EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 10 April 2013  
on the Deposit Guarantee Fund  
(CON/20 13/25) 
 
Introduction and legal basis  
On 20 March 2013, the European Central Bank (ECB) received a request from the Spanish Secretary of 
State for Economic Affairs an d Business Support for an opinion on a draft Royal Decree- Law amending 
Royal Decree- Law 21/2012 of 13 July 2012 on liquidity measures for the general government and the 
financial sector1 (hereinafter the ‘draft law ’). 
The ECB’s competence to deliver an opi nion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent of Article  2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities r egarding draft 
legislative provisions2, as the draft law relates to rules applicable to financial institutions insofar as they 
materially influenc e the stability of financial institutions and markets . In accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion.  
 
1.  Purpose of the draft law 
1.1 Role of the Deposit Guarantee Fund  
The draft l aw specif ies the measures that the Deposit Guarantee Fund ( DGF ), in addit ion to  its core  
role of protecting insured  deposits , may take to facilitate the implementation of the Union financial 
assistance programme to  recapitalis e Spanish credit institutions . Pursuant to t he draft law, the  DGF  
may: (a) provide guarantees in the context of the financial assistance programme; (b) subscribe or 
purchase shares not listed on an official market and issued by nationalised credit institutions and 
credit institutions  subject to restructuring or resolution processes in the context of the subordinated 
liability exercises  and actions to manage subordinated debt and hybrid capital instruments ; 
(c) subscribe shares or subordinated debt issued by the Spanish impaired assets scheme, i.e. the 
Asset Management  Company for Assets Resulting from Bank R estructuring (the SAREB) . 
                                                 
1  Boletín Oficial del Estado  No 168 of 14 July 2012 . 
2  OJ L 189, 3.7.1998, p. 42.  
ECB -PUBLIC  
2 1.2 Maximum cost to the DGF  
The cost of such measures must be less than the cost the D GF would have incur red if, at the  
beginning  of the relevant restructuring or resolution process, it would have paid the amounts 
covered by it.  
1.3 Extraordinary contribution to the DGF  
In order to bolster  the assets  of the DG F, the draft law provides that the annual contribution to be 
made by member institutions based on their deposits at 31 December 2012 be subject to an 
extraordinary, one -off in crease of an additional 0.3  %, which will  be paid in two instalments : two 
fifths of the total increase  will be paid within 20 business days of 31 December 2013, while the 
remaining three fifths  will be paid within a maximum period of seven years starting  from 2014 and 
subject to a payment schedule to be adopted by the D GF’s Steering Committee . Notwithstanding 
such payment schedule, the amount corresponding to the second instalment will be recorded as the 
DGF’s assets on the date of payment of the first inst alment . 
1.4 Exemptions  
Regarding the first instalment, the DGF’s Steering Committee  may, by a favourable vote of two 
thirds of its members, decide:  (a) to exempt me mber institutions which are nationalised or subject 
to a restructuring or resolution process  from paying all of the first instalment; ( b) to grant  an 
exemption of up to 50 % of that instalment to member institutions with a calculation base not 
exceeding EUR  5 billion ; (c) to grant  an exemption of up to 30 % of the amounts invested by 
31 December 2013 by member institutions in the subscription or purchase of shares or subordinated 
debt instruments issued by the SAREB. For each member institution, the total of the deductions 
provided for in points ( b) and ( c) may not exceed 90  % of the amount that t he institution should 
have paid in accordance with the deposits held at 31 December 2012.  
 
2. Compatibility with Union legislation  
2.1 The draft law specifies the financial support measures the DGF  may take  in addition to its core role 
of pro tecting insure d deposits in line with Directive 94/19/EC of the European Parliament and of 
the Council of 30 May 1994 on deposit -guarantee schemes3. As previously pointed out , the ECB 
supports  rules which provide  that the available financial means of deposit guarantee s chemes may 
be used to finance resolution, as this allows for synergies between such schemes and resolution 
financing, but considers it of the utmost importance that this does not compromise in any way the 
core function of deposit guarantee schemes in prote cting insured deposits4. Furthermore , in seeking 
to achieve any of its statutory  objective s, the DGF should choose the least costly measure.  The 
                                                 
