A fundamental principle underlying DGS is that they are funded entirely by banks, and that … Its members constitute over 90 per cent of the insurance market in the UK and 20 per cent across the EU. In all such cases, the State aid rules should be complied with. The costs of the measures taken to prevent the failure of a credit institution should not exceed the costs of fulfilling the statutory or contractual mandates of the respective DGS with regard to protecting covered deposits at the credit institution or the institution itself. Having regard to the proposal from the European Commission. 5. Member States may allow the central body and all credit institutions permanently affiliated to the central body as referred to in Article 10(1) of Regulation (EU) No 575/2013 to be subject as a whole to the risk weight determined for the central body and its affiliated institutions on a consolidated basis. 6. The limit should be applied to each identifiable depositor. 1. Directive 2009/14/EC of the European Parliament and of the Council (8) introduced a fixed coverage level of EUR 100 000, which has put some Member States in the situation of having to lower their coverage level, with risks of undermining depositor confidence. That reduced target level shall not be lower than 0,5 % of covered deposits. (7)  Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (see page 190 of this Official Journal). However, Member States may, for a transitional period until 31 December 2023, establish the following repayment periods of up to: 15 working days from 1 January 2019 until 31 December 2020; 10 working days from 1 January 2021 until 31 December 2023. Without prejudice to rights which it may have under national law, the DGS that makes payments under guarantee within a national framework shall have the right of subrogation to the rights of depositors in winding up or reorganisation proceedings for an amount equal to their payments made to depositors. If you have a joint account with other person(s): The limit of EUR 100 000 [replace by adequate amount if currency not EUR] applies to each depositor separately (3). (17)  Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (OJ L 331, 15.12.2010, p. 1). The calculation of contributions shall be proportional to the risk of the members and shall take due account of the risk profiles of the various business models. Their limited number compared to all other depositors minimises the impact on financial stability in the case of a failure of a credit institution. Therefore, references to DGSs in advertisements should be limited to short factual statements. the banking sector in which the credit institutions affiliated to the DGS operate is highly concentrated with a large quantity of assets held by a small number of credit institutions or banking groups, subject to supervision on a consolidated basis which, given their size, are likely in case of failure to be subject to resolution proceedings. 7. 5. The power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in order to adjust the coverage level for the total deposits of the same depositor as laid down in this Directive in line with inflation in the Union on the basis of changes in the consumer price index. The harmonised level of coverage provided for in this Directive should not affect schemes protecting the credit institution itself unless they repay depositors. DGSs shall be subject to the requirements of professional secrecy in accordance with Article 70 of that Regulation when exchanging information with EBA. 6. DGSs and relevant authorities should handle data relating to individual deposits with extreme care and should maintain a high standard of data protection in accordance with that Directive. The same coverage level should apply to all depositors regardless of whether a Member State’s currency is the euro. 9. Member States should ensure that their DGSs have sound governance practices in place and that they produce an annual report on their activities. 3. Certain depositors should not be eligible for deposit protection, in particular public authorities or other financial institutions. During the transitional period until 31 December 2023, where DGSs cannot make the repayable amount available within seven working days they shall ensure that depositors have access to an appropriate amount of their covered deposits to cover the cost of living within five working days of a request. This means that all deposits with one or more of these trademarks are in total covered up to EUR 100 000. Directive 95/46/EC of the European Parliament and of the Council (12) applies to the processing of personal data carried out pursuant to this Directive. Given the divergences in administrative practices relating to DGSs in Member States, Member States should be free to decide which authority determines the unavailability of deposits. 2. 4. If, for instance a depositor holds a savings account with EUR 90 000 and a current account with EUR 20 000, he or she will only be repaid EUR 100 000. (2)  If a deposit is unavailable because a credit institution is unable to meet its financial obligations, depositors are repaid by a Deposit Guarantee Scheme. Deposit guarantee schemes (DGS) reimburse a limited amount to compensate depositors whose bank has failed. 9. Deposits made before the expiry of that notice period shall continue to be fully covered by the DGS. (3)  In case of joint accounts, the limit of EUR 100 000 applies to each depositor. Where several persons are absolutely entitled, the share of each under the arrangements subject to which the sums are managed shall be taken into account when the limit provided for in Article 6(1) is calculated. 