Tuesday, 27 February 2018

Ceisteanna (184)

Michael McGrath

Ceist:

184. Deputy Michael McGrath asked the Minister for Finance the amount paid by each licensed credit institution to the Central Bank by way of regulatory fees, in each of the years since 2014, in tabular form; and if he will make a statement on the matter. [9856/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am informed by the Central Bank of Ireland that due to its obligations to maintain confidentiality, it is not possible to set out the levy rates payable by individual firms in any sector. However, the basis on which levies payable by credit institutions (in this case referring only to banks, not credit unions) have been calculated in each of the years specified is set out below.

2017 - New Methodology to Calculate Funding Levies for Banks

Following a Consultation Process (CP108 – New Methodology to Calculate Funding Levies), the Central Bank has, in 2017, implemented a new methodology for the calculation of levies payable by credit institutions. This new calculation is similar to that used by the European Central Bank. It takes into account the size and risk of credit institutions, the Central Bank’s role in their supervision within the Single Supervisory Mechanism but also reflects the Central Bank’s consumer protection, anti-money laundering and financial stability mandates. The new methodology eliminates the cliff effects of the previous levy methodology. Banks with the ability to have the greatest impact on financial stability and consumers will continue to be levied in a proportionate manner to the level of supervision undertaken by the Central Bank.

Category A1 entities (comprising sub-categories A1a and A1b )

These entities will fund 80 per cent of the annual funding charge for credit institutions.

- 10 per cent of this amount will be recovered from A1a and A1b credit institutions, split equally amongst them (the minimum levy).

- The remaining 90 per cent (the variable levy) will be allocated between category A1 banks in proportion to their size and importance (as measured by Total Assets) and risk profile (as measured by Total Risk Weighted Exposure Amount).

The above levy calculations will take account of the agreed recovery rates of 100 per cent for the ELG Scheme Institutions (sub-category A1a) and 65 per cent for other credit institutions (sub-category A1b ) resulting in minimum levies in 2017 for A1a credit institutions of €386,458 and A1b credit institutions of €251,198. Individual credit institution levies will then be adjusted for:

(i) external costs related to pre-inquiry work related to the investigation of legacy issues; and

(ii) levies over recovered in 2016.

Category A2 entities

These entities will fund 20 per cent of the annual funding charge for credit institutions before adjustment for

(i) external costs related to pre-inquiry work related to the investigation of legacy issues, and

(ii) levies over recovered in 2016.

- 10 per cent of this amount (the minimum levy - €12,560 in 2017) will be recovered from all category A2 banks, split equally amongst them.

- The remaining 90 per cent (the variable levy) will be allocated between sub-category A2a banks in proportion to their size and importance (as measured by Total Assets) and risk profile (as measured by Total Risk Weighted Exposure Amount).

Individual levy amounts will then be calculated taking account of the agreed recovery rate of 65 per cent, before applying an adjustment in respect of levies over recovered in 2016.

Non-retail EEA branches (sub-category A2b ) will only be subject to the minimum fee component of the above methodology.]

2013 to 2016 - Old Methodology to Calculate Funding Levies for Banks

Between 2013 and 2016 the amount of the Industry Funding Levy payable by a credit institution to the Central Bank was determined by its type and impact categorisation under PRISM[4] . The table below sets out the levy rates applicable during the period requested. It must, of course, be remembered that credit institutions which had previously been admitted to the Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009 and their subsidiaries that are Credit Institutions authorised under Irish legislation were required to fund 100 per cent of the cost of their regulation while other credit institutions were required to fund 50 per cent of the cost of their regulation.

In addition, relevant credit institutions were also required to fully fund the cost of any external reviews of those institutions which were carried out during the period under review.

Credit Institution Type & Year

Ultra High Impact (€)

High Impact (€)

Medium High Impact (€)

Medium Low Impact (€)

Low Impact (€)

Branch/ Freedom of Services (€)

A1a

2014

4,514,457

2,048,435

N/A

N/A

N/A

N/A

2015

7,809,447

3,543,536

N/A

N/A

N/A

N/A

2016

9,979,995

4,528,422

N/A

N/A

N/A

N/A

A1b

2014

N/A

1,117,385

255,490

50,790

21,038

N/A

2015

N/A

1,645,681

376,285

74,804

23,751

N/A

2016

N/A

1,925,477

440,261

87,522

N/A

N/A

A2/A3

2014

N/A

N/A

N/A

N/A

N/A

15,778

2015

N/A

N/A

N/A

N/A

N/A

17,814

2016

N/A

N/A

N/A

N/A

N/A

21,020

A5 (First introduced in 2016)

2016

N/A

N/A

440,261

N/A

N/A

N/A

Single Resolution Fund:

Further to the above, the Central Bank of Ireland, on behalf of the Single Resolution Board (“SRB”), collects contributions from credit institutions (i.e. banks) for the Single Resolution Fund (“SRF”). The SRF was established on 1 January 2016, pursuant to the Single Resolution Mechanism Regulation (EU) No. 806/2016 of the European Parliament and of the Council of 15 July 2014. An institutions annual levy is calculated in accordance with the methodology set out in the Commission Delegated Regulation (EU) 2015/63 of 21 October 2014. The resolution levies that the Central Bank collects from licensed credit institutions do not fall within the remit of a regulatory fee. The purpose of the resolution fund is to facilitate the use of resolution tools, not to pay for the cost of regulation.

Irish credit institutions contributed the following amounts to the SRF:

2016 - €97,138,094

2017 - €95,216,210

Further information on the Central Bank's Annual Industry Funding Levy can be found at: https://www.centralbank.ie/regulation/how-we-regulate/fees-levies/industry-funding-levy/guidance