Brexit and deposit guarantee
The transition period for the United Kingdom’s withdrawal from the European Union ends on 1 January 2021. Deposit guarantee is based on an EU Directive, hence Brexit also has effects on the deposit guarantee enjoyed by some depositors in the EU area. However, every depositor’s deposits will continue to be protected, and no one’s deposits will fall outside the deposit guarantee due to Brexit.
The European Banking Authority has recommended that the deposit guarantee for EU-based branches of banks domiciled in the United Kingdom would be maintained at a level consistent with the Deposit Guarantee Directive. There are no such branches operating in Finland, and therefore the impacts of Brexit on Finnish depositors are limited.
Following Brexit, the United Kingdom will require branches of EU banks to join its deposit guarantee scheme called the Financial Services Compensation Scheme (FSCS). Among Finnish banks, Nordea has a branch in the United Kingdom. After Brexit, deposits in Nordea’s branch will also continue to be covered by the guarantee provided by the FFSA.
The Finnish Financial Stability Authority will continue its cooperation with the FSCS also after Brexit. This cooperation takes place, for example, within the international organisations for deposit insurance, the EFDI and IADI.