2. In order to limit deposit protection to the extent necessary to ensure legal certainty and transparency for depositors and to avoid transferring investment risks to DGSs, financial instruments should be excluded from the scope of coverage, except for existing savings products evidenced by a certificate of deposit made out to a named person. This Directive therefore contributes to the completion of the internal market. (6)  Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). Member States shall ensure that credit institutions inform actual and intending depositors of the applicable exclusions from DGS protection. This Directive should not prevent Member States from including within its scope credit institutions as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council (5) which fall outside the scope of Directive 2013/36/EU of the European Parliament and of the Council (6) pursuant to Article 2(5) of that Directive. DGSs should be able to provide that protection in various ways. Depositors shall be informed prior to the conclusion of the contract by the credit institution where their liabilities towards the credit institution are taken into account when calculating the repayable amount. Reimbursement period in case of credit institution’s failure: [replace by another deadline if applicable], euro [replace by another currency where applicable], [insert the contact data of the relevant DGS. Alternative measures as referred to in paragraph 3 of this Article shall not be applied where the competent authority, after consulting the resolution authority, considers the conditions for resolution action under Article 27(1) of Directive 2014/59/EU to be met. It is necessary to harmonise the methods of financing of DGSs. The relevant administrative authority shall make the determination referred to in point (8)(a) of Article 2(1) as soon as possible and in any event no later than five working days after first becoming satisfied that a credit institution has failed to repay deposits which are due and payable. 3. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council. By way of derogation from paragraph 1 of this Article, Member States may ensure that the following are included up to the coverage level laid down in Article 6(1): deposits held by personal pension schemes and occupational pension schemes of small or medium-sized enterprises; deposits held by local authorities with an annual budget of up to EUR 500 000. A contractual scheme as referred to in point (b) of Article 1(2) of this Directive may be officially recognised as a DGS if it complies with this Directive. 11. Member States may decide that deposits referred to in Article 7(3) are subject to a longer repayment period, which does not exceed three months from the date on which a relevant administrative authority makes a determination as referred to in point (8)(a) of Article 2(1) or a judicial authority makes a ruling as referred to in point (8)(b) of Article 2(1). It requires EU countries to introduce laws setting up at least 1 DGS that all banks must join. 3. 4. Member States may limit the time in which depositors whose deposits were not repaid or acknowledged by the DGS within the deadlines set out in Article 8(1) and (3) can claim the repayment of their deposits. The original deposit guarantee schemes directive of 1994 only required a minimum level of harmonisation between domestic deposit guarantee schemes in the EU. 2. DGSs should also assist in the financing of the resolution of credit institutions in accordance with Directive 2014/59/EU of the European Parliament and of the Council (7). The PRA Consultation Paper (CP20/14) implements the recast EU Deposit Guarantee Schemes Directive (DGSD), and it seems to carry numerous substantial additions to the current reporting process. The DGS of the host Member State shall also inform the depositors concerned on behalf of the DGS of the home Member State and shall be entitled to receive correspondence from those depositors on behalf of the DGS of the home Member State. The delegation of power referred to in Article 6(7) may be revoked at any time by the European Parliament or by the Council. In general, all retail depositors and businesses are covered by Deposit Guarantee Schemes. 2. In any event, DGSs should have adequate alternative funding arrangements in place to enable them to obtain short-term funding to meet claims made against them. The most important elements of the 1994 directive on deposit guarantee schemes (Directive 94/19/EC) were amended in 2009 in response to the 2008 financial crisis. At the same time, those common requirements are of the utmost importance in order to eliminate market distortions. 2. Directive 94/19/EC of the European Parliament and of the Council (3) has been substantially amended (4). Member States that convert into their national currency the amount referred to in paragraph 1 shall initially use in the conversion the exchange rate prevailing on 3 July 2015. If a depositor uses internet banking, the information required to be disclosed by this Directive may be communicated by electronic means. DGSs may use their own risk-based methods for determining and calculating the risk-based contributions by their members. It is therefore reasonable to set the harmonised coverage level at EUR 100 000. The Directive on Deposit Guarantee Schemes is designed to improve depositor protection in Europe. In times of stability it is possible that different coverage leads to depositors choosing the highest deposit protection rather than the deposit product best suited to them. The contributions deferred pursuant to this paragraph shall be paid when such payment no longer jeopardises the liquidity or solvency of the credit institution. Since