COMVTISSION OF THE EUROPEAN COMVIDNITIES 
C0M(92) 188 final - SYN 415 
Brussels,4 June 1992 
Proposal for a 
COUNCIL DIRECTIVE 
on deposit-guarantee schemes 
(presented by the Commission) 
- 2 -
EXPLANATORY MEMORANDUM 
A. General considerations 
(1) Main obiectives of the proposal 
This proposal for a Directive has a dual objective: to protect the 
depositors of each credit institution and to ensure the stability of the 
banking system as a whole. 
Deposit-guarantee schemes, which are based on a system of solidarity 
between credit institutions, protect depositors in the event of a financial 
crisis in an institution and in particular those depositors who have 
insufficient financial knowledge to discriminate between sound and unsound 
credit institutions. 
But, by the same token, guarantee schemes also protect the banking system 
from the risk resulting from the withdrawal of their funds by depositors, 
not only from an institution in difficulty, but also from banks in 
relatively sound condition which may be the subject of unfounded rumours. 
One of the principles underlying the establishment of such guarantee 
schemes is therefore that the costs or possible distortions caused by 
introducing such schemes are outweighed by potential economic costs to 
society as a whole of a "run" on the banking system. 
(2) Need for deposit-guarantee schemes 
At the end of 1986, the Commission was already convinced of the 
desirability of credit institutions of all Member States belonging to a 
deposit-guarantee scheme and had published a Recommendation to this end, 
87/63/EEC,1 since it considered that this instrument, although not 
binding, was sufficient to persuade those Member States which did not have 
a guarantee scheme at the time to introduce one. 
1 OJ No L 33, 4.2.1987. 
- 3 -
Despite this Recommendation, some Member States are not yet convinced of 
the need for all their credit institutions to be required to belong to a 
deposit guarantee scheme, and two Member States have not yet introduced one 
at all. 
It is certain that the strengthening of national and international 
prudentiai measures is designed to avoid financial crises in credit 
inst i tut ions. 
However, in the same way as prudentiai rules, a deposit-guarantee scheme is 
an element in the safety net with which the Commission and the supervisory 
authorities are endeavouring to surround credit institutions in preparation 
for the extension of their activities which wiII start in 1993. 
This guarantee meets the need of foreseeing that, although it may be 
subject to very strict rules and severe prudentiai controls, a credit 
institution can experience financial difficulties. 
In this case, the cost of compensating depositors wi I I have to be weighed 
against that of reorganization measures which might be essential in order 
to rescue the institution. 
The provisions of this proposal for a Directive therefore meet a need and 
take account of the experience acquired during the implementation of the 
abovementioned Recommendation 87/63/EEC and at the time of recent crises in 
institutions that had branches in several Member States. The proposal 
tries to satisfy the wishes expressed on this subject by the European 
Parliament in its opinion1 on the proposal for a Directive C0M(88)42 
concerning the reorganization and the winding-up of credit institutions and 
deposit-guarantee schemes and by the Banking Advisory Committee, in its 
opinion of 4 July 1991.3 
1 Opinion of the European Parliament at first reading of 13 March 1987, 
OJ No C 99, 13.4.1987, p. 211. 
2 OJ No C 36, 8.2.1988, p. 3. 
3 Report of the Chairman 1988-91, Annex C. 
- 4 -
(3) Principle of guarantee by the scheme of the credit institution's home 
Member State 
Protection is based on the principle that branch depositors wiII be 
guaranteed by the scheme existing, for this category of institution, in the 
Member State where the institution has its head office (home Member State). 
On completion of the internal market, all the activities exercised by a 
credit institution in the Community through its branches wiII be subject to 
a single accounting system, balance sheet and profit and loss account, and 
a system of monitoring solvency. 
According to the opinion of the Banking Advisory Committee, failure to 
respect the home country principle, in a field as closely Iinked to bank 
supervision as deposit guarantee schemes, would have created a dangerous 
precedent for the realization of the Internal Market in banking services. 
This wi I I lead to the coexistence on the same territory of several 
deposit-guarantee schemes. But the experience of Member States in which, 
for many years, various types of credit institutions have been exercising 
their activities, while being covered by different guarantee schemes, 
proves that this can work very well, especially if the minimum level of 
coverage set by the proposal ensures that small depositors are compensated 
in all Member States. 
(4) Choice of minimum level of coverage 
Recommendation 87/63/EEC did not suggest a harmonized level of coverage. 
Yet it seems essential in the run-up to completion of the single market for 
depositors to be given basic protection, regardless of whether their 
deposits are in an office of a home-country bank or in an office of a bank 
based in another Member State. 
- 5 -
The minimum level of coverage set for the Community should not be too high 
in order to avoid what has occurred in the United States in particular, 
where the risks taken by individual depositors have been lowered so much 
that such depositors have become virtually indifferent to the soundness of 
their credit institutions. 
