Brussels has unveiled plans to fill up the EU's new €55bn bank rescue fund by leaning heavily on Europe's biggest banks, a system officials acknowledged will benefit Germany, whose banking system is made up of hundreds of small and medium-sized financial institutions.
Under the plans, the last major open issue in the eurozone's march towards "banking union", 90 per cent of €55bn would come from the eurozone's large banks, which European Commission officials said account for 85 per cent of all banking assets, reports Peter Spiegel and Alice Ross.
The system will prove costly for France, whose financial system is dominated by three large banks.
Small banks – defined as those with less than €1bn in assets and deposits of less than €300m – would only pay 0.3 per cent of the total rescue funds even though they account for 1 per cent of eurozone banking assets; medium-sized banks, which account for 14 per cent of assets, would pay in just 9.7 per cent.
The rules could mean that more than a quarter of Germany's army of politically-connected Sparkassen – small, regional savings banks – will be classified as "small", paying as little as €1,000 a year towards the fund.
A total of 116 Sparkassen have less than €1bn in assets, meaning that if their liabilities are also less than €300m, they will pay a flat rate of between €1,000 and €50,000 a year.
Germany's savings bank group – which includes 417 Sparkassen and seven larger Landesbanken – have a combined balance sheet of nearly €2.3tn, which is larger than Deutsche Bank, the country's biggest single lender by assets.
European Commission officials justified overweighting the eurozone's largest banks by arguing they are the most likely to need rescue cash from the bailout fund in a crisis. When it is completely filled in 2024, the new fund will amount to 1 per cent of deposits in countries participating in the EU banking union.
Michel Barnier, the EU's outgoing chief financial regulator, said:
The approach chosen is fair as each bank will contribute in proportion to its size and risk profile... It is also proportionate as the smallest banks have their own adjusted regime of contributions.
Still, some of the most spectacular bank failures of the eurozone crisis – like Ireland's Anglo-Irish, Spain's Bankia and Cyprus' Laiki – were small or mid-sized banks.
EU officials insisted many similar banks would still end up paying more since the contributions would be based on not only their size, but also how risky their balance sheet was. The riskiest banks could end up paying nearly twice what banks with large deposit bases will.
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