the objective of this Directive, namely the harmonisation of rules concerning the functioning of DGSs, cannot be sufficiently achieved by the Member States, but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. DIRECTIVE 94/19/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL. … a judicial authority has made a ruling for reasons which are directly related to the credit institution’s financial circumstances and which has the effect of suspending the rights of depositors to make claims against it; ‘credit institution’ means a credit institution as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013; ‘branch’ means a place of business in a Member State which forms a legally dependent part of a credit institution and which carries out directly all or some of the transactions inherent in the business of credit institutions; ‘target level’ means the amount of available financial means which the DGS is required to reach in accordance with Article 10(2), expressed as a percentage of covered deposits of its members; ‘available financial means’ means cash, deposits and low-risk assets which can be liquidated within a period not exceeding that referred to in Article 8(1) and payment commitments up to the limit set out in Article 10(3); ‘payment commitments’ means payment commitments of a credit institution towards a DGS which are fully collateralised providing that the collateral: is unencumbered by any third-party rights and is at the disposal of the DGS; ‘low-risk assets’ means items falling into the first or second category referred to in Table 1 of Article 336 of Regulation (EU) No 575/2013 or any assets which are considered to be similarly safe and liquid by the competent or designated authority; ‘home Member State’ means a home Member State as defined in point (43) of Article 4(1) of Regulation (EU) No 575/2013; ‘host Member State’ means a host Member State as defined in point (44) of Article 4(1) of Regulation (EU) No 575/2013; ‘competent authority’ means a national competent authority as defined in point (40) of Article 4(1) of Regulation (EU) No 575/2013; ‘designated authority’ means a body which administers a DGS pursuant to this Directive, or, where the operation of the DGS is administered by a private entity, a public authority designated by the Member State concerned for supervising that scheme pursuant to this Directive. The directive maintains the deposit protection of €100,000, and includes a gradual reduction of the repayment times of deposit guarantees. Interest shall be due only at the time of repayment; the interest rate set must be at least equivalent to the marginal lending facility rate of the European Central Bank during the credit period; the lending DGS must inform EBA of the initial interest rate and the duration of the loan. 2. EBA shall cooperate with the European Systemic Risk Board (ESRB), established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council (17) on systemic risk analysis concerning DGSs. The repayable amount shall be made available without a request to a DGS being necessary. This would allow the risk profiles of individual credit institutions to be reflected, including their different business models. The EUWA also gives ministers powers to make statutory instruments (SIs) to prevent, remedy or mitigate any failure of EU law to operate effectively, or any other deficiency in retained EU law. 5. DGSs shall raise the available financial means by contributions to be made by their members at least annually. Such access should only be made on the basis of data provided by the credit institution. Consequently, a variety of DGSs with very distinct features currently exist in the Union. Deposit Guarantee Schemes (DGSs) reimburse deposits to depositors up to a certain amount in case a credit institution has to be closed. (2)  Position of the European Parliament of 16 February 2012 (OJ C 249 E, 30.8.2013, p. 81) and Decision of the Council at first reading of 3 March 2014 (not yet published in the Official Journal). Member States may decide that members of an IPS pay lower contributions to the DGS. A decision to revoke shall put an end to the delegation of the power specified in that decision. If a credit institution does not comply with the obligations incumbent on it as a member of a DGS, the competent authorities shall be notified immediately and, in cooperation with the DGS, shall promptly take all appropriate measures including if necessary the imposition of penalties to ensure that the credit institution complies with its obligations. In order to take account of particularly low-risk sectors which are regulated under national law, Member States should be allowed to provide for corresponding reductions in the contributions while respecting the target level for each DGS. Member States should not be prevented from taking appropriate measures concerning the rights of DGSs in a winding up or reorganisation procedure of a credit institution. Points (a), (b) and (c) of Article 5(1), Article 6(1), Article 7(1), (2) and (3), Article 8(8), Article 9(1) and Article 17 shall apply from 4 July 2015. 3. Adverse effects on financial stability should be avoided, for example where only credit institutions with a high-risk profile are transferred to a cross-border DGS. 1. Member States shall limit the use in advertising of the information referred to in paragraphs 1, 2 and 3 to a factual reference to the DGS guaranteeing the product to which the advertisement refers and to any additional information required by national law. Cross-border DGSs shall be supervised by representatives of the designated authorities of the Member States where the affiliated credit institutions are authorised. 