Annual compensation payment to the State for the conversion of a consolidated debt
Question discussed at the 2013 general meeting
By law, the Bank pays € 24.4 million per annum to the State before the profit distribution. That payment obligation was introduced in 1991 in the light of the profit distribution rules prevailing at the time between the Bank and the State, in order to compensate the State for the excess costs which it incurred on the repayment of a non interest-bearing debt dating from 1948.
In 2009 the profit distribution rules between the Bank and the State were amended, and in the light of the new rules prevailing since then the Bank considers that the annual compensation payment of € 24.4 million is no longer logical. The Bank therefore asked the Minister of Finance to initiate legislation to abolish that payment obligation.
Obviously, the Bank cannot fail to meet its payment obligation so long as the law remains unchanged.