Opinion of the European Central Bank of 12 December 2011 on the establishment and financing of a resolution fund and on the amended calculation of contributions to the deposit guarantee scheme (CON/2011/103)
Date: 2011-12-12
Institutions: European Central Bank
Subjects: Belgium, bank deposit, company in difficulties, credit guarantee, credit institution, financial stability, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 12 December 2011 

on the establishment and financing of a resolution fund and on the amended calculation of 

contributions to the deposit guarantee scheme 

(CON/2011/103) 

Introduction and legal basis 

On 30 November 2011, the European Central Bank (ECB) received a request from the Nationale Bank 

van België/Banque Nationale de Belgique (NBB), on behalf of the Belgian Ministry for Finance, for an 

opinion on a draft law establishing a financial stability contribution and creating a resolution fund, on the 

one hand, and amending the calculation of contributions to the Belgian deposit guarantee scheme, on the 
other hand1 (hereinafter the ‘draft law’), and on two draft royal decrees implementing these two chapters 
of the draft law (hereinafter respectively the ‘draft Royal Decree on the Resolution Fund’2 and the ‘draft 
Royal  Decree  on  the  calculation  of  contributions  to  the  DGS’3  and,  together,  the  ‘draft  royal  decrees’). 

The ECB was requested to deliver an opinion under extreme urgency.  

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  third  and  sixth  indents  of  Article  2(1)  of  Council 

Decision 98/415/EC  of  29 June 1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities  regarding  draft  legislative  provisions4,  as  the  draft  law  and  the  draft  royal  decrees  relate  to 

NBB and to rules applicable to financial institutions, insofar as they materially 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. 

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Draft  law  establishing  a  financial  stability  contribution  and  amending  the  Royal  Decree  of  14  November  2008 
implementing the Law of 15 October 2008 on measures to promote financial stability and, in particular, to set up a State 
guarantee  for  loans  granted  and  other  transactions  in  the  context  of  financial  stability,  as  regards  the  protection  of 
deposits, life insurance and the capital of authorised cooperative societies, and amending the Law of 2 August 2002 on 
the supervision of the financial sector and on financial services. 
Draft Royal Decree on the organisation and functioning of the Resolution Fund and defining the terms for payment of the 
contributions. 
Draft royal decree implementing Article 8, § 1, 1° bis, of the Royal Decree of 14 November 2008 implementing the Law 
of  15  October  2008  on  measures  to  promote  financial  stability  and,  in  particular,  to  set  up  a  State  guarantee  for  loans 
granted and other transactions in the context of financial stability, as regards the protection of deposits, life insurance and 
the  capital  of  authorised  cooperative  societies,  and  amending  the  Law  of  2  August  2002  on  the  supervision  of  the 
financial sector and on financial services. 
OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
                                                 
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1.  

Purpose of the draft law and the draft Royal Decrees 

1.1  The draft law establishes a Resolution Fund destined to ensure the financing of measures reducing 

the impact of a credit institution’s default on the financial system and economic and social well-
being  in  Belgium5.  The  Resolution  Fund  does  not  aim  at  preventing  the  failure  of  a  credit 
institution6  but  rather  at  resolving  ailing  entities  at  the  lowest  economic  and  social  cost.  For  this 

purpose,  the  Resolution  Fund  will  finance  resolution  measures  such  as,  according  to  the  non-
exhaustive list in the Explanatory Memorandum to the draft Royal Decree on the Resolution Fund7: 

(i)  a  bridge  bank,  with  the  resolution  authority  taking  over  the  bank,  to  allow  an  insolvent 

institution’s operations to continue, (ii) a total or partial transfer of assets and/or liability from the 

ailing  entity  to  a  third  party,  (iii)  a  good  bank/bad  bank  split,  or  (iv)  administrative,  legal  and 

advisory expenses and the need to preserve certain  vital functions of the banks, such as payment 

systems.  The  King  will  adopt  a  royal  decree  deliberated  in  the  Council  of  Ministers,  after 
consulting the NBB8, to activate the Resolution Fund, i.e. to finance a resolution measure.  

Belgian  credit  institutions  will  pay  an  annual  financial  stability  contribution  to  finance  the 
Resolution  Fund9.  It  will  amount  to  0.022  %  of  the  credit  institution’s  total  liabilities  at 

31 December of the preceding year, after deduction of (i) the deposits eligible for reimbursement 

by the Belgian deposit guarantee scheme (hereinafter the ‘eligible deposits’), and (ii) its regulatory 
capital10.  The  ECB  understands  that  the  basis  for  calculating  the  financial  stability  contribution, 

which excludes eligible deposits, is conceived as an incentive to limit systemic risk related to the 
financing  structure  of  credit  institutions11.  The  amount  used  to  calculate  the  credit  institution’s  

annual  financial  stability  contribution  is  communicated  to  the  Resolution  Fund  by  the  NBB  on 
request12.  