In addition, managers of credit institutions have been encouraged to hold 
risky portfolios, without market discipline requiring them to pay their 
guarantee scheme high premiums because of the increased risk of bankruptcy 
which such investments represented for the inst i tut ion. In this way 
institutions benefited from taking risks while losses were borne by the 
guarantee scheme. 
Conversely, coverage must not be too low and leave too many deposits 
outside the minimum threshold of protection. 
The only unaggregated data readily available to the Commission relate to 
the average size of deposits held at Community savings banks. 
The average for such deposits is about ECU 2 500, which reflects a weighted 
average of ECU 30 000 for time deposits, ECU 2 600 for current accounts and 
ECU 2 150 for savings accounts. 
Unfortunately averages alone do not provide an answer to the question of 
what proportion of deposits or depositors would have balances above or 
below any particular minimum level of protection. 
Without direct empirical evidence on the size and distribution of accounts, 
it seemed reasonable to try to establish a minimum level of coverage in the 
Community, based roughly on the levels of coverage now chosen by guarantee 
schemes in Member States. If the two Member States with extremely high 
levels of coverage (Germany and Italy) are excluded, together with those 
where there is no protection at all (Greece and Portugal), the median of 
existing levels is approx imately ECU 15 000, which is why this figure has 
been chosen. 
- 6 -
When the proposal was being prepared, the question arose of whether it 
might be preferable to set a percentage limit for repayment which would be 
more egalitarian but less protective of small depositors. This solution 
was not adopted because it would have led to very major changes in some 
solidarity schemes which take responsibiIity for rescuing the failing 
institution and therefore compensate its depositors in full. 
The compromise solution finally adopted makes it possible to limit the 
guarantee to a percentage of the deposit but requires that this covers at 
least 90% of deposits, up to a payment of ECU 15 000. Above this limit, 
Member States or schemes remain free to provide for lower payment ratios or 
even to refuse any guarantee whatsoever. 
(5) Setting very limited time limits for payment 
Most of the existing guarantee schemes provide for a prompt payout to 
depositors, but unt i I now, this payout has very often been tied to the 
progress of liquidation procedures and to the diligence of liquidators 
appointed by the courts. 
This has often led to delays causing depositors very understandable 
distress. It is also a source of numerous disputes which can make payout 
operations even slower. 
This proposal permits a starting point for the time-limit which is not 
I inked to insolvency procedures: the length of time for which the deposit 
is unavailable has been taken into consideration and if it is more than ten 
consecutive days procedures for paying out the guarantee can be started; 
these must be completed within a three-month time limit unless there are 
special circumstances. 
This three-month time-limit results from the practical experience of 
managers of guarantee schemes. In most of the cases where it has not been 
possible to observe such a time limit, a legal procedure was under way and 
the valuation of deposits for the purposes of the guarantee was not 
distinguished from the valuations necessary for liquidation which relate to 
all the assets and are bound to take more time. 
- 7 -
(6) Depositor information 
The priority goa I of depositor protection suggests that the depositor 
should be fully informed of the extent of coverage of his funds. 
Complete information is also important in reducing systemic risk: in 
particular, the greater the depositor's awareness of risk, the greater care 
he wi I I take to discover whether the institution to which he entrusts his 
deposits is weIl-managed, and the less sensitive he wiII be to unjustified 
rumours. 
(7) Questions not deaIt with in the proposaI 
Several points have not been the subject of harmonized provisions; the main 
ones are: 
(a) the legal status of guarantee schemes 
As already stated in the Recommendation,1 it was necessary to 
acknowledge the coexistence in the Community, and sometimes in the 
same Member State, of deposit protection schemes set up by private 
institutions and schemes administered on a statutory basis; most 
private schemes are set up under the responsibiIity of professional 
organizations, but they are just as effective as the schemes managed 
by or with the assistance of the public authorities. 
It was therefore considered advisable not to change this state of 
affairs and not to compel Member States and credit institutions to 
adopt a specific statute for their deposit guarantee schemes. 
Fourth recital of Recommendation 87/63/EEC. 
- 8 -
(b) financing mechanism 
there are also wide differences in the financing of schemes. The 
main difference is whether or not a guarantee fund exists. If it 
does, credit institutions pay contr ibut ions to the said fund at 
specific intervals of time; these contributions are based on the 
value of the deposits insured or on other parameters; the funds are 
managed by the guarantee schemes themselves. 
In other cases, the guarantee scheme is funded by commitments to pay 
on the part of the member credit institutions; no payments are made 
into the scheme except in the event of a claim. Lastly, some schemes 
are mixed (funds plus commitments or possibiIities of exceptional 
contributions in the event of a claim). 
After receiving the assurance that the financing arrangements were 
sufficiently sound to pay off all depositors covered, including those 
at branches in another Member State, it was not considered necessary 
to harmonize rules which are closely linked with the management of 
the schemes in question. 
