The European Banking Authority (EBA) published today data relating to two key concepts in the Deposit Guarantee Schemes Directive (DGDS): available financial means, and covered deposits. The data provides an overview of the level of pre-funded resources available to each Deposit Guarantee Scheme (DGS) in the EU to cover its potential liabilities to depositors. The available financial means of each DGS is in the process of being built up under a new funding model introduced in 2014. Nevertheless, the deposit guarantee of €100,000 (or equivalent in local currency) remains fully in effect, and built up available financial means is only one source of funding for EU DGSs. With this publication, which will be done on a yearly basis, the EBA will contribute to enhance transparency and public accountability of DGDs across the EU to the benefit of markets, depositors, policymakers, DGSs and Members States.
Every year, the EBA receives data from each EU Member State on available financial means and covered deposits. The first set of data, with reference date as of 31 December 2015, was received in 2016. The second set of data with reference as of 31 December 2016 was received in 2017. This data provides a point-in-time snapshot of the extent to which DGSs across the EU are building up funds to help cover the guarantee they offer to depositors. However, the data should be interpreted carefully given the national specificities that still exist in individual Member States. As a matter of fact, data for different Member States is not immediately comparable without taking these national specificities into account. A detailed description of these specificities and the data along with relevant explanations can be found here.
Legal basis and background
Deposit guarantees are an important measure for maintaining confidence in banking systems, and for managing financial distress in individual banks. The degree of harmonisation of deposit guarantees in the EU has been enhanced by the 2014 Deposit Guarantee Scheme Directive. Member States unequivocally guarantee the repayment of covered deposits, with a minimum coverage level of €100,000 (or equivalent in local currency) per depositor per institution. In order to increase the robustness of the funding for this guarantee, the 2014 Directive requires Member States to build up funds over a number of years, by raising levies from their banks.
Article 10(10) of that Directive requires Member States to inform EBA of the amount of covered deposits in their Member State and of the amount of the available financial means of their DGSs on 31 December of the preceding year.
The deposit guarantee is one tool for managing crisis in the financial system. A new set of “bank resolution” tools has also been introduced since the crisis. These tools allow the authorities to restructure a failing bank without putting it into liquidation and triggering the deposit guarantee payout. In combination, the more robustly-funded deposit guarantee and the existence of bank resolution tools will allow the authorities to manage firm failures in the financial system, without causing systemic issues and without recourse to State-funded bailouts.