The European Banking Authority (EBA) on Tuesday 21 February unveiled new guidelines, applicable from July 2024, which establish a closer link between mandatory bank contributions to national deposit guarantee schemes (DGS) and the level of risk incurred by the banks concerned.
Among the amendments to the previous EBA guidelines is the setting of minimum thresholds to avoid situations where a financial institution does not meet the prudential requirements related to a key indicator (CET1 high quality assets, leverage, liquidity, non-performing loans ratios) while not falling into the category of high risk entities.
The guidelines also indicate how to deal with certain deposits where there is uncertainty about the nature of the deposits covered by a DGS, for example where a deposit is included in an inheritance or where funds are placed by a bank in another financial institution.
To raise contributions, national deposit guarantee schemes are also allowed to use the ‘stock-based’ approach, which takes into account past bank contributions and encourages banks to reduce their risk level even after national deposit guarantee schemes have reached their target contribution level.
See the guidelines: https://aeur.eu/f/5g4 (Original version in French by Mathieu Bion)