The question of whether the public sector would be able to provide 
assistance for guarantee schemes in emergency situations of exceptional 
gravity and when the schemes' resources have been exhausted, has been 
raised in order to enable them to respect their commitments to depositors. 
It did not seem appropriate, in the proposal for a Directive, to prohibit 
such assistance, which could prove necessary in practice, although it is 
not desirable as a general rule and could not be allowed to contravene the 
rules of the Treaty concerning state aid. 
- 9 -
B. Commentarv on the Articles 
Art icle 1 
Article 1 gives a few definitions which are necessary for the Directive to 
be understood properly. In order not to make this I ist of definitions too 
long, those already contained in several Directives have not been repeated; 
these include "credit institutions" and "branches" which can be found in 
Directive 77/780/EEC,1 and "home Member State" or "host Member State", 
which can be found in Directive 89/646/EEC.2 
Paragraph 1 
The idea of deposi t as it appears in paragraph (1) has been envisaged from 
the depositor's point of view. The depositor has a "credit balance" or 
"claim" whereas in the Directives relating to annuaI accounts, this 
naturally appears in the credit institution's accounts in the form of 
"debt" or "loan". This terminology has, on the other hand, been adopted in 
paragraph 2, which deals with non-repayable funds. 
Guaranteed deposits are those which result from funds left in accounts 
either permanently or temporarily, or from claims for which negotiable 
certificates have been issued. 
The idea of "credit balance" is relatively clear: in particular it is used 
for current accounts but it is supplemented by the idea of "funds left in 
accounts", which is intended to indicate savings books or accounts or any 
other instrument in which funds generally remain for longer than in current 
accounts. 
1 OJ No L 322, 17.12.1977. 
2 OJ No L 386, 30.12.1989. 
- 10 -
On the other hand, in order to understand the idea of "claims for which 
negotiable certificates have been issued" it has to be seen in the context 
of Articles 19 and 20 of Directive 86/635/EEC1 on annual accounts, the 
first of which deals with "amounts owed to customers" while the second uses 
this formula and spells it out in detail: "debts for which negotiable 
certificates have been issued, in particular deposit receipts, 'bons de 
caisse' and liabilities arising out of own acceptances and promissory 
notes". 
The above Directive distinguishes these debts from debt securities which 
appear in a separate heading. This distinction is not retained in the 
definition, but debt securities may be excluded from the guarantee if 
Member States do not wish to cover them (option 11 of the Annex). 
The definition does not specify that deposits have to be nominative; here 
too an option is possible and Member States may provide for bearer deposits 
to be excluded from the guarantee (point 9 of the Annex). 
It was necessary to define the idea of Joint account, because of the option 
chosen of a limit per depositor, so as not to disadvantage holders of such 
accounts (Article 5(2)). 
Lastly, the idea of unavailable deposit has been defined; in order to speed 
up the payout of the guaranteed amount, it was decided not to I ink this 
payout with the uncertainties of the procedures of reorganizing and 
liquidating the credit institution but to keep to an objective observation, 
namely that for ten consecutive days a depositor has been deprived of the 
funds which should have been repaid by the credit institution. 
This period of ten days should normally make it possible, in most Member 
States, to obtain a decision by a judicial or administrative authority 
establishing that payments have ceased. The period wiII be shorter if such 
a decision results in the closure of banks since, in that case, the payout 
time limit (three months) wiII count from the day of the decision. 
1 OJ No L 372, 31.12.1986, p. 8. 
- 11 -
Paragraph (2) 
Some deposits are excluded from the guarantee. First of all, interbank 
deposits: the main just i f icat ion for this is that banks are supposed to 
know the crisis bank's situation better than other persons in a business 
relat ionsh ip wi th i t. 
With regard to subordinated loans, the existence of the clause recalled in 
the definition contractuaIly excludes them from the guarantee, since by 
their nature they are not to be repaid unt i I the liquidation is completed 
and repayment depends on its results. 
Art icle 2 
Paragraph (1) 
Paragraph (1) of this Article contains two fundamental principles: 
(a) The principle that all authorized institutions must take part in a 
deposit-guarantee scheme. The introduction of at least one deposit-
guarantee scheme in each Community Member State had already been the 
subject of recommendation 87/63/EEC, mentioned above; not only does 
the proposal for a Directive repeat this requirement (still not 
satisfied in two Member States), but it makes it compulsory for all 
authorized institutions to belong to the schemes set up in this way. 
This requirement is the counterpart of the freedom of establishment 
of branches and the freedom to provide services. 
Since credit institutions enjoy these freedoms, it is absolutely 
necessary for depositors of branches located in other Member States 
and not supervised by local authorities, and depositors who entrust 
deposits to banks not established in the country where they reside, 
to be protected against any risk of financial crisis in the 
institution in question. 
