EBA Issues Opinion on Implementation of Deposit Guarantee Directive
EBA published its second opinion on implementation of the Deposit Guarantee Schemes Directive (DGSD) in EU. The Opinion, which is addressed to EC, is focused on the payouts by deposit guarantee schemes and proposes a number of changes to the EU legal framework; the proposed changes are intended to strengthen depositor protection, improve depositor information, enhance financial stability, and reinforce operational effectiveness of deposit guarantee schemes. EBA invites EC to consider the proposals outlined in the Opinion when preparing a report on the implementation of the DGSD to be submitted to the European Parliament and the Council.
In its Opinion, EBA assesses nine different topics related to deposit guarantee scheme payouts and sets out 30 proposals on how to improve the current EU legal framework. The proposals include changes in relation to cases where depositors have lost access to their funds but payouts have not started and cases where there are money laundering and terrorism financing (ML/TF) concerns. The Opinion also proposes improvements to the treatment of specific situations, such as the treatment of beneficiary accounts and depositors temporarily holding deposits above the coverage level or with banks headquartered in another EU member state. Based on recent real-life cases, the Opinion proposes changes to ensure that depositors are not unduly left without access to their funds when the decision that deposits have become unavailable has not (yet) been made by the authorities. The Opinion proposes that, in such instances, depositors should have access to an appropriate daily amount from their deposits.
Similarly, EBA proposes that the EU framework could benefit from more clarity on deposit guarantee scheme payouts where there are ML/TF concerns, including the introduction of powers necessary to suspend payouts to depositors suspected of ML/TF. The Opinion also proposes how cooperation between deposit guarantee schemes and anti-money laundering authorities can be improved and highlights the importance of informing depositors in such instances. Given the complexity of such cases, EBA is of the view that further analysis is needed, both from the deposit guarantee scheme and the anti-money laundering perspective.
Finally, throughout the Opinion, EBA underlines the importance of enhancing depositor protection and clearly informing depositors about the most relevant features of such protection, in normal times as well as during a deposit guarantee scheme payout. In this respect, EBA proposes, for example, that depositors should be clearly informed about their rights in relation to temporary high balances and the possibility that their deposits would be set-off against their liabilities that have fallen due before their deposits had became unavailable. EBA also proposes that depositors should have sufficient time to claim their funds after a bank failure.
Article 19(6) of DGSD requires EBA to support EC in its development of a report on the progress toward the implementation of DGSD. This Opinion is the second part of the fulfillment of this mandate by EBA. This Opinion follows the first opinion, which was published in August 2019 and covered the eligibility of deposits, coverage level, and cooperation between deposit guarantee schemes. The third and final EBA opinion on deposit guarantee scheme funding and uses of deposit guarantee scheme funds will be published in early 2020.
Related Links
Keywords: Europe, EU, Banking, Deposit Guarantee Schemes, DGSD, EDIS, ML/TF Risk, Opinion, EC, EBA
Related Articles
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR
The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy
The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
EBA Examines Supervisory Practices, Issues Deposits Reporting Template
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
