French, German resolution fund bill to be 15 billion euros per country

By Reuters

Nov 05, 2014 03:28 AM EST

France and Germany have agreed that the banking sectors in each country should pay 15 billion euros ($19 billion) toward an EU fund designed to limit the fallout from a banking collapse, French Finance Minister Michel Sapin said on Tuesday.

The 55 billion euro common fund established in March, known as the Single Resolution Mechanism, is designed to be a pan-European bailout fund made up of levies on banks built up over eight years.

"We'll have a system of equal weights between France andGermany, even if Germany has a lot of small banks and German authorities want to contribute less, and we have large banks," Sapin told journalists. "(It will be) about 15 billion euros."

Although Sapin said the French government was working with banks toward the idea of making some of their contributions tax deductible, large French banks were concerned they could end up footing the biggest bill if contributions were set according to scale.

Francois Perol, chairman of France's cooperative lender BPCE and the head of a French banking association, said that his association hoped to press the French government to lower the contribution amount.

"It seems that the (French banks') share of 31 percent in the fund is exaggerated compared with the risk that we represent," Perol told journalists on Tuesday.

BNP Paribas (BNPP.PA) along with Groupe Credit Agricole (CAGR.PA), Societe Generale (SOGN.PA) and BPCE, parent of investment bank Natixis (CNAT.PA), are among Europe's biggest banks in terms of assets. Germany has a higher proportion of smaller banks, even though it has Europe's biggest economy.

BNP Paribas Chief Executive Jean-Laurent Bonnafe told Le Figaro newspaper on Saturday he believed a 10 billion euro contribution would be fairer for French banks, citing their relatively low risk profile. He described as "exorbitant" a figure of 16 billion euros cited in media reports as the likely French bill.

Germany had lobbied for all banks with assets below 500 million euros to be excluded from making any contribution to the fund. The country's savings banks had argued that a system that included small banks favored large banks, as smaller lenders were unlikely to need a pan-European rescue.

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