- 12 -
This wi I I be an innovation in several States where membership is 
optional, even though most credit institutions do in fact take part 
in a deposit-guarantee scheme. 
(b) The principle that the guarantee scheme of the home Member State 
shall cover the deposits of branches. 
This principle is the logical result of supervision by the 
Member State where the head office is located. Once the competent 
authority of the home country is responsible for issuing 
authorizations making it possible to open branches and engage in 
activity with the freedom to provide services throughout the 
Community, and supervision of such activity, in particular the 
monitoring of solvency, take place at the head office, the 
implications for guarantee schemes have to be recognized. 
Since the credit institution and its branches are considered to be a 
single un i t, from both the legal and the banking point of view, it 
seems natural for this institution to take part in the solidarity 
scheme for credit institutions in the country where its head office 
is established. The Iinks between this institution and host country 
for its branches wi I I be far looser than they are now when branches 
are "author ized" in the same way as local institutions and have to 
respect the requirements of the Member State in which they are 
located: 
Paragraph (2) 
This principle of belonging to the home country scheme, vigorously stated 
in paragraph (1), has to be tempered by the provision in paragraph (2), the 
purpose of which is to enable branch depositors to enjoy the advantages of 
the host country's guarantee scheme. 
- 13 -
This is not strictly speaking a derogation from the principle of belonging 
to the home country scheme since the latter is stiII required to guarantee 
branch depositors up to the amount offered to depositors with the 
institution's head office but it is, as it were, an additional guarantee 
which must be available whenever branch managers consider it appropriate to 
extend it to their customers in order not to suffer a competitive 
disadvantage. 
Guarantee schemes which provide a high level of protection wiII, in order 
to enable branches to belong, have to find solutions to problems which are 
different from those they have had to settle in order to guarantee the 
institutions that have their head office on their territory. 
These schemes wi I I probably have to avaiI themselves of the disclosure of 
information as mentioned in Article 12(5) of Directive 77/780/EEC, amended 
by Article 16 of Directive 89/646/EEC1 in order to obtain data which wi I I 
be useful to them on the activity and solvency of the inst i tut ion whose 
branch wiII be applying for membership. 
They will probably have to stipulate special conditions for contributing to 
their guarantee scheme in keeping with the risks taken, since part of the 
risk will already be covered by the head office guarantee. 
These technical difficulties should not conceaI the essential advantage of 
this provision in preventing distortions of competition between 
institutions and differences in protection levels, which depositors of the 
same country would find difficult to accept. 
Paragraph (3) 
Since some of the deposit-guarantee schemes which exist in the Community 
are schemes set up under private law contracts, the fact that all 
institutions are required to take part in deposit guarantee schemes will 
lead to a constraint not envisaged so far, but which should not create 
undue problems. On the other hand keeping them in the scheme if they do 
not comply with its contractual requirements, for example with regard to 
financial contributions or information, is liable to prove very difficult. 
1 OJ No L 386, 30.12.1989, p. 8. 
- 14 -
The fact that a guarantee scheme will be allowed to exclude an institution 
means that depositors will be deprived of the protection to which they are 
entitled under the Directive or that the public authorities will be 
compelled to withdraw authorization; such withdrawal will therefore depend 
on the decision of a private body, which is unacceptable in principle and 
in some cases unduly severe if the breach of obligations is a minor one. 
As a way out of this dilemma, the proposal for a Directive accepts the 
possibility of exclusion when all measures to secure the defaulting 
institution's compliance with its obligations have been fruitless, but 
requires the guarantee to be maintained for one year after exclusion, 
whatever the decision taken by the supervisory authority. 
This measure will enable the credit institution's supervisory authorities 
not to resort to the extreme sanction of withdrawing authorization too 
automatically and to find, where appropriate, another solution for 
safeguarding the rights of the excluded institution's depositors. 
Art icle 3 
This Article establishes that branches of institutions that have their head 
office outside the Community cannot be compulsorily required to observe the 
rule of belonging to the home country scheme as are Community institutions. 
As a result, depositors of these branches could be entirely deprived of 
protection if Member States did not take the necessary steps to secure 
their membership of the local scheme where they are not covered by another 
guarantee scheme, for example in their home country. 
This is why paragraphs (2) and (3) of this Article require the depositors 
of these branches to be provided with information; this is in fact an 
application, adapted to this particular case, of the rules on providing 
depositors with information which are contained in Article 6 of the 
proposal for a Directive and relates to institutions that have their head 
office in the Community. 
- 15 -
Art icle 4 
This essential provision of the Directive specifies the minimum level of 
protection for depositors which has to be guaranteed within the Community. 
