Brussels, 18/12/2013 (Agence Europe) - Inter-institutional talks on the European deposits (savings) guarantee scheme (DGS) finally reached agreement in the evening of Tuesday 17 December, after over three years of negotiations. Savers will now be better informed and protected in the event of a bank collapse. The agreement still needs to be formally endorsed by the legislators.
EP rapporteur Peter Simon (S&D, Germany) said it was a good day for taxpayers and savers, adding that the connection between banks and taxpayers has been broken. EU Internal Market and Financial Services Commissioner Michel Barnier said the directive would boost the existing DGS schemes to deal with shortcomings revealed by the crisis.
Savers will have the first €100,000 of savings guaranteed in the event of bank collapse, and it will now be easier and quicker to access their cash. Repayment timings will be gradually reduced from 20 working days to 7 working days by 2024 (15 days by 1 January 2019 and 10 in 2012). Savers will now only have to wait five working days to recover part of their savings to meet daily needs. This measure on timelines was backed by the MEPs, but the Council of Ministers was very reluctant to accept it.
Deposit Guarantee Fund. For the first time since the European savings guarantee system was introduced, details have been given on how it will be financed. Barnier explained: “In principle, the target level for ex ante funds of DGS is 0.8% of covered deposits to be collected from banks over a 10-year period”, and “a maximum of 30% of the funding can be made up of payment commitments”. The amount each bank has to pay will depend on its risk profile.
For a highly concentrated financial industry, member states may be allowed by the Commission to set a lower target of at least 5% of the covered savings. If 'ex ante' resources are insufficient, the DGS would have to get money from the bank industry. As a last resort, loans from the private or public sector would be possible. On a voluntary basis, DGS would be able to lend to each other. The ten-year deadline for meeting the new financing targets might be extended by four years if the system is called upon to make a substantial repayment during the start-up phase.
Reporting obligations. The directive will provide savers with greater clarify about how their savings are protected. Banks will have to get savers to sign a standard document providing full information about how their savings are protected. Some restrictions will be placed on how savings products are advertised, like the requirement to only provide factual information.
Member states will have twelve months after the directive comes into force to introduce it into their legislation.
Following the agreements on bank capital requirements earlier this year, and the common rules on bank resolution (BRRD) last week, the EU has now reached agreement on rules to ensure that savers no longer have to pay when banks fail. EU finance ministers met on Wednesday to reach a common approach so they can enter negotiations with the European Parliament on the single resolution mechanism (see related article). (EL/transl.fl)