Thursday, 23 March 2017

ECB 2016 Financial Accounts: The Ever-Inflating Direct Costs of Central Supervision

Source: European Parliament Approves the Single Supervisory Mechanism

Right, a bit late with the commentary this year, but on 16 February the European Central Bank (ECB) published its financial accounts for 2016.

As has by now become a tradition, the ECB spending spree continued despite eurozone debt problems growing larger every year, the latter of course facilitated by the former.

Due primarily to ECB money printing as QE related assets increased by €83 billion, the balance sheet inflated €92 billion during the year, an increase of 36%. Since 2012, the bank's assets have increased €142 billion, or 68.4%.

Headcount continued to increase due to, according to the ECB, the Single Supervisory Mechanism (SSM). The number of staff employed at year end increased by 300 (10.4%). There are today 1,381 more staff working for the ECB than in 2013, a total increase of 77.2%. At year end, total headcount stood at 3,171.

During 2016, total administrative expenses increased €90 million, or 10.4%, to €954 million. According to the ECB, "This increase was due to higher costs incurred in connection with the Single Supervisory Mechanism (SSM)." But not to worry as "The full SSM-related costs are recovered via fees charged to the supervised entities." Total administrative expenses have by now increased €490 million since 2012, a total increase of 105.6%.

Depreciation expenses for the year was €65 million, largely unchanged from previous year, but up €49 million (323%) compared to 2014. This increase was directly caused by the €1.4 billion new ivory tower housing ECB staff that was completed in 2014/15.

The largest contributor to the increase in total administrative expenses during the year was "administrative expenses" which increased €63 million, or 18.0%. Again, this was driven by costs related to the SSM according to the ECB.

Staff costs per head actually decreased to €147,127, down 4.2% on 2015, but was still 9.5% higher than in 2013.

Draghi's compensation, not including lavish high-living expenses fully paid for by the ordinary citizens from whom he with great effort every day confiscate purchasing power, was €389,760 - a "well-anchored" 1.0% increase way below his own inflation target.

The ECB 2016 accounts can be downloaded here.

Also see: The 2014 and 2015 EcPoFi articles on the ECB accounts.

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