Paragraph (1) 
Paragraph (1) specifies that the lower limit of coverage per depositor, for 
his aggregate deposits, is ECU 15 000, which is a little higher than the 
maximum coverage provided in Spain (11.700 ECU), Belgium and Luxembourg 
(11.900 ECU), Ireland (13.200 ECU), and a little lower than the coverage 
provided in the Netherlands (17.400 ECU) and the United Kingdom (21.400 
ECU). 
This minimum guarantee wi I I cover total deposits of less than ECU 15 000 
and the sum paid to a depositor wi I I therefore be ECU 15 000 for total 
deposits of ECU 15 000, ECU 12 000 for total deposits of ECU 12 000, 
ECU 10 000 for total deposits of ECU 10 000, etc. 
But, in order to take account of the anxieties, in particular of economists 
and financial experts who would I ike part of the risks to be borne by 
depositors, in order to encourage them to take an interest in the soundness 
of the institution to which they entrust their deposits (even if the latter 
are not considerable), paragraph (4) allows the minimum coverage to be set 
in the form of a percentage and not in the form of a fixed amount. 
As a result, the ECU 15 000 minimum wi I I not be paid out to repay a 
ECU 15 000 deposit but a larger deposit - namely ECU 16 650 - if the 
percentage guaranteed is 90% of total deposits. For total deposits of 
ECU 15 000, the same depositor wi I I receive only ECU 13 500, st i I I on the 
assumption that the percentage guaranteed is equal to 90% of the total; 
this is the minimum percentage which has to be observed within the limits 
of minimum coverage. 
- 16 -
It is important to note that the introduction of a percentage, within the 
limits specified in paragraph (4), will not have the effect of reducing the 
minimum payout due from the scheme which is st i I I ECU 15 000; however, in 
order to arrive at this amount, in a scheme where each depositor is repaid 
only a percentage of his deposits, it is clear that the amount to be taken 
into account, in order to establish the minimum limit of deposits to be 
covered for each depositor, will have to be higher than ECU 15 000 (and, 
depending on the payout ratio chosen, will have to range from ECU 15 000 to 
ECU 16 650). 
Paragraph (2) and Annex 
Paragraph (2) provides that Member States may authorize the exclusion from 
the guarantee of certain depositors or certain deposits Iisted in the 
Annex. 
These exclusions relate mainly to the deposits of financial instItutions, 
insurance companies, central and local authorities, and other depositors 
which can hardly be considered as meriting protection because of their lack 
of economic expertise or economic weakness. However, the number of these 
institutions and persons is fairly large and the appraisal of whether it is 
advisable to exclude them varies from one Member State to another. 
This is why it has not been possible to achieve ful ler harmonizat ion on 
this point because the arrangements covering these different institutions 
and depositors very largely depend on the guarantee amount which the scheme 
provides and on national practice. In this way several schemes in certain 
circumstances take bearer deposits into consideration because they are used 
by the smallest savers (non-nominative savings books) whereas most other 
countries wish to exclude them. 
The list contained in Annex I is limitative and Member States may exclude 
from the guarantee only the institutions and persons mentioned therein, 
with any other exclusion contravening the Directive. 
- 17 -
Paragraph (3) 
Paragraph (3) however permits the retention or adoption of provisions 
raising the guarantee ceiling on which there is no maximum limit. 
This provislorf"wiTl permit the retention of cerTaTn schemes which provide 
depositors with ful I compensation; these are the result of a solidarity 
arrangement designed to avoid member institutions being put into 
liquidation and which therefore provides, in the event of closure, for the 
fulI repayment of all deposits. 
Disregarding this extreme case of the 100% repayment of deposits, schemes 
such as the Danish, French or Italian ones, which under the guarantee pay 
out amounts higher than the minimum contained in the proposal for a 
Directive wiII be able to maintain their present level of repayment.1 
Art icle 5 
This Article states the principle of a guarantee per depositor and not per 
deposit with a view to avoiding abuse, as is the case in the United States, 
and makes some provision for special cases which have given rise to 
difficulties in some countries and have been solved in a variety of ways. 
Paragraph (2) lays down a supplementary rule for Joint accounts and 
paragraph (3) provides for the case of special accounts where the account 
holder acts on behalf of the beneficial owners who are the real owners of 
the funds deposited in the account. 
Classic cases are those of property managers who receive the tenants' rents 
before handing them over to the owners, lawyers, who pass certain sums 
intended for their customers through their accounts and trustees who act on 
behalf of their beneficial owners. 
Guarantee schemes wi I I be able to lay down certain formalities enabling 
them to ascertain the identity and rights of depositors. 
Denmark: 31.500 ECU 
France: 57.500 ECU 
Italy: 511.000 ECU per deposit 
- 18 
In some countries these formalities precede the provision of the guarantee. 
The proposal for a Directive does not take a position on this question; 
this depends on national practice in relation to these accounts which is 
far from being standardized. 
Art icle 6 
This Art icle lays down the rules relating to the necessity to inform 
customers of credit institutions. 