3  OJ L 135, 31.5.1994, p. 5. See the European Commission ’s proposal COM(2010) 368 final , which  recast s Directive 
94/19/EC.  
4  See paragraph 8.2 of ECB Opinion CON/2012/99 of 29 November 2012 on a proposal for a directive establishing a 
framewor k for recovery and resolution of credit institutions and investment firms. All ECB opinions are  published on the 
ECB’s website at www.ecb.europa.eu.  
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3 ECB welcomes the rule requiring that costs of the DGF’s involvement in restructuring should be 
lower than the c osts of potential pay -outs of deposit guarantees and expects that this rule will be 
implemented in a transparent manner , allowing for verification of the compliance with this rule in 
practice.  
2.2 To fulfil its core role of pro tecting insured deposits  in the event of  bank insolvency,  the DGF needs 
to be able to  rely on a highly liquid asset structure. T he ECB views  the envisaged purchase of 
equity shares in non- listed banks  as conflicting with that prudential principle  and would therefore 
caution against am ending  the investment rules apply ing to the DGF that allow  such purchases. As 
the draft law is an amendment of the Fifth Additional Provision of RDL 21/2012, which 
specifically deals with the measures to be adopted in the context of the European financial 
assistance programme, t he ECB understands that the envisaged  purchases would take place in  
relation to the DGF’s temporary involvement in the resolution of ailing banks. Moreover , the ECB 
points to the  on-going review of Directive 94/19/EC5, which may introduce rules concerning 
deposit -guarantee scheme investment policies . This may result in the need to amend in the future 
Royal Decree- Law 21/2012, in particular with regard to th e categories of securities in which the 
DGF is allowed to invest . 
2.3 The arran gements introduced by the dr aft law may need to be assessed from the perspective of 
State aid  rules . 
 
3. Compat ibility with  financial -sector p olicy conditionality  framework  
3.1 The DGF ’s powers under  the draft law need to respect the requirement under the Memorandum of 
Understanding on Financial -Sector Policy Conditionality6 (hereinafter the ‘ MoU ’) of minimis ing 
the taxpayer ’s burden. In this respect, the ECB understands that State resources will not be used to 
finance the DGF’s new capabilities (see  paragr aph 1.3 above).  The measures to be taken need to 
carefully weigh the benefits (i.e. the potential positive contribution to the value of the Fund for 
Orderly Bank Restructuring’s shareholding in  banks , as well as the mitigation of the potential risk 
of liti gation by certain categories of creditors or shareholders  of non- listed banks ) against the costs , 
in particular  the reduced tax revenue  for the State resulting from lower financial results of the 
banks owing to the extraordinary contributions to the  DGF.  In addition, it should be  assessed 
whether the DGF’s limited  funds  would be  best used for the benefit of retail investors or instead for  
other financial stability purposes , such as  replenishing the DGF  and thereby reinforcing market 
confidence in its ability  to carry out its core role . Finally, due consideration needs to be given to the 
alternative that banks could rebuild their capital buff ers instead of contributing funds to the DGS.  
                                                 
5  See COM(2010) 368 final.  
6   Available on the Commission’s website at www.ec.europa.eu.  
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4 3.2 Furthermore, the principles of burden sharing as agreed in the MoU need to be respected7. It is 
essential that the price paid by the DGF for the equity shares to be acquired from retail investors in 
the context of the subordinated liability exercises be fair . In the absence of a quoted price, the price 
needs to be the infer red market price, i.e. using the economic valuation of the banks only as a 
starting point , so that investors in listed banks would not be disadvantaged. In this respect, the ECB 
notes that the final version of the law  expressly requires that  (i) the purcha se price be no higher 
than the market value of the shares;  (ii) it should comply with Union rules on State aid ; and (iii) the 
DGF is requested to commission an independent expert report to determine such market value.  
 
4. Extraordinary contribution and ex emptions  
As regards banks that have directly invested in the SAREB, the business plan underlying the SAREB 
envisages a reasonable return to investors, there fore there  is no need to exempt banks that decided on 
business grounds to invest in the SAREB from t he extraordinary contributions  to the DGS . 
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 10 April 2013.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI   
                                                 
7  MoU, Paragrap h 17 states that  ‘Steps will be taken to minimise the cost to taxpayers of bank restructuring’. Paragraph  18 
states that  ‘These amendments should also include provisions allowing that holders of hybrid capital instruments and 
subordinated debt fully partic ipate in the SLEs’ . Finally, p aragraph  19 states the following : ‘For non -viable banks, SLEs 
will also need to be used to the full extent to minimise the cost for the taxpayer’ .