Total annual fees

The ECB levies an annual supervisory fee on all supervised banks to cover its costs in relation to banking supervision.

The total amount of annual supervisory fees is published by 30 April each year in an ECB decision.

The ECB Annual Report on supervisory activities contains information on the actual expenditure and staffing for ECB supervisory tasks and describes the supervisory fees framework for that reporting period.

ECB Annual Report on supervisory activities

What does the fee cover?

The total amount of annual supervisory fees covers the ECB’s expenditure in relation to its supervisory tasks for the relevant fee period, i.e. for that particular year. It consists of:

  • the estimated total annual expenditure for the year
  • the surplus (or deficit) from the previous year, if any, that will be refunded (or charged)

The total amount of annual supervisory fees also includes:

  • any amounts received or refunded in the context of Article 7 of the ECB Regulation on supervisory fees relating to changes, such as the authorisation of new supervised banks, the withdrawal of authorisation, or changes in status from significant to less significant or vice versa
  • any fees related to previous fee periods that were not collectible
  • any interest payments received for late payment by the fee debtor

ECB Regulation on supervisory fees
Change in situation

Total annual supervisory fee for the fee period

For the 2018 fee period the annual supervisory fee amounts to €474.8 million. This is an increase of €49.8 million on the total annual supervisory fees levied in 2017, which amounted to €425 million. As shown in the table below, one quarter of the increase in the annual supervisory fee estimate is due to a smaller surplus carried forward than in the previous fee period. The balance of the increase in expenditure related mainly to new tasks as explained in the supervisory priorities 2018:

 
Annual expenditure estimate 2018
Annual expenditure estimate 2017
Annual expenditure estimate 2016
Total supervisory fee* 474.8 425.0 404.5
Estimated expenditure 502.5 464.7 423.2
Surplus/deficit from previous year -27.9 -41.1 -18.9
Other adjustments 0.2 1.4 0.2

* All amounts are in €m. Totals may not add up due to rounding.

Total annual expenditure

The ECB’s annual expenditure for banking supervision primarily consists of costs directly related to its supervisory tasks:

  • directly supervising significant banks or banking groups: mainly costs associated with the Joint Supervisory Teams and on-site inspections
  • overseeing the supervision of less significant banks or banking groups: costs associated with oversight activities
  • performing horizontal tasks and specialised services: costs associated with activities such as the work of the Secretariat to the Supervisory Board, macroprudential tasks, statistical services and dedicated legal services

It also includes costs indirectly related to the ECB’s supervisory tasks, such as shared services provided by the ECB’s support business areas, including premises, human resources management and information technology (IT) services.

For each grouping, the costs reported include the allocation of shared services provided by the ECB’s support business areas.

 
Estimated expenditure
2018
Estimated expenditure
2017
Actual expenditure 2017
Actual expenditure 2016
Expenditure for banking supervision tasks* 502.5 464.7 436.7 382.2
Direct supervision of significant banks 283.4 279.0 242.9 192.0
Oversight of less significant banks 27.1 24.1 24.0 24.8
Horizontal tasks and specialised services 192.0 161.5 169.8 165.4

* All amounts are in €m. Totals may not add up due to rounding.

Organigram

What does the annual expenditure cover?

Supervised banks or banking groups are charged annually using an estimate of the ECB’s costs for carrying out its supervisory tasks in that particular year, broken down into three main categories:

  • salaries and benefits: remuneration, overtime, allowances and post-employment benefits for supervisors and staff of the shared services
  • rent and building maintenance: the cost of renting the building space on both a permanent and a temporary basis, and all repair, maintenance and service costs related to the ECB premises
  • other operating expenditure: expenses such as consultancy, IT services, statistical services, depreciation for fixed assets (other than those related to premises), business travel and training

 
Estimated expenditure
2018
Estimated expenditure
2017
Actual expenditure 2017
Actual expenditure 2016
Expenditure for banking supervision tasks* 502.5 464.7 436.7 382.2
Salaries and benefits 247.6 208.6 215.0 180.7
Rent and building maintenance 53.9 55.0 53.0 58.1
Other operating expenditure 201.0 201.1 168.8 143.4

* All amounts are in €m. Totals may not add up due to rounding.

