Single Resolution Fund: no expected contribution in 2024 as target level reached

After the completion of the target level verification exercise, the SRB confirms that the financial means available in the Single Resolution Fund (SRF) at 31 December 2023 represented EUR 78 billion and therefore reached the target level of at least 1% of covered deposits held in the Member States participating in the Single Resolution Mechanism as set by Article 69(1) of Regulation (EU) No 806/2014 (SRMR). This amount includes the substantial positive economic return obtained on cash accounts and investments during 2023.

“Reaching the target level for the Single Resolution Fund is a major achievement for the Single Resolution Mechanism and European banks, providing a substantial crisis fund to use should it be needed. It also means that, in 2024, we will not collect contributions from banks, unless it was to be used to support an effective resolution in the course of the year,” said SRB Chair Dominique Laboureix. 

As such, no regular annual contributions will be collected in 2024 from the institutions falling in scope of the SRF, and contributions would only be collected in the event of specific circumstances or resolution actions involving the use of the SRF.

Under normal circumstances, the target level verification exercise will be performed each year to confirm that the available financial means at the SRF are at least 1% of the amount of covered deposits of all credit institutions authorised in the Participating Member States. If the result of such exercise should prescribe so, the SRB will restart the regular collection of contributions to SRF. The industry will be informed accordingly. 

Background 

In accordance with Article 69(1) SRMR, the available financial means in the SRF should reach at least 1% of the amount of covered deposits of all credit institutions authorised in the participating Member States at the end of the eight years-initial period starting from 1 January 2016, and ending on 31 December 2023. After the end of the initial period, the SRB verified whether the financial means available to the SRF at 31 December 2023 equalled at least 1% of the amount of the covered deposits held at 31 December 2023.

In order to establish the target level at 31 December 2023, the SRB collected data on covered deposits from the Deposit Guarantee Schemes. Based on the information available, the amount of covered deposits held at 31 December 2023 in the Participating Member States was EUR 7 500 billion. Therefore, the target level at 31 December 2023 amounted to approximately EUR 75 billion. 

As a next step the SRB quantified the amount of the financial means available in the SRF at 31 December 2023. The available financial means in the SRF, represented by cash balances, assets and irrevocable payment commitments, amounted to approximately EUR 78 billion. This amount includes the accrued purchase yield on the securities and all interest due, as well as the profits and losses made on the disposal of securities. 

End of the initial period and Loan facility agreements

On 18 December 2013, the SRB and the Member States participating in the Banking Union entered into loan facility agreements (LFAs), to provide bridge financing and support to the national compartments of the SRF. The agreements themselves set the expiration date for the end of the initial period, namely, 31 December 2023. As a result, the LFAs have expired. 

About the SRF

The SRF is an emergency fund that can be called upon in times of crisis. It can be used to ensure the efficient application of resolution tools for resolving the failing banks, after other options, such as the bail-in tool, have been exhausted. The SRF ensures that the financial industry as a whole ensures the stabilisation of the financial system. All banks across the 21 Banking Union countries paid a fee annually by law to the SRF. These fees are called contributions. The fund means that taxpayers are not first in line to pump money into a bank, should extra funding be required, as instead the banks would pay into the fund when needed in line with EU law. Find out more about the SRF here.