The Resolution Fund will be established within the Deposit and Consignment Office (Deposito- en 

Consignatiekas/Caisse  des  dépôts  et  consignations),  a  government  department  without  legal 

personality  under  the  Minister  for  Finance.  The  Resolution  Fund  will  book  the  financial  stability 

contributions in a resolution reserve, whose amount will be disclosed in the annual report on the 
Resolution Fund13. The Resolution Fund will transfer the annual financial stability contributions to 
the Belgian Treasury14. The draft law imposes a sanctioned15 duty of confidentiality for the Deposit 

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Article 2 of the draft law.  
Explanatory Memorandum to the draft Royal Decree on the Resolution Fund, comment on Article 1, p. 2.
Explanatory Memorandum to the draft Royal Decree on the Resolution Fund, comment on Article 2, p. 2. 
Second paragraph of Article 2 of the draft law. 
Third paragraph of Article 2 and Article 3 of the draft law.  
Second paragraph of Article 3 of the draft law. 
Explanatory Memorandum to the draft law, pp. 2 and 3. 
Article 7 of the draft law; Explanatory Memorandum to the draft law, comment on Article 7, p. 10. 
Articles 3 and 4 of the draft Royal Decree on the Resolution Fund. 
Article  3  of  the  draft  law.  These  amounts  will  thus  be  integrated  in  the  resources  of  the  Belgian  State  (Explanatory 
Memorandum to the draft law, comment on Article 3, p. 10).  
Article 458 of the Criminal Code. 

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and Consignment Office agents who may not disclose the confidential information obtained when 

cooperating with the Resolution Fund.  

1.2  The draft law also amends the method for calculating the annual contribution to the Belgian deposit 
guarantee scheme16 (hereinafter the ‘contribution to the DGS’); that contribution was annulled by 
the  Belgian  Constitutional  Court  with  effect  from  1  January  201217.  The  Constitutional  Court’s 

decision is based notably on the consideration that: (i) the amount of deposits collected from the 

public is not, as such, an indicator of difficulties likely to trigger the DGS’ intervention, and (ii) the 

uniform calculation of the contribution to the DGS, notably the absence of weighting according to 

the risk profiles of the credit institutions, created a disproportionate prejudice for institutions that 

mainly finance themselves through deposit-taking activities, compared to those that have recourse 

to wholesale financing.  

The  draft  law  replaces  the  currently  applicable  flat  fee  with  an  annual  contribution  to  the  DGS 

amounting  to  0.10  %  of  the  credit  institution’s  stock  of  eligible  deposits  at  31  December  of  the 
preceding year18 and will be risk-weighted based on three types of risk factors: capital adequacy, 
quality of assets and liquidity19. The draft Royal Decree on the calculation of contributions to the 

DGS further defines the risk indicators, as well as the scores that will be applied to each of them.  

2. 

General observations  

2.1  The  ECB  welcomes  the  establishment  in  Belgium  of  a  resolution  fund  financed  by  contributions 

from  Belgian  credit  institutions  and  the  amendment  of  the  calculation  of  the  contribution  to  the 

DGS,  as  part  of  a  broader  range  of  initiatives  strengthening  financial  stability.  The  Fund  regime 

entails the further disengagement of the State in favour of restructuring primarily financed by the 
banking sector20. 

2.2  The  ECB  understands  that  the  provisions  submitted  by  the  Belgian  authorities  concerning  the 

Resolution  Fund  (paragraph  1.1)  and  the  amended contribution  to  the  DGS  (paragraph  1.2)  were 
drafted  in  the  light  of  the  corresponding  Union  legislative  initiatives21,  in  accordance  with  the 

general  principle  of  sincere  cooperation  and  loyalty  pursuant  to  the  Treaty  on  European  Union. 

This  approach  reduces  the  risk  of  significant  divergences  in  national  legal  frameworks  and  the 

corresponding counterproductive effects. It is crucial to strive for consistency and a level playing 

field  across  the  Union  and  to  minimise  market  distortions  by  national  approaches  to  resolution 

funds. Therefore, it is important to ensure that the national regime fits well into the evolving Union 

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Special  Fund  for  Protection  of Deposit  and  Life  Insurances  organised  by the  Royal  Decree  of  14  November  2008  and 
amended by the Law of 23 December 2009. 
Constitutional Court, 23 June 2011, N°115/2011; Explanatory Memorandum of the draft law, pp. 4 and following. 
Article 8 of the draft law. An additional 0.13% contribution to the DGS will be collected in 2012. 
Article 8 of the draft law; Explanatory Memorandum to the draft law, comments on Article 8, pp. 11 to 15. 
See Opinions CON/2010/45 and CON/2010/83. 
These initiatives are (i) the proposal for a directive…./…../EU of the European Parliament and of the Council on Deposit 
Guarantee  Schemes  [recast],  COM(2010)  368,  and  (ii)  the  Communication  from  the  Commission  to  the  European 
Parliament, the Council, the European Economic and Social Committee and the European Central Bank, Bank Resolution 
Funds, 26.05.2010, COM(2010) 254 final. 

