© Reuters. FILE PHOTO: European flags fly outside the European Commission headquarters in Brussels, Belgium September 20, 2023. REUTERS/Yves Herman/File Photo
LONDON (Reuters) – Banks in the European Union will have a payment holiday this year after contributions over the last eight years to a rescue fund reached their target, the bloc’s watchdog for dealing with failing banks said on Thursday.
The Single Resolution Board (SRB) said its fund, a first port of call for cash to deal with a failed lender to help shield taxpayers, totals 78 billion euros ($84.08 billion), meeting the target of at least 1% of lenders’ total covered deposits.
It offers a further line of defence to a bank’s own capital and liquidity buffers, and to the special debt lenders must issue to replenish capital in a crisis.
Contributions to the Single Resolution Fund have been a point of contention for some banks, particularly in stressed markets during the COVID-19 pandemic.
“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,” SRB Chair Dominique Laboureix said in a statement.
“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.”
($1 = 0.9276 euros)
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