Government's decision on DGS contributions affects competitiveness of Belgian banks

5 April 2023 - 4 min Reading time

The banking sector is very disappointed with the government's decision to further increase the deposit guarantee contribution, which Belgian banks pay annually, to an unprecedented level of 1.8% of covered deposits. The percentage of 1.8% of covered deposits must be reached by 3 July 2025. Although the DGS reform has some merits, such as setting an upper limit to be reached, this upper limit of 1.8% is unprecedented in Europe .


This measure is a budget measure and undermines the European and international competitive position of the Belgian banks and the role they play in supporting our economy.

DGS contribution as a budgetary measure


The deposit guarantee contribution is an important contribution from the sector to protect the savings of Belgian citizens. This contribution is regulated at European level and is primarily intended to protect savings. A good thing, and a contribution that is not questioned by the sector. However, in Belgium this contribution is regarded by the government as a budgetary measure to feed the budget, which is completely contrary to the European objective.

It is for this reason that the Belgian government has decided to now increase the DGS contribution to an unprecedented level of 1.8% of covered deposits, while the standard of 0.8% is used in Europe. The Belgian banks will therefore pay 2 to 3 times more DGS contributions than other European banks (France: 0.5%; the Netherlands 0.8%, Germany 0.8%,…). This while the banking sector in Belgium is particularly healthy and solid. The governor of the NBB recently stated that Belgian banks are among the strongest and most stable banks in Europe. The DGS contribution in Belgium is therefore particularly high, compared to our risk profile and the other banks in Europe. This strongly affects the competitive position of Belgian banks in Europe, as well as the attractiveness of Belgium as a financial centre.


Economic support affected


Febelfin believes that a strong banking sector is essential for supporting the economy and society.

Belgian banks have always been ready to fully support the economy in times of crisis. During the Covid crisis, banks continued to lend and assisted businesses and families that ran into financial difficulties. With the energy crisis, they have repeated this commitment. To continue to play this role, a strong and healthy banking sector is necessary. The extra levies and contributions reduce the banks' clout to support our economy. The possible impact on lending to businesses and households should not be underestimated. The banks ensure that money flows to where they are needed. Through their credit operation, they channel the deposits of savers to the projects of others. In addition, they can provide a major boost to the economy through their own leverage effect. With an amount of EUR 100 million in additional capital, the banks can then provide additional credit for approximately EUR 2 billion.

Banks must also have sufficient capacity to absorb shocks and meet the challenges of the future, such as the important role that financial institutions play in financing the transition to a more sustainable society. These budgetary measures reduce the banks' capacity to provide businesses and households with the oxygen they need, and also hinder them from assuming their role in a European and international context.


European competitiveness


Belgian banks already make a significant contribution to public finances and the functioning of the financial system. For 2022, the total amount can be estimated at 3.7 billion. After all, in addition to the 'classical' taxes and levies (corporate income tax, social security contributions…), the Belgian financial sector pays a number of specific levies each year, including the Annual Tax on Credit Institutions (JTK), the DGS contribution and the contribution to the resolution fund ( SRF). Good for about 1.6 billion euros in 2022.

A comparison with our neighboring countries shows that Belgian banks already pay considerably higher contributions and charges. Febelfin is therefore extremely concerned about the competitiveness of the Belgian financial sector in a European and international context.

Febelfin therefore calls on the government to reflect thoroughly on the impact of these fiscal measures on the Belgian banking sector, and by extension the entire Belgian economy.