Strasbourg, 14/12/2007 (Agence Europe) - On Thursday 13 December, the European Parliament adopted an own initiative report by German Social Democrat Christian Ehler on the report on deposit guarantee systems (see EUROPE 9317). Like the European Commission, the rapporteur believes that there is no need at present to consider amending Directive 94/19/EC because the functioning of the EU's regulatory framework can be improved through industry self-regulation.
EU legislation requires member states to introduce compensation systems to ensure savers are refunded at least €20,000 in the event of bankruptcy of the bank managing their savings. Although not calling for legislation, the MEPs say that it would be desirable to increase the total minimum guaranteed amount in a harmonised manner. They say that such an increase should be coupled with the development of the national economies because some EU countries have not yet introduced the guaranteed savings level foreseen in the directive. MEPs say that that better information should be provided for customers to enable them to make enlightened choices about intermediaries with whom they entrust their savings. The time taken to pay out the compensation could be considerably shortened in the event of crisis due to important technological innovations since the directive was introduced in 1994, they add. The situation could be improved at first by a non-legislative approach in the form of agreements, the exchange of best practice, improving the quality of information and voluntary commitments from banks. The MEPs called on the Commission to draw up standards for improving risk assessment by deposit guarantee systems.
EU Internal Market Commissioner Charlie McCreevy said: 'The recent financial turmoil provides evidence that maintaining deposits or confidence is crucial during a financial crisis. As to deposit guarantee schemes, two elements seem to be key - an appropriate coverage level and a short payout delay. If depositors know that their deposit will be covered and if they feel confident that the insured deposits will be reimbursed rapidly, there is no need for them to join any queue outside a bank,' he added, referring to the scenes outside branches of the UK bank Northern Rock recently with savers queuing up to withdraw their money when the bank faced a liquidity crisis in September 2007 following the sub-prime market woes on the financial markets. Agreeing with MEPs that payment time-frames should be reduced (they should be less than three months according to EU legislation), the commissioner said that the European Forum of Deposit Insurers (EFDI) had been instructed to examine obstacles to speedy payments. (M.B.)