Such information must be ful I and accurate because the schemes which the 
branches of the same Member State wi I I join may be far more numerous than 
they are at present. It is therefore important, especially if the branch 
depositors do not enjoy supplementary coverage by the local scheme, as 
provided for in Article 2(2), for these depositors to be well informed of 
the advantages and disadvantages of the guarantee scheme covering the 
institution to which they entrust their deposit. 
Art icle 7 
This Art icle represents one of the main results to be achieved by the 
proposal, namely that of permitting the promptest possible payout of the 
guarantee provided for by the scheme. 
In order to achieve this, a three-month time limit (renewable only once) is 
set for payouts. 
This period wi I I normaliy count from a decision by the supervisory 
authorities or a court which often act very rapidly once the solvency of a 
credit institution is called into question. 
- 19 -
However, in order to save depositors and especially small depositors from 
having, as is sometimes the case, to endure a delay during which a 
reorganization solution is sought and implemented without the institution 
returning to normal activity, or a lengthy procedure of legal liquidation, 
the proposal provides for a ten-day period of unavailabiIity at the end of 
which, if no decision has been taken as to the institution's activity, the 
depositor is entitled to payment of the guaranteed amount and the scheme is 
required to comply with the three-month time limit. 
Paragraphs (2) and (3) 
Nevertheless, there is provision for the time-limit to be extended, but 
only in the event of difficulties encountered in the settlement of 
particular cases, e.g. difficulties in proving the amount of the deposit 
(case of joint accounts or accounts where the account holder is not the 
beneficial owner), and difficulties in identifying the depositor, or even 
in finding him (if he has changed his address or is I iving in another 
country). 
The very short time limits are stipulated in order to favour depositors and 
should not operate against their interests; the proposal therefore sets no 
time-limit within which they have to enforce their rights. 
Paragraph (4) supplements the provisions relating to depositor information 
contained in Article 6 by information to be provided at the time of the 
cla im. 
Lastly, paragraph (5) states that the payment shall be effected in national 
currency or in ecu; it is necessary to make this clear because the 
guarantee is not confined to deposits in Community currencies or in ecu, 
but also covers deposits in third-country currencies, in keeping with 
Art icle 5(1). 
- 20 -
Art icle 8 
The first subparagraph of paragraph 1 calls upon Member States to comply 
with the Directive on 1 January 1994. 
The second subparagraph provides that, where Member States adopt the 
necessary provisions of national law, the latter are to contain a reference 
to this Directive or are to be accompanied by such reference on the 
occasion of their official publication. 
The second paragraph deals with the requirement to communicate to the 
Commission the main provisions of national law adopted by Member States. 
Art icle 9 
This Article contains the usuaI formula that this Directive is addressed to 
ail the Member States. 
- 21 -
Proposal for a 
COUNCIL DIRECTIVE 
on deposit-guarantee schemes 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
and in particuiar the first and third sentences of Article 57(2) thereof, 
Having regard to the proposal from the Commission, 
In cooperation with the European Parliament, 
Having regard to the opinion of the Economic and Social Committee, 
Whereas, in accordance with the objectives of the Treaty, the harmonious 
development of the activities of credit institutions throughout the 
Community should be promoted through the elimination of any restrictions on 
freedom of establishment and the freedom to provide services while 
increasing the stability of the banking system and the protection of 
savers ; 
Whereas, at the same time as restrictions on their activities are 
eliminated, consideration should be given to the situation which might 
arise if a credit institution that has branches in other Member States 
suffers a financial crisis; whereas it is indispensable to ensure a 
harmonized minimum level of deposit protection wherever in the Community 
deposits are located; whereas such deposit protection is as essential as 
the prudentiai rules for the completion of the single banking market; 
Whereas, in the event of the closure of an insolvent credit institution, 
the depositors of branches situated in a Member State other than that where 
the credit institution has its head office must be protected by a guarantee 
scheme, in the same way as all the institution's other depositors; 
- 22 -
Whereas the cost to credit institutions of participating in a guarantee 
scheme bears no relation to the cost that would result from a massive 
withdrawal of bank deposits not only from a credit institution in 
difficulties but also from healthy institutions following a loss of 
depositor confidence in the solidity of the banking system; 
Whereas only ten Member States have a guarantee scheme in accordance with 
Commission Recommendation 87/63/EEC of 22 December 1986 concerning the 
introduction of deposit-guarantee schemes in the Community1; whereas this 
situation may prove prejudicial to the proper functioning of the 
Single Market; 
Whereas the Second Council Directive 89/646/EEC2, as amended by Directive 
92/30/EEC3 provides for a system for authorizing and supervising credit 
institutions which wiII enter into force on 1 January 1993; 
Whereas branches wiII no longer require authorization in host 
Member States, because they wi I I be granted a single authorization valid 
throughout the Community, and their solvency wi I I be monitored by the 
competent authorities of the home Member State; whereas this situation 
justifies all branches, set up in the Community, of the same credit 
institution in belonging to a single guarantee scheme; whereas this scheme 
can only be the one which exists, for this category of institution, in the 
state where the head office is situated, in particular because of the Iink 
which exists between supervision of a branch's solvency and its membership 
of a deposit-guarantee scheme; 
Whereas harmonization must be confined to the elements necessary and 
sufficient to ensure, within a very short period, a payment under the 
guarantee calculated on the basis of a harmonized minimum level; 