10. (16)  Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (OJ L 299, 8.11.2008, p. 25). The obligation to transpose the provisions which are unchanged arises under the earlier directives. The limit referred to in Article 6(1) shall apply to the aggregate deposits placed with the same credit institution irrespective of the number of deposits, the currency and the location within the Union. The first test shall take place by 3 July 2017. By 3 July 2017 and at least every five years thereafter, EBA shall conduct a review of the guidelines on risk-based or alternative own-risk-based methods applied by DGSs. Since further amendments are to be made, that Directive should be recast in the interests of clarity. The content of such information should be identical for all depositors. DGSs shall cover the depositors at branches set up by their member credit institutions in other Member States. It proved disruptive for financial stability and the internal market, especially during the financial crisis of 2007-2009. Where this Directive refers to Regulation (EU) No 1093/2010, a body which administers a DGS or, where the operation of the DGS is administered by a private entity, the public authority supervising that scheme, shall, for the purpose of that Regulation, be considered to be a competent authority as defined in Article 4(2) of that Regulation. If some of the activities of a credit institution are transferred to another Member State and thus become subject to another DGS, the contributions of that credit institution paid during the 12 months preceding the transfer, with the exception of the extraordinary contributions in accordance with Article 10(8), shall be transferred to the other DGS in proportion to the amount of covered deposits transferred. Any correspondence between the DGS and the depositor shall be drawn up: in the official language of the Union institutions that is used by the credit institution holding the covered deposit when writing to the depositor; or. The original Directive on Deposit Guarantee Schemes (DGS) … Information is an essential element in depositor protection. The resolution authority shall determine, after consulting the DGS, the amount by which the DGS is liable. The financial means referred to in Article 10 shall be primarily used in order to repay depositors pursuant to this Directive. Contributions to DGSs should be based on the amount of covered deposits and the degree of risk incurred by the respective member. Such information may extend to the factual description of the functioning of the DGS but shall not contain a reference to unlimited coverage of deposits. The European Union (Withdrawal) Act 2018 (EUWA) repeals the European Communities Act 1972 on the day the UK leaves the EU and converts into UK domestic law the existing body of directly applicable EU law. It will repay your deposits (up to EUR 100 000 [replace by adequate amount if currency not EUR]) within [insert repayment period as is required by national law] at the latest, from [31 December 2023] within [7 working days]. Deposit Guarantee Schemes Directive (DGSD): DIRECTIVE 2014/49/EU (DGSD) The unregulated use in advertising of references to the coverage level and the scope of a DGS could affect the stability of the banking system or depositor confidence. Depositors at branches set up by credit institutions in another Member State shall be repaid by a DGS in the host Member State on behalf of the DGS in the home Member State. Until the target level has been reached for the first time, Member States may apply the thresholds in Article 11(5) in relation to the available financial means. Repayment as referred to in paragraphs 1 and 4 may be deferred where: it is uncertain whether a person is entitled to receive repayment or the deposit is subject to legal dispute; the deposit is subject to restrictive measures imposed by national governments or international bodies; by way of derogation from paragraph 9 of this Article there has been no transaction relating to the deposit within the last 24 months (the account is dormant); the amount to be repaid is deemed to be part of a temporary high balance as defined in Article 6(2); or. EDIS is the third pillar of the banking union. 1. in the official language or languages of the Member State in which the covered deposit is located. 8. Those methods may also take into account the asset side of the balance sheet and risk indicators, such as capital adequacy, asset quality and liquidity. Such deposits should be offset against the outstanding amount of the loan. Where the financing capacity falls short of the target level, the payment of contributions shall resume at least until the target level is reached again. Deposit protection is an essential element in the completion of the internal market and an indispensable complement to the system of supervision of credit institutions on account of the solidarity it creates among all the institutions in a given financial market in the event of the failure of any of them. The website of the DGS shall contain the necessary information for depositors, in particular information concerning the provisions regarding the process for and conditions of deposit guarantees as envisaged under this Directive. (8)  Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009 amending Directive 94/19/EC on deposit-guarantee schemes as regards the coverage level and the payout delay (OJ L 68, 13.3.2009, p. 3). Deposit Guarantee Schemes (DGS) are a mechanism of financial stability whose main aim is to protect depositors through a guarantee on cash deposits and securities (1) held with financial institutions. 1 Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes (OJ L 135, 31.5.1994, p. 5).