Adoption of the fee payment rules of the Resolution Fund for 2014

15 September 2014, 4:48 pm

The Board of Directors of the Resolution Fund has approved the Fee Payment Rules for the performance of the annual risk-based fee payment obligation of the member institutions.

Based on Act XXXVII of 2014 on the Further Development of the Institutional System Strengthening the Security of Certain Participants of the Financial Intermediary System and the proposal of the Central Bank of Hungary (MNB), the Board of Directors of the Resolution Fund approved the fee policy, and the fee payment rules of the Resolution Fund, on the basis of which it determined the obligation of its members to pay their membership fees for 2014. Credit institutions and investment firms are required to pay a fee commensurate with their size; however, their riskiness has also been taken into account in setting the fee due to the risk-based variable fee component. The sector’s contributions to the Resolution Fund this year (including accession fees) represent an amount of HUF 2.5 billion. The Fund’s assets may only be used to contribute to the costs of resolution, whereby helping to achieve the resolution objectives, including the maintenance of the stability of the financial intermediary system and the protection of deposits.

The most important source of income for the Fund is the regular annual contributions of its members, the amount of which is determined by the Board of Directors of the Fund on the basis of a proposal prepared by MNB. All domestically based credit institutions and investment firms are required to pay a fee to the Resolution Fund because they all benefit from the existence of the Fund.

The fee payment obligation is proportional to the size of the institutions, but the Board of the Resolution Fund set a minimum fee of HUF 200,000 per year (the proportional part thereof for this year) for those institutions for which the proportional fee would not reach this level. The fees have been set at the individual institutional level and the obligation to pay the fees shall be met at the individual level, with the exception of institutions with joint and several responsibility for the integration of cooperative credit institutions. The common assets of the Integrational Organization of Cooperative Credit Institutions (ISZ) have been included in the solvency capital of its credit institutions in proportion to the risk-weighted balance sheet total.

Based on the applicable law, the regular fee consists of a base fee and a risk-based variable fee. The fee payment is based on the institution’s liabilities (excluding own funds) less the part of the insured deposits below the indemnity amount, which is multiplied by the fee payment rate. The Board of Directors set the fee payment rate at 0.04 percent. The basic fee is multiplied by the risk factor to obtain the fee to be paid by each institution, as a result of which the total fee is between 80 and 150 per cent of the basic fee, determined on the basis of the riskiness of each institution. To determine risk, the fee policy considers four categories (risk, profitability, systemic risk, and miscellaneous other). The risk-based part of the fee is a deviation from the base fee, that is, the fee payable is higher for a riskier institution and lower for a less risky institution.

The fee payment rules of the Resolution Fund are available on the websites of the Central Bank of Hungary (MNB), the Ministry of Finance (PM) and the National Deposit Insurance Fund of Hungary (OBA).

Dated: Budapest, 15 September 2014

Board of Directors of the Resolution Fund