1 OJ No L 33, 4.2.1987, p. 16. 
2 OJ No L 386, 30.12.1989, p. 1. 
3 OJ No L 110, 28.4.1992, p. 52. 
- 23 -
Whereas, for economic reasons, it is undesirable to introduce throughout 
the Community a very high level of protection which is liable to encourage 
the reckless management of institutions; whereas, in addition, in the 
event of a serious claim, contributions to the funding of the scheme could 
become too burdensome for the member institutions; 
Whereas, however, the harmonized guarantee level must not be too low in 
order not to leave too great a number of deposits outside the minimum 
protection threshold; whereas in the absence of statistics on the amount 
and distribution of deposits in Community credit institutions, it seemed 
reasonable to take as a basis the median guarantee offered by the national 
systems; whereas that amount is ECU 15 000; 
Whereas in the six Member States which are above that median level, the 
guarantee schemes offer depositors a coverage of their deposits which is 
higher; whereas it does not seem appropriate to require that these schemes, 
certain of which have been introduced only recently pursuant to 
Recommendation 87/63/EEC, be amended on this point; 
Whereas the retention in the Community of schemes providing coverage of 
deposits which is higher than the harmonized minimum may lead on the same 
territory to disparities in compensation which are prejudicial to 
depositors and unequaI conditions of competition between national 
institutions and the branches of institutions of other Member States; 
whereas, in order to counteract these disadvantages, branches should be 
authorized to Join the host country scheme so that they can offer their 
depositors the same guarantees as those offered by the scheme of the 
country where they are located; 
Whereas, in order to speed up payments under the guarantee, the initiation 
of insolvency proceedings should not be awaited, unless the latter take 
place within ten days of the deposits becoming unavailable because a credit 
institution finds it impossible to comply with the obligation of refunding 
them in accordance with the legal and contractual provisions applicable to 
them; 
- 24 -
Whereas a number of Member States have deposit-protection schemes under the 
responsibiIity of professional organizations; whereas other Member States 
have schemes set up and administered on a statutory basis and whereas some 
schemes, although set up on a contractual basis are partly administered on 
a statutory basis; whereas this variety of status poses a problem only 
with regard to compulsory membership of and exclusion from the scheme; 
whereas it is therefore necessary to take steps to limit the powers of 
schemes in this area; 
Whereas one of the objectives of the harmonized minimum protection laid 
down by the Directive is to ensure depositor protection up to a certain 
amount, while excluding from such protection only deposits of other credit 
institutions and claims which are the subject of special conditions such as 
subordinated deposits; whereas it should, however, be possible for each 
Member State to limit such protection to depositors who are unable to 
evaluate the financial policy of the institutions to which they entrust 
their deposits, by enabling certain categories of depositors or of deposit 
to be excluded from the guarantee; 
Whereas the principle of a harmonized minimum limit per depositor and not 
per deposit has been retained; whereas it is therefore appropriate to take 
into consideration the deposits made by depositors who either are not 
mentioned as holders of the account or are not the sole holders; whereas 
the limit must therefore be applied to each identifiable depositor; whereas 
the same does not apply to collective investments in transferable 
securities made via financial institutions and subject to special 
protection rules which do not exist for the abovementioned deposits; 
Whereas in compliance with the Directives governing the admission of credit 
institutions having their head office in third countries, and in particular 
Article 9(1) of Council Directive 77/780/EEC1, as last amended by 
Directive 89/646/EEC, Member States are to decide whether and on what 
conditions to admit the branches of such credit institutions to operate on 
their territory; whereas such branches wiII not benefit from the free 
1 OJ No L 322, 17.12.1977, p. 30. 
- 25 -
provision of services by virtue of Article 59, second paragraph of the 
Treaty, nor from freedom of establishment in Member States other than the 
one in which they are established; whereas accordingly a Member State 
admitting such branches may decide to oblige or permit such branches access 
to the guarantee system in place on their territory; whereas, however, it 
is appropriate that such branches should be required to inform their 
depositors of whether or not they belong to any guarantee system and of the 
extent and limits of any such guarantees; 
Whereas depositor information is an essential element in their protection 
and must therefore also be the subject of a minimum number of binding 
prov isions; 
Whereas deposit protection is an essential element in the completion of the 
Internal Market and an indispensable supplement to the system of 
supervision of credit institutions on account of the solidarity it creates 
between all the institutions in a given financial market in the event of 
one of then fa iIing, 
HAS ADOPTED THIS DIRECTIVE: 
Art icle 1 
1. For the purposes of this Directive, the following definitions shall 
apply: 
Depos i t: credit balances which result from funds left in accounts or 
from temporary situations deriving from normal banking transactions and 
which the credit institution must repay under the legal and contractual 
conditions applicable, and claims for which negotiable certificates 
have been issued by a credit institution. 
