Funding of administrative expenses of the Resolution Authority

We asked for views on how the Resolution Authority’s administrative expenses should be calculated and how this amount should thereafter be recovered by means of a levy allocated to banks.

We received 8 separate responses to the Consultation Paper. Of these, none were against the proposed method of calculating the resolution administration expenses.

The Authority proposed that these expenses, for the year 2021-22, should be recovered through levies on an ‘equal share’ basis amongst the banks, early in the year 2022-23. Half of the respondents either had no comment or specifically agreed with this proposal. The remaining respondents had divergent views as to how the levy should be allocated. This included 3 banks, each with different business models, who believed their particular business model should pay a smaller share than banks operating different business models.
 

The Authority believes that resolution administration expenses will be incurred in relation to all banks, certainly for an initial period. It is intended therefore to proceed with recovery of these expenses by means of a levy calculated on an ‘equal share’ basis for the year 2021-22.    

However, if over time it becomes clear that there is a significant divergence between the degrees of ongoing administrative work required for the different types of bank operating on the Island, the Authority would be pleased to discuss this with the banking industry and to consider adapting the levy allocation methodology accordingly.