The EU Bank Recovery and Resolution Directive has been implemented in Norwegian law from January 1, 2019.
To deal with failing banks in the future, there has been established a Resolution Fund. Financial institutions will pay annual contributions to the new fund, according to their size, complexity and risk profile.
Calculation of annual contributions
The methodology for calculating contributions to the Resolution Fund is based on EU Regulation 2015/63. The financial institutions shall pay annual contributions based on their share of total liabilities less their amount of covered deposits. This basic annual contribution is then risk-adjusted according to selected risk indicators. The indicators are weighted together to a total risk weight for each financial institution.
The risk adjustment consists of risk indicators within the following categories:
- Risk exposure
- Stability and variety of sources of funding
- Importance of an institution to the stability of the financial system or economy
- Additional risk indicators for complexity
Smaller financial institutions will pay lump-sum contributions. These are divided into six different levels. The lump-sum contributions will normally be lower than what these institutions would have had to pay if they were included in the calculation of risk-adjusted fund contributions.
Total annual contributions
The total annual contributions to the resolution fund is set at 0.1 percent of covered deposits. The Ministry of Finance may determine if contributions in a given year should be lower.
Annual contributions may be set higher than 0.1 percent if the fund size falls below two thirds of the minimum requirement of 1 percent of total covered deposits. The financial institutions may also be subject to an extraordinary contribution if the fund is insufficient in an ongoing resolution. This extraordinary contribution is limited to three times the ordinary annual contribution.
Collection of contributions
The model for calculating contributions to the Resolution Fund shall be decided by the Financial Supervisory Authority as the resolution authority.
Annual contributions following the new law will be collected for the first time in 2019.