Savings deposits under €100,000 will finally be guaranteed by funds contributed by banks, rather than the taxpayer, thanks to a political agreement struck by Parliament and Council negotiators on Tuesday. This agreement, three years in the making, will govern deposit guarantee schemes to be set up in each member state. Each fund must reach an amount equal to 0.8% of the covered deposits within ten years, and depositors will be sure to get their money back within 7 working days.
"This is a good day for the taxpayer and for depositors. We have severed the link between taxpayers and banks, and depositors will be able to receive their money faster", said the MEP leading the negotiations for Parliament, Peter Simon (S&D, DE).
Deposit guarantee funds
The funds available for reimbursing depositors in times of difficulty must reach 0.8% of covered deposits within 10 years of the system’s entry into force. With the approval of the European Commission, the 0.8% target could be reduced to 0.5% in the case of “concentrated banking sectors”, i.e. where banking assets are concentrated in the hands of a few banks. If a scheme is obliged to make a large reimbursement during the build-up phase it will be granted a further four years to reach the stipulated target fund level.
Banks will contribute to the funds according to their risk profiles, with those exercising riskier activities contributing more.
Finally, 70% of payments into funds will need to be made in real cash and paid up on time. Banks will be able to defer only up to 30% of the money they owe their fund from one year to another. The Council originally sought to offer banks far more leeway.
MEPs considerably reduced the time depositors will have to wait before getting their money back. For a long time the Council refused to reduce the current time limit of 20 days. In the end, the deal stipulates a reimbursement deadline of 7 working days for the entirety of a deposit and 5 working days for a sum allowing the depositor to cover the cost of living in that country. Member states will be allowed to deviate from the 7-day limit but only until 2024.
To apply within a year
MEPs also ensured that member states will have to transpose the directive into their national laws within 12 months of its entry into force.