German banks face tripling of EU bailout fees

Branch office. Germany, 2005. [Björn Láczay/Flickr]

Plans being considered for a new European bank restructuring fund would see German banks pay in about €1.9 billion a year, banking and government officials said on Monday (28 April).

That would be about three times what they pay into an existing national bank rescue fund, with bigger lenders set to foot most of the bill.

European leaders decided last month to complete a long-planned banking union with an agency to shut failing euro zone banks and a common €55 billion back-up fund, to be built up over eight years with payments from banks.

Germany is pushing to have bigger banks stump up most of the costs, with the smallest lenders – which pose less of a systemic threat – exempted from paying in.

To that end, newspaper Handelsblatt reported on Monday that Berlin plans to abolish for the European pot a rule that caps contributions to the existing German fund at 20% of annual net profit.

That measure has saved German banks €1.3 billion each year on average for the past three years, during which they have paid in an average of about €600 million a year, according to the finance ministry.

That is less than a third of the €1.9 billion German lenders would have pay into the European fund in each of the next eight years to bring their total contribution to the expected €15 billion.

Exact calculations have yet to be proposed by the EU Commission, said German finance ministry spokesman Hans Joachim Narzynski.

“Size and risk will play a significant role for each bank in the Commission proposal,” Narzynski said.

“The German government has always made the case for the principle of proportionality … that smaller banks must have a better standing than big banks which pose a big risk to the system.”

The EU Commission will consider Europe-wide rules governing bank contributions to the fund this summer.

Banks’ contributions should not be calculated at the national level but on an individual basis, using the same criteria for all participating banks in order to prevent competitive distortions, said a second finance ministry spokeswoman.

Germany, unlike France, has lobbied for measures that would burden big banks more than small.

Finance Minister Wolfgang Schäuble has lobbied the EU Commission to lift the threshold beyond which fund contributions become mandatory to banks with an adjusted balance sheet size of €500 million, from €300 million now.


At a summit in October 2013, EU leaders agreed plans to complete the European banking union by January 2014, after the general elections in Germany.

The concession was made to German Chancellor Angela Merkel who argued for "quality" over "speed" in putting in place the new supervisory system, seen as a cornerstone of the EU's efforts to end the eurozone' sovereign debt crisis.

>> Read: EU summit deal aims for full 'banking union' in 2014