expressed certain concerns about the material adverse consequences of the increase in this levy and has recommended a robust impact assessment detailing the net benefits of the proposed changes.

    In accordance with Law No 384/2011, the rate of the levy during the period from 2017 to 2020 is 0.2% of each bank’s liabilities reported in its balance sheet and 0% as of 2021. The draft law increases the rate of levy to 0.4% of each bank’s liabilities, as reported in the balance sheet, and does not provide for temporal limitation for the applicability of the levy. ECB has recommended that it is necessary to introduce a clearer separation between the extraordinary account created out of the levy proceeds and the general budgetary resources of the Slovak Government. ECB understands that the obligation of the banks to pay the bank levy is additional to their obligation to pay contributions to the Resolution Fund and the Deposit Guarantee Fund. ECB understands that the bank levy proceeds would serve as a funding backstop that is not covered by the resolution fund and for refinancing the deposit guarantee fund.

    According to ECB, the draft law could have unintended and material adverse consequences on financial stability. The levy proceeds already constitute a significant share of bank profits, in addition to the contributions to the Deposit Guarantee Fund and the Resolution Fund. The proposed increase in the levy could disproportionately impact profitability of the banking system, with negative consequences for internal capital generation and lending. Moreover, removing the temporal limitation on the levy could have procyclical consequences. Therefore, ECB recommends the legislative proposal be accompanied by a robust impact assessment detailing the net benefits of the proposed changes. At a minimum, the draft law could maintain a proportionate temporal limitation for the applicability of the levy, in line with the impact assessment, to reduce ambiguity regarding the overall effects of the levy going forward.


    Related Link: ECB Opinion (PDF)

    Keywords: Europe, Slovakia, Banking, Special Levy, Resolution Fund, Deposit Guarantee Fund, Proportionality, CON/2019/40, Resolution Framework, Opinion, ECB

    Related Articles

    NGFS Seeks Public Feedback on Climate Risk Assessment Scenarios

    The Network for Greening the Financial System (NGFS) launched its first user feedback survey on climate scenarios, with the feedback period ending on February 27, 2023.

    February 06, 2023 WebPage Regulatory News

    EBA Launches Stress Tests for Banks, Issues Other Updates

    The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.

    January 31, 2023 WebPage Regulatory News

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8702