Remainders of the national bank levy – Where to put it?

The collapse of Germany's Traffic Light Coalition (eponymously named after the political colours of the parties forming it) has significant legislative consequences—not least for the extensive pipeline of financial legislation. One pressing issue concerns how the remaining funds from the original national bank levy are to be used. Between 2011 and 2014, banks were required to pay this special levy into the federal special-purpose Restructuring Fund (RSF).
In the meantime, a European solution, the Single Resolution Fund (SRF), was established. In 2016, a substantial amount of the RSF’s assets was transferred to the SRF. However, an amount of € 2.3 billion remains in the RSF and under current legislation is for all intents and purposes ‘useless’.

Initially deemed a Luxury Problem, the issue has reached an impasse since the special-purpose nature of the bank levy (Sonderabgabe) places strict constitutional limits on its use. Funds raised must be mandatorily applied to their designated purpose. However, the € 78 billion overfunding of the SRF has already more than achieved this aim. So what can be done?

Usage of the remainig RSF funds

Since 2023, there has been ongoing debate about how to use the remaining RSF funds. In the spring of 2024, hundreds of banks petitioned BaFin, i.e. the German national competent supervisory authority for banks and at the same time the administrator of the RSF, for these residual funds to be repaid. In response to these demands, the German government planned to pass the Restructuring Fund Transfer Act (RStruktFÜG) in the summer of 2024. The draft legislation proposed transferring the RSF’s remaining funds to the Financial Market Stabilisation Fund (SoFFin) to pay down its debt. At the same time, repayments to banks were explicitly ruled out.

Despite – or possibly even precisely because of – the prospect of this legislative solution, some banks responded by filing administrative lawsuits seeking to compel BaFin to issue a formal decision. The banks argue that BaFin has discretionary authority over the RSF funds and that they have a legitimate claim for repayment. Their position and line of argument seems straightforward enough: "The purpose of the special levy has been fulfilled—there’s no longer any reason for the state to retain the funds."

Consequences of the collapse of the Traffic Light Coalition

However, the collapse of the Traffic Light Coalition has disrupted the legislative process. With the RStruktFÜG unlikely to pass in this parliamentary term, the situation remains unresolved. This uncertainty is once again redirecting the focus to the existing legal framework, which is now under scrutiny at the Administrative Court in Frankfurt.

A legal opinion commissioned by the Finance Ministry in 2022 and authored by legal scholars Milutinovic and Reimer from Heidelberg University argues against repayment claims but also opposes transferring the funds to the federal budget. The draft RStruktFÜG aligns with the opinion’s preferred solution: transferring the RSF’s residual funds to SoFFin.

The legal opinion highlights the Steering Purpose of the bank levy—deterring risky behaviour, discouraging financial market speculation, and enabling creditor compensation—as central to its justification. It rejects any constitutional right to repayment, referring to the levy’s achievement of its purposes and the absence of further restructuring cases. This, the authors argue, gives the legislature broad discretion in reallocating remaining funds.
However, critics of this reasoning contend that indefinitely holding funds without any purpose is not a legally satisfactory outcome. The opinion’s assertion that achieving the levy’s original purpose grants the legislature expansive discretion for new purposes seems also contentious and inadequately substantiated in the opinion.

One intriguing alternative set out in the legal opinion is to see the levy as being akin to an insurance premium, which, if considered valid, could justify transferring the funds to the federal budget. However, the lack of normative grounds for such a model in German law leads the authors of the opinion to dismiss this approach.

At the same time the opinion notes that it is hard to argue a causal relationship between the RFS and economic stability being restored following the 2008/2009 Financial Markets Crisis – and that therefore the achievement of the original purpose supposedly indirectly makes the case for refusing the reimbursement claims of the banks. That is because it is not possible under this insurance model approach to establish with any legal certainty whether such original purpose was actually achieved.

Further complexities arise in terms of legal doctrine. The opinion assesses repayment claims purely through the lens of the unjust enrichment doctrine, which some argue is overly restrictive and possibly also impracticable. Another perspective might invoke principles of partnership law, drawing parallels between the collective, purpose-driven contributions of banks under state mandate and a partnership dissolved after achieving its purpose. Under section 734 of the German Civil Code (BGB), such surplus assets would be distributed among participants, providing clearer timelines and frameworks for resolution.
This legal quandary underscores the need for legislative clarity. However, the collapse of the coalition government has made legislative intervention less predictable, leaving the judiciary to handle the situation under existing laws. This is not only challenging for Germany’s administrative courts but also raises broader constitutional questions about the flexibility and reallocation of crisis-related public funds. One key takeaway for future lawmakers, which may sound a bit know-it-all: Provisions for the disposition of residual funds from special levies should be embedded in the originating legislation from the outset.

Authors: Dr. Mathias Hanten, Dr. Moritz Maier