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    EBA Proposes Guidelines to Clarify Certain Aspects of DGSD

    April 28, 2021

    EBA proposed guidelines on the delineation and reporting of available financial means of the Deposit Guarantee Schemes or DGSs, with the consultation period ending on July 28, 2021. The guidelines propose to clarify that only funds that credit institutions contributed or that stem indirectly from such contributions, such as recoveries or investment income, will count toward reaching the target level of the Deposit Guarantee Scheme fund. The proposed guidelines extend the reporting requirements from Deposit Guarantee Schemes to EBA, with Annex 1 to the consultation paper presenting the reporting template for Deposit Guarantee Scheme funds.

    An earlier EBA Opinion, which was published in January 2020, recommended clarifying, with respect to the Deposit Guarantee Scheme Directive (DGSD or Directive 2014/49/EU), that borrowed funds or funds stemming from borrowed funds should not count toward reaching the minimum target level for Deposit Guarantee Scheme funds. Given that a review of the Deposit Guarantee Scheme Directive (DGSD) is still several years away from being proposed, negotiated, and finalized, the proposed guidelines provide such a clarification ahead of any such changes, using the existing Directive as a legal basis. The draft guidelines clarify that Available Financial Means comprise:

    • Qualified Available Financial Means—Funds stemming directly or indirectly from contributions of Deposit Guarantee Scheme member institutions, which qualify toward reaching the target level of the Deposit Guarantee Scheme fund
    • Other Available Financial Means—Funds that are not qualified as available financial means, including borrowed funds that stem from liabilities such as loans, and hence do not count toward reaching the target level of the Deposit Guarantee Scheme fund.

    The proposed guidelines will extend the reporting requirements from Deposit Guarantee Schemes to EBA to reflect the clarified concepts of Available Financial Means, Qualified Available Financial Means, and other Available Financial Means in the guidelines. They also require the reporting on outstanding liabilities of Deposit Guarantee Schemes, unclaimed repayments, and high-level information on alternative funding arrangements that are in place. That information would be published on the EBA website annually and should provide more transparency and comparability of the financial position of Deposit Guarantee Schemes across EU.

     

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    Comment Due Date: July 28, 2021

    Keywords: Europe, EU, Banking, Deposit Guarantee Scheme, Available Financial Means, DGSD, DGS, Reporting, EBA

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