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framework  and  to  provide  for  the  possibility  to  adapt  it  to  future  Union  and  international 

developments. 

2.3 

In addition, the ECB welcomes that the draft law and the draft royal decrees accommodate several 

recommendations  in  previous  ECB  opinions  on  resolutions  funds.  First,  the  risk  of  double 
charging22  is  avoided  since  only  credit  institutions  incorporated  in  Belgium  are  subject  to  the 

payment of the financial stability contribution, which does not apply to branches of foreign credit 
institutions in Belgium23. Second, there is no automatic relationship between the financial stability 
contributions and pay-out by the Resolution Fund24. The draft royal decree on the Resolution Fund 

provides that the financial stability contribution creates neither an entitlement by the paying credit 

institution  to  intervention  by  the  Resolution  Fund,  nor  a  duty  for  the  Resolution  Fund  to 
intervene25. 

3. 

Resolution measures that may be financed by the Resolution Fund26 

The  ECB  welcomes  the  Resolution  Fund’s  objective  of  financing  resolution  measures  to  reduce  the 

impact of a credit institution’s default on the financial system and on economic and social well-being in 
Belgium27.  

The  draft  law  does  not  specify  the  resolution  measures  that  may  be  financed  by  the  Resolution  Fund.  

Only  the  Explanatory  Memorandum  to  the  draft  royal  decree  on  the  Resolution  Fund  contains  a  non-

exhaustive list of potential measures, such as financing of a bridge bank, a total or partial asset transfer or 
a  good  bank/bad  bank  split28.  The  ECB  recommends  setting  out,  either  in  the  draft  law  or  in  the  draft 

Royal Decree on the Resolution Fund, the different types of resolution measures that may be financed by 

the  Resolution  Fund.  This  would  enhance  legal  certainty  and  hence  also  benefit  financial  stability.  The 

necessary  flexibility  can  be  maintained  if  the  list  of  potentially  eligible  resolution  measures  is  non-

exhaustive.  

The financing of resolution measures through the Resolution Fund is subject to strict conditions under the 
Union State aid framework29, which applies to the Resolution Fund’s interventions. In particular, while it 
might  be  useful  to  have  recourse  to  the  Resolution  Fund  for  the  management  of  bad  assets30,  this  is 

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CON/2011/66,  paragraph  2.1,  and  the  reference  to  the  European  Council’s  call  for  ‘further  coordination  between  the 
different levy schemes in order to avoid double-charging’ (conclusions of the European Council of 28-29 October 2010, 
available on the Council’s website at www.consilium.europa.eu). 
Third paragraph of Article 2 of the draft law and Article 2 of the draft royal decree on the Resolution Fund. Explanatory 
Memorandum to the draft law, p. 3. 
CON/2011/29, paragraph 3.2; CON/2011/66, paragraph 3.2.2. 
Article 2 of the Draft Royal Decree on the Resolution Fund. Explanatory Memorandum to the draft law, pp. 4 and 7.  
CON/2010/83, paragraphs 6.2 and 6.3; CON/2011/29, paragraphs 3.2 and particularly 3.4; CON/2011/93, paragraph 5.2. 
Article 2 of the draft law.  
Explanatory Memorandum to the draft royal decree on the Resolution Fund, comment on Article 2, p. 2. 
See in particular the latest Communication from the Commission on the application, from 1 January 2012, of State aid 
rules to support measures in favour of banks in the context of the financial crisis, (OJ C 356, 6.12.2011, p. 7). 
Explanatory Memorandum to the draft royal decree on the Resolution Fund, comment on Article 2, p. 2. 

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subject to strict conditions under the framework, especially regarding the pricing of the assets, in order to 

avoid a bailout of shareholders or creditors of the ailing bank. 

4. 

Funding and replenishment of the Resolution Fund 

The ECB welcomes an ex ante levy on the financial industry, as this protects public funds and reduces 

moral hazard, and is in line with the countercyclical approach of building up funds before a crisis.  

However,  funds  provided  ex  ante  may  be  insufficient  in  a  crisis  situation  and  public  funds  may  also 

become  necessary.  In  such  a  case,  the  banking  sector  should  be  called  on  to  reimburse  the  State.  The 

principle  of  ex  post  recovery  from  the  banking  sector  should  promote  additional  market  discipline  and 
address  moral  hazard  risk31.  The  same  principles  apply  to  any  full  or  partial  replenishment  of  the 

Resolution Fund by the national authorities. The ECB stresses that the central bank may not finance the 
Resolution Fund, in line with the prohibition of monetary financing32. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 12 December 2011. 

[signed] 

The President of the ECB 

Mario DRAGHI 

31  
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CON/2010/83, paragraph 6.3. 
CON/2008/59, paragraph 3.2, CON/2011/39, paragraph 3.6, and CON/2011/93, paragraph 4.3.  

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