According to the WSJ, ANZ has just forked out $750,000 to South Korean regulators:
South Korea has begun collecting a levy on domestic banks and local branches of foreign banks it introduced in August, hoping to help the economy guard against shocks stemming from rapid capital flows in and out of the country, the Finance Ministry said Sunday.
The Australia & New Zealand Banking Group Ltd. paid $795,000, making it the first foreign or domestic bank to pay what is called the “macroprudential stability levy” to the Bank of Korea. The levy is imposed on financial institutions’ nondeposit foreign debt, the ministry and the central bank said in a joint statement.
A total of 57 banks are subject to the levy requirement, introduced in August by Seoul in an effort to minimize the risks posed by the rapid flow of foreign capital in and out of domestic markets. The levy is meant to encourage lenders to take out offshore debt with longer maturities, which the authorities hope will reduce their vulnerability to major global market shocks.
Such payments collectively will amount to about $210 million annually, but for this year the actual payment will be smaller as the rule only took effect Aug. 1, the BOK said.
The levy penalises foreign currency denominated debt and short term wholesale debt. It is also supposed to help stabilise troubled banks during crises.
The levy paid by ANZ is infinitesimal. But one can’t help feeling somewhat aggrieved at the principle involved. ANZ gets a free two-notch upgrade to its Australian credit rating because the Australian Budget carries a portion of its macroprudential risk and meanwhile ANZ pays Korean regulators to stabilise its macroprudential circumstances.
Now that’s good regional citizenship by the Australian taxpayer. More on the levy below.
101220 – Macro-Prudential Stability Levy
