The Deposit Guarantee Fund safeguards deposits
The Deposit Guarantee Fund’s purposes and size
The task of the Deposit Guarantee Fund is to safeguard the assets of depositors when a bank becomes insolvent. The Deposit Guarantee Fund is financed by deposit guarantee contributions raised from banks. The Deposit Guarantee Fund can be used for the following purposes:
- Payment of deposit guarantee compensation to depositors
- Financing of an arrangement to transfer the deposits in a deposit bank for the assumption of liability by another Finnish deposit bank
- Financing the resolution of a deposit bank when bail-in would have an impact on the deposits to be compensated.
The financing of the Deposit Guarantee Fund began in summer 2015 and the statutory target level was reached in July 2024. The Fund’s target level is equivalent to 0.8% of the total amount of covered deposits. In the end of 2024, the size of the Deposit Guarantee Fund was approximately EUR 1,237 million.
Chart: Target level of the Deposit Guarantee Fund. The target level of the fund was reached in 2024.
The Financial Stability Authority reports information annually to the European Banking Authority on the total amount of covered deposits and the assets available to the Deposit Guarantee Fund. The EBA publishes information on the deposit guarantee schemes of all EU Member States on its website (Deposit Guarantee Schemes Data).
The Deposit Guarantee Fund is administered by the Financial Stability Authority
The Deposit Guarantee Fund in Finland is part of the Financial Stability Fund administered by the Financial Stability Authority, which consists of two separate funds: the Deposit Guarantee Fund and the Resolution Fund. The Financial Stability Fund is external to the State budget.
The relevant legislation imposes obligations to invest the assets of the Deposit Guarantee Fund prudently and to ensure the Fund’s liquidity, including the return on the Fund’s assets and diversification of investments.
The Deposit Guarantee Fund is financed by deposit guarantee contributions
The statutory target level of the Deposit Guarantee Fund was reached in 2024. If the Fund's size is below the target level due to, for example, growth in the covered deposits, collecting of deposit guarantee contributions will continue until the target level is reached again. The Deposit Guarantee Fund is financed by deposit guarantee contribution raised from deposit banks. The individual contributions are determined on the basis of the amount of each bank’s covered deposits and risk level. The deposit guarantee contributions are collected in the end of June.
Additional financing arrangements for the deposit guarantee scheme
If the assets previously raised by the Deposit Guarantee Fund are insufficient for the payment of compensation, the Financial Stability Authority may obligate deposit banks to pay an additional annual contribution or lend assets to the Fund. Additional annual deposit guarantee contributions may not exceed 0.5 per cent of a deposit bank’s covered deposits. The terms of loans are determined by a decree issued by the Ministry of Finance.
In the event of a bank’s insolvency, the Deposit Guarantee Fund also has access to the assets of the Old Deposit Guarantee Fund (VTS Fund), which acts as a buffer fund. If the assets of the Deposit Guarantee Fund are insufficient for the reimbursement of covered deposits or for the fulfilment of the Deposit Guarantee Fund’s other obligations, the Financial Stability Authority may obligate the VTS Fund to transfer assets to the Deposit Guarantee Fund. The VTS Fund is administered by Finance Finland.