EBA Publishes Data on Deposit Guarantee Schemes
EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits. In 2020, nearly all DGS in EU, Iceland, Lichtenstein, and Norway increased their available financial means for reimbursing depositors in case of bank failures by more than 12%. Additionally, covered deposits in the European Economic Area grew by 8.6%, which is twice the annual growth rate of the four preceding years. Changes in the available financial means and covered deposits are relevant, because the ratio of available financial means to covered deposits is the measurement for the target level of 0.8% of covered deposits set out in the DGS Directive, which the DGSs need to reach by July 03, 2024.
As of December 31, 2020, 18 DGSs have already reached the target level while 16 DGSs have yet to reach it. Available financial means is the amount of funds raised by DGSs from credit institutions and its main purpose is to reimburse depositors in case of bank failures. The increase in the available financial means as of December 31, 2021 stems from levies paid by banks that are members of those DGSs. In some cases, a significant increase in available financial means in 2020 was the result of the DGS receiving recoveries from a previous intervention. In other instances, DGSs experienced a significant drop in available financial means following bank failures where they had to use their available financial means to reimburse depositors.
In 2020, about half the DGSs even saw double-digit growth rates of the covered deposits they protect. The increase could be a consequence of COVID-19, as households may have delayed purchases due to commercial restrictions or sought to store their savings safely. The above-average increases in covered deposits mean that the ratio of available financial means to covered deposits increased by less than it would have otherwise. The consequence might be that the DGS contributions might need to be higher in the coming years, particularly where the DGS has not yet reached the target level of 0.8% of available financial means to covered deposits. Covered deposits, in turn, are guaranteed up to EUR 100,000 or the equivalent in other currencies per depositor at each bank.
Related Links
Keywords: Europe, EU, Banking, Deposit Guarantee Schemes, DGSD, Available Financial Means, Covered Deposits, EBA
Previous Article
IOSCO Sees Support for Mandatory Sustainability ReportingRelated Articles
ESAs Issue Multiple Regulatory Updates for Financial Sector Entities
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
EBA Finalizes Methodology for Stress Tests, Issues Other Updates
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
OSFI Sets Out Work Priorities and Reporting Updates for Banks
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
APRA Finalizes Changes to Capital Framework, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
BIS Hub and Central Banks Conduct CBDC and DeFI Pilots
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations
The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.
ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector
Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)
EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation
The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)