While expenditure for regular banking supervisory tasks has generally stabilised, external factors such as the United Kingdom’s withdrawal from the EU and the 2018 biennial supervisory stress tests for significant institutions have led to an increase in the annual expenditure estimate for the current fee period. These activities have an impact on both the number of people working in banking supervision at the ECB and the costs of hiring external consultants to assist in the projects.

Furthermore, European banking supervision launched a system-wide approach in 2017 to increase the number of cross-border and mixed-team inspections in the coming years. This has led to an increase in the number of NCA inspectors seconded to the ECB and related business travel costs. The multi-annual targeted review of internal models (TRIM) project continues in 2018 with the budget remaining stable as compared with 2017. Finally, as the number of people working on banking supervision continues to grow there is an increased demand for shared services provided by the ECB’s support business areas.

Supervision. Explained. What is the targeted review of internal models?

As shown, compared with the ECB Decision of 2017, the cost increases all relate to the salaries and benefits category. The estimation of other operating expenditure, which was the main driver of the underspending of 2017, has remained stable as compared with the Decision of 2017, despite new activities and services being introduced in 2018 (as explained above).

Surplus or deficit

The total amount levied by the ECB must cover, but not exceed, the expenditure incurred by the ECB in the relevant fee period in relation to its supervisory tasks. As the ECB’s decision on the total annual supervisory fees is based on an estimate, a surplus or deficit between the amount collected and the actual expenditure incurred can arise. The surplus or deficit from the previous year, if any, is deducted from or added to the total amount of annual supervisory fees for the following year.

At the end of 2017, the ECB’s expenditure for supervisory tasks stood at €436.7 million. This was 6% less than estimated, resulting in a surplus of €27.9 million, compared with the expenditure estimated for that year. This amount is included in the total amount to be levied in 2018.

Annual accounts of the ECB

Other adjustments

Each supervised bank or banking group must pay a fee for the year, or part of the year, in respect of which it is supervised. Where changes in a bank’s or banking group’s situation occur after the ECB has finalised the individual supervisory fee notice, the adjustment will be reflected in the total amount of annual supervisory fees for the next fee period. Changes in situation include authorisation of new supervised banks, the withdrawal of authorisation, or changes in status from significant to less significant or vice versa.

Change in situation

The ECB takes all the necessary steps to collect supervisory fees from supervised banks and banking groups. Interest on late payments received and any amounts that were not collectible will be taken into account in determining the total amount of annual supervisory fees for the following year.

The other adjustments related to the 2017 fee period, which have been incorporated into the 2018 annual supervisory fee estimate, amount to €0.2 million. These adjustments are mostly related to supervisory fee refunds made to less significant banks.

How much does each category of bank pay?

The amount that is recovered through annual supervisory fees depends on whether the supervised entity is significant or less significant and, therefore, the extent to which it is scrutinised by the ECB.

There is a net surplus of €27.9 million between the actual expenditure incurred for banking supervisory tasks in 2017 and the amount levied in that year. This figure accounts for significant and less significant banks: while significant banks under direct supervision accounted for a surplus of €30.2 million, a deficit of €2.3 million of the total amount was levied on less significant banks. The less significant banks will, therefore, need to pay €2.3 million in addition to the 2018 fee as they were under charged in 2017.

 
Fees on SIs or
banking groups 2018
Fees on LSIs or
banking groups 2018
Total
Total supervisory fee* 428.5 46.3 474.8
Annual expenditure estimate 458.6 43.9 502.5
Surplus/deficit carried forward -30.2 2.3 -27.9
Other adjustments 0.1 0.1 0.3

* All amounts are in €m. Totals may not add up due to rounding.