Only deposit banks are permitted to take deposits. Deposit bank inform depositors on deposit guarantee on an annual basis. Under law, only deposit products offered by deposit banks may be called deposits. These are either demand deposit accounts or fixed-term accounts (fixed-term deposits) with standard terms and conditions, which are opened in the depositor’s own name. Only deposit accounts are protected by the deposit guarantee. One of the characteristics of a deposit is that the bank has provided the depositor with a deposit account agreement as well as the general terms and conditions of deposit accounts. Deposit guarantee covers, among other things, home savings incentive accounts (ASP), long-term savings accounts (PS) and client asset accounts used for example in attorney services. The deposit guarantee is valid regardless of the currency in which the account is denominated. Accounts that are by nature investments do not fall within the scope of deposit guarantee.
The deposit guarantee scheme is not intended to cover high-risk investments. In addition, the deposit interest must be easily calculated in advance. Investment-linked deposits may therefore have only limited deposit guarantee.
Investment-linked deposit refers to a deposit product in which the interest rate is fully or partially tied to the performance of an underlying instrument (typically a basket of shares) instead of the passing of time. Additional interest refers to interest rate or return that is tied to the performance of the underlying instrument (e.g. the value of a basket of shares) instead of the passing of time. Guaranteed interest refers to a predetermined interest rate that is tied to the passing of time.
The capital and guaranteed interest of an investment-linked deposit are covered by the deposit guarantee. But the additional interest on an investment-linked deposit does not fall within the scope of the deposit guarantee.
Accounts falling outside the scope of deposit guarantee
Money market instruments
Money-market instruments are not covered by the deposit guarantee. Money-market instruments include e.g. Certificates of Deposit issued by banks and money-market investments. Money-market investments are sometimes erroneously called money-market deposits. However, a money-market investment differs from a deposit for example in that it is not subject to general account terms and conditions and the customer only receives a certificate of the investment.
Client asset accounts in investment operations
Client asset accounts in the name of an investment service provider are not covered by the deposit guarantee. This is due to the division of duties between the Deposit Guarantee Fund and the Investors’ Compensation Fund, which are two separate funds. The Deposit Guarantee Fund was established to protect depositors, and the Investors' Compensation Fund to protect investors. These assets are therefore not covered by the deposit guarantee; the Investors' Guarantee Fund is responsible for protecting them.