Česká národní banka

CNB > Resolution > Prescribing contributions to the resolution financing arrangement

Prescribing contributions to the resolution financing arrangement

The resolution financing arrangement for the Czech Republic is the Resolution Fund. The assets in the Resolution Fund should reach at least 1% of covered deposits by 2024 (approximately 27 bn CZK). This level should be achieved by regular contributions paid by banks. The amount of an institution’s individual contribution to the Resolution Fund depends on its size and risk profile and is specified in the Commission Delegated Regulation EU 2015/63. The CNB is responsible for calculating, prescribing and, where necessary, enforcing these contributions.

The funds in the Resolution Fund are managed by the Financial Market Guarantee System. In exceptional cases, the Resolution Fund can also be tapped in the resolution of an institution to:

  • finance resolution (e.g. to top up capital of the failed institution or a bridge institution, to purchase its assets, or to provide a loan or a guarantee in the sale of its business or assets to a selected acquirer),
  • pay compensation according to the “no-creditor-worse-off” principle if the results of the application of resolution tools lead to the institution’s owner (or creditor) being entitled to lower payment compared to liquidation or insolvency.

As the funds are public, their use is subject to prior approval by the European Commission under the public support rules.