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Biggest banks to pay up to 15m euros for ECB supervision

The eurozone's biggest banks will face an annual bill of up to 15 million euros ($20 million) apiece for being supervised by the European Central Bank, the ECB said on Tuesday.

FRANKFURT: The eurozone's biggest banks could face an annual bill of up to 15 million euros ($20 million) apiece for being supervised by the European Central Bank, the ECB said on Tuesday.

The ECB said in a statement that the costs incurred in its new role as Europe's common banking supervisor -- which it begins in November -- are expected to amount to 260 million euros in 2015.

As part of the new Single Supervisory Mechanism (SSM), the ECB will directly supervise up to 130 institutions classified as "significant" with assets in excess of 30 billion euros.

Around 5,800 smaller and less significant banks will remain under the remit of the national supervisory authorities.

The 130 biggest banks will foot around 85 per cent of the total bill and the other 5,800 the remaining 15 per cent, according to the ECB's estimate.

"It's a fair system. The largest banks with the higher risk profile will pay the most," the ECB's head of budgeting and human resources Steven Keuning told a news conference.

The fees amounted to a fraction -- some 0.001 per cent -- of the total assets under supervision, he pointed out.

Furthermore, the banks eventually stood to benefit because their borrowing costs were expected to fall as a result of being supervised and that would more than offset the supervision fees, he argued.

Of the overall sum of 260 million euros, staff costs would amount to around 60 per cent, premise-related costs to 10 per cent and the remaining 30 per cent would be accounted for by other operating expenditures such as travel, consultancy and IT services, the ECB said.

The ECB is hiring around 1,000 new staff for its supervisory duties, who will be housed in the central bank's current Eurotower headquarters in Frankfurt, while the rest of the workforce are scheduled to move to a brand new skyscraper currently under construction in the east of the city.

While the ECB said that the precise costs can only be confirmed in 2015, "a preliminary analysis has shown that for 2015 the annual fee for a directly supervised bank may range from 150,000 euros to 15 million euros."

However, most of the directly supervised banks would pay between 700,000 euros and 2.0 million euros, the ECB calculated.

Similarly, around 75 per cent of the smaller, indirectly supervised banks may pay between 2,000-7,000 euros per year, while the bigger banks in this category could be faced with a bill of about 200,000 euros.

The annual fee would be payable on July 1.

The ECB said it would conduct a review of the cost framework and the methodology for calculating it in 2017.

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