The European Banking Authority (EBA) has published a public consultation on draft Guidelines defining the meaning of available financial means of deposit guarantee schemes (DGS). This definition specifies which funds count towards the target level of the deposit guarantee fund. The Guidelines also clarify what information on the funds of the deposit guarantee fund is reported to the EBA. The Financial Stability Authority (FFSA) participated in the preparation of the Guidelines.
The Guidelines aim at harmonising the funding of DGSs and thereby improve the transparency and comparability of their financial position. These objectives are geared at fostering confidence in financial stability.
The EBA proposes that DGSs would provide more detailed reporting on the assets of the deposit guarantee fund. The EBA would publish the data reported on its website. In addition, the EBA proposes that only funds collected through deposit guarantee contributions from deposit banks or indirectly stemming from these contributions would count towards reaching the target level of the deposit guarantee fund. This has a bearing on, for example, whether funds recovered from the bankruptcy estate after the disbursement of deposit guarantee compensations should count towards reaching the target level. In accordance with the EBA's proposal, the target level would not include funds initially stemming from loans taken for the deposit guarantee fund. Hence, according to the Guidelines, in circumstances where borrowed funds are used to pay out deposit guarantee compensations, funds recovered from the bankruptcy estate should not be included.
The Act on the Financial Stability Authority does not acknowledge such calculation based on tracking the source of funds. In connection with the preparation of the EBA Guidelines, the FFSA has highlighted this discrepancy in comparison with Finland's current manner of calculation. Due to the new manner of calculation proposed by the EBA, in the context of re-accumulation, deposit guarantee contributions would sometimes have to be levied even after the deposit guarantee fund has reached its minimum level of 0.8%.
The EBA organised a hearing in connection with the consultation and attendance was possible remotely via conference call. The hearing was held on Wednesday 28 June 2021. The consultation period ended 28 July 2021.
EBA consultation: EBA consults on draft Guidelines on the delineation and reporting of available financial means of Deposit Guarantee Schemes
Further information: Fanni Teinilä, Legal Counsel (firstname.lastname(at)rvv.fi
