The Canton of Basel-Stadt has announced an increase in the annual compensation payment that Basler Kantonalbank (BKB) must make for the state guarantee, effective from 2025.

The government council has set the new payment at CHF 15.2 million for the years 2025 to 2028, up from the previous amount of CHF 10.2 million.

This adjustment reflects the bank's larger balance sheet and aims to mitigate the financial risks associated with the canton’s liability for the bank's debts in the event of bankruptcy.

The compensation is designed to address the cost advantages BKB enjoys in financing, thereby preventing any distortions in competition within the financial sector.

The amount is determined using a "cost advantage model," which takes into account the financial benefits the bank receives from the state guarantee.

This move underscores the canton’s commitment to balancing risk management with fair competition in the banking industry.