The Minister of State, Sean Fleming T.D today confirmed the announcement that the Credit Institution Resolution Levy for 2022 will be reduced to 0.024914% of assets (approximately €5 million) and the Credit Union Stabilisation Levy for 2022 will be reduced to 0.0015033% of assets (approximately €300,000).
Collectively levies of €5.3 million will be collected for 2022, mirroring the amount collected in 2021.
Minister of State, Sean Fleming T.D noted that:
“As Minister for State with responsibility for Financial Services, Credit Unions, and Insurance, my aim is to support the credit union sector in continuing to provide essential financial services to local communities.
We are maintaining the levies at the amounts charged in 2021 to balance our legal obligations to maintain and grow the funds with the challenges faced by credit unions.”
Following completion of the statutory consultation process, the Minister for Finance, Paschal Donohoe T.D., signed into law the Credit Institutions Resolution Fund Levy Regulations and the Stabilisation Fund Levy Regulations.
The Credit Institutions Fund Levy Regulations and the Stabilisation Fund Levy Regulations are now both available on the Department of Finance website.
The Central Bank and Credit Institutions (Resolution) Act 2011 established a resolution regime for credit institutions and credit unions in Ireland. The Credit Institutions Resolution Fund (Resolution Fund) was established under this legislation to support resolution actions in the State, and is managed and administered by the Central Bank. Credit unions are now the only financial institutions contributing to the Resolution Fund as other financial institutions are now covered by the Single Resolution Mechanism which has resulted in Irish Banks paying into the Single Resolution Fund.
The Department of Finance, in collaboration with the Central Bank of Ireland, carried out a review of the levy in 2019, which included a public consultation. Following this review it was decided that the target size of the Resolution Fund should be set at €65 million and that this target should be met by 2025. It was also agreed that the Resolution Fund should be reviewed in 2025 and that the annual levy should be approximately €5 million per annum from 2020 to 2025 to increase the size of the Resolution Fund from €35 million to €65 million, broadly in line with the increased average asset size of credit unions. The adjusted levy rate would be dependent on the movement of the asset size of the sector over the five years and whether any costs of resolution have been incurred by the Resolution Fund.
The Minister for Finance has now agreed that the Resolution Levy for 2022 be kept at circa €5 million per annum to allow the fund to continue to grow to €65 million by 2025.
The levy rate for 2022 will be set at 0.024914% in the regulations, a slight reduction in the levy rate from 0.0259% of assets in 2021.
The Department of Finance prepares the annual Levy Regulations following consultation with the Central Bank and the Credit Union Advisory Committee. These regulations come into force on 1 October each year and prescribe the rate of contribution or method of calculating the rate of contribution to the Resolution Fund.
Under section 59(3) of the Credit Union and Co-Operation with Overseas Regulators Act (“the CUCOR Act”) the Minister for Finance is required to make regulations prescribing the rate of contribution or a method of calculating the rate of contribution to the Stabilisation Fund which is a part of the Credit Union Fund. To enable the levy to vary from year-to-year, regulations are made annually prescribing the rate of the levy and the basis on which it will be charged. The CUCOR Act requires that the Minister consult the Central Bank, the Credit Union Advisory Committee and the Credit Union Restructuring Board before prescribing the annual levy rate each year.
In making the regulations for the Stabilisation Levy the Minister must have regard to the need:-
- for the Stabilisation Fund to grow, over time, to a size commensurate to the costs that might be incurred in providing stabilisation support under Part 4 of the Act; and
- for the rate of contribution by a credit union, or category of credit unions, to be consistent with maintaining the financial viability and sustaining the commercial position of such credit unions
Following the annual review, it has been decided to set the levy rate to 0.0015033% for 2022 which will result in a charge of circa €300,000 for the credit union sector in 2022, maintaining the annual levy at approximately the amount charged in 2021. Given the continuing uncertainty relating to the pandemic, no decision was taken in relation to the target size of the Stabilisation Fund. The levy rate will be reviewed as required by law during 2022.
Brian Meenan, Press Officer, Department of Finance - 087 219 8857 email@example.com Our Mission
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