EN ECB-PUBLIC 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 26 November 2019 
on increasing  the special levy on selected financial institutions  
(CON/20 19/40) 
 
Introduction and legal basis  
On 5 November  2019  the European Central Bank (ECB) received a request from the Ministry of Finance 
of the Slovak Republic  for an opinion on a draft law amending Law No 384/2011 Coll. on a special levy on 
selected financial institutions  and on amendments to certain laws  (hereinafter the ‘draft law’ )1. 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC2, as 
the draft law relates to rules applicable to financial institutions insofar as they mater ially influence the 
stability of financial institutions and markets . In accordance with the first sentence of Article 17.5 of the 
Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.  
 
1.  Purpose of the draft law  
1.1 Law No 384/2011 Coll. on a special levy on selected financial institutions and on amendments of 
certain laws (hereinafter the ‘ Law No 384/2011’)  imposes  an obligation on banks and branches of 
foreign banks operating in Slovakia (hereinafter collective ly referred to as  ‘bank s’) to pay a special 
levy. The proceeds of this special levy  are state financial assets with the designated purpose of 
cover ing costs related to the resolution of financial crises in the banking sector and protect ing the 
financial st ability of the Slovak banking sector , including the replenishment of the Deposit 
Guarantee Fund necessary for expenses due to the payment of compensation for unavailable 
deposits. In accordance with L aw No 384/2011,  the rate of the levy during the period f rom 2017 to 
2020 is 0.2 % of each bank’s  liabilities reported in its balance sheet3 and 0 % as of 2021.  
1.2 The draft law increas es the rate of levy to 0.4 % of each bank’s  liabilities  as reported in the balance 
sheet , and does not provide for temporal lim itation  for the applicability of the levy . 
 
                                                 
1  Návrh zákona ktorým sa mení a dopĺňa zákon č. 384/2011 Z. z. o osobitnom odvode vybraných finančných inštitúcií 
a o doplnení niektorých zákonov v znení neskorších predpisov . 
2  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions ( OJ L 189, 3.7.1998, p. 42) . 
3 The liabilities are s ubject to the following deductions: (i)  the amount of the bank’s own funds, provided that its value 
is positive ; (ii) the value of financial  resources provided to the branch of a foreign bank on a long term basis ; and 
(iii) the value of subordinated debt.  
ECB-PUBLIC 
 
2  
 
2. Impact of the increased bank levy 
2.1 The ECB has in the past opined on draft legislation introducing bank  levies in Slovakia4. The ECB 
has stated in earlier opinions5 that taxes on financial institutions should be considered in relation to 
the dual objective of: (a) ensuring a more equitable distribution of the costs arising from  their 
potential failure between taxpayers and the financial sector; and (b) addressing the risks that  they 
pose.  Using the proceeds of any ad hoc taxes imposed on banks for general budgetary purposes 
would be undesirable, to the extent that such taxes would place undue burdens on banks, 
hampering the provision of credit, with a knock -on effect on growth in the real economy6. The 
proceeds from tax es on financial institutions should be ring- fenced to avoid their use for  general 
fiscal consolidation purposes7. The ECB has recommended that it is necessary to introduce a 
clearer separation between the extraordinary account created out of t he levy proceeds and the 
general budgetary resources  of the Slovak Government8. 
2.2 The ECB understands that the obligation of the banks to pay the bank levy is additional to their 
obligation to pay contributions to the resolution fund and the deposit guar antee fund.  The ECB has 
in the past recommended making clear in which part of the resolution financing process the income 
from the bank levy is to be employed and how bank levy proceeds will interact with the resolution 
fund in order to avoid duplication of instruments9. In this regard, t he ECB understands that the 
bank levy proceeds would serve as a funding backstop that is not covered by the resolution fund 
and for refinancing the deposit guarantee fund10. 
2.3    While the draft law would maintain the desi gnated primarily financial stability purpose of the 
proceeds of the bank levy, it could have unintended and material adverse consequences on 
financial stability. The levy proceeds already constitute a significant share of bank profits, in 
addition to the c ontributions to the Deposit Guarantee Fund and the Resolution Fund. The 
proposed increase in the levy could disproportionately impact the profitability of the banking 
system, with negative consequences for internal capital generation and lending. Moreover , 
removing the temporal limitation on the levy could have procyclical consequences as banks may  be 
subject to the levy even in periods of  adverse macroeconomic  conditions . 
2.4 Therefore, the ECB recommends the legislative proposal be accompanied by a robust  impact 
assessment detailing the net benefits of the proposed changes. At a minimum, the draft law could 
                                                 
4  See Opinion CON/2011/66, Opinion CON/2012/53, Opinion CON/2015/3 and Opinion CON/2015/43.  All ECB 
opinions are published on t he ECB’s website at www.ecb.europa.eu . 
5  See, for example,  paragraph 2.1 of Opinion CON/2011/29 and paragraph 3.1.1 of Opinion CON /2015/43.  
6  See paragraph 3.1.1 of Opinion CON/2015/43.  
7  See paragraph 3.2.1 of O pinion CON /2010/62.  
8  See paragraph 3.2.1 of Opinion CON/2011/66, paragraph 2.1 of Opinion CON/2012/53 and paragraph 3.1.2 of 
Opinion CON/2015/43.  
9  See paragraph 4.1 of Opinion CON/2015/3.  
10 See also paragraph 3.2.1  of Opinion CON/2015/43.  
ECB-PUBLIC 
 
3 maintain a proportionate temporal limitation for the applicability of the levy, in line with the impact 
assessment , to reduce ambiguity regarding the overall effects of the levy going forward.  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 26 November 2019.  
 
[signed]  
 
The President of the ECB  
Christine LAGARDE