- 26 -
Joint account: an account opened in the name of two or more persons or 
over which two or more persons have rights that may operate against the 
signature of one or more of those persons. 
Unavailable deposit: a deposit which a credit institution experiencing 
a financial crisis is unable to repay under the legal and contractual 
conditions applicable to such repayment. 
This suspension of payments need not necessarily be declared or decided 
by a judicial or administrative authority; it is sufficient for it 
actually to iast for ten consecutive days. 
At the end of that period, the deposit sha I I be deemed to be 
unavailable. 
2. The following sha I I be excluded from any repayment by the guarantee 
schemes: 
the obligations towards other credit institutions; 
subordinated loans in respect of which there exist binding 
agreements whereby such loans are not to be repaid untiI after 
settlement of all other debts in the event of the bankruptcy or 
liquidation of the credit institution. 
Art icle 2 
1. Each Member State shaII ensure that on its territory one or more 
deposit-guarantee schemes are introduced in which all credit 
institutions authorized in that Member State under Article 3 of 
Directive 77/780/EEC must take part. The schemes shaII cover the 
deposi tors of branches set up by such inst i tut ions in other 
Member States. 
- 27 -
A branch of a credit institution authorized in another Member State may 
apply to Join voluntarily the scheme covering the category of 
institution to which it belongs in the Member State in which it is 
established in order to suppiement the guarantee which its depositors 
already enjoy by virtue of their obligatory coverage by the scheme 
referred to in paragraph 1. 
Member States shaII ensure that objective conditions relating to the 
membership of these branches form part of all deposit-guarantee 
schemes. 
If one of the credit institutions required by paragraph 1 to take part 
in the scheme or one of the branches granted voluntary membership under 
paragraph 2 does not comply with the obligations incumbent on it as a 
member of the deposit-guarantee scheme, the supervisory authority which 
issued the authorization shaII be notified. 
After taking all the measures necessary to secure compliance by the 
credit institution, or branch thereof, with its obligations and after 
noting the decisions taken by the supervisory authority (for example 
reorganization or withdrawal of the authorization), the guarantee 
scheme may exclude the credit institution or branch. In that case, the 
guarantee covering the institution's depositors shalI be maintained for 
twelve months from the date of exclusion. 
Art icle 3 
Subject to Article 9(1) of Directive 77/780/EEC, Member States may 
stipulate that the branches established by credit institutions with 
their head office outside the Community must join a deposit-guarantee 
scheme in operation on their territory. 
- 28 -
2. In any event, the managers of foreign branches shall provide their 
depositors with information enabling them: 
either to identify the guarantee scheme to which the branch belongs 
and to be aware of the limits or ceilings which exist in that 
scheme; 
or to note the absence of any such guarantee. 
3. The information referred to in paragraph 2 shall be made available in 
the official language(s) of the Member State in which the branch is 
established and shall be drafted in a clear and comprehensible form. 
Article 4 
1. The deposit-guarantee schemes shall stipulate that the aggregate 
deposits of a given depos itor must be covered up to ECU 15 000 in the 
event of a financial crisis in a credit institution rendering deposits 
unavailable. 
2. Member States may provide that certain depositors or deposits shall be 
excluded from the guarantee or shall be granted a lower level of 
guarantee. The exceptions are listed in the Annex. 
3. This Article shall not preclude the retention or adoption of provisions 
which offer a higher guarantee ceiling. 
4. Member States may limit the guarantee provided for in paragraph 1 or 
that referred to in paragraph 3 to a specified percentage of the 
deposits. However, the percentage guaranteed must equal or exceed 90% 
of the aggregate deposits unt i I the amount to be paid under the 
guarantee reaches ECU 15 000. 
- 29 -
Art icle 5 
1. The limits referred to in Article 4(1), (3) and (4) shall apply to the 
aggregate deposits placed with the same credit institution irrespective 
of the number of deposits, the currency and the location within the 
Commun i t y. 
2. The share of each depositor in a joint account shall be taken into 
account in calculating the limits provided for in Article 4(1), (3) and 
(4). 
In the absence of special provisions, the account shall be divided 
equally between the depositors. 
3. Where an account holder is not the beneficial owner of the sums held in 
the account, it is the beneficial owner who shall be covered by the 
guarantee. If there are several beneficial owners, the share of each 
owner shall be taken into account in calculating the limits provided 
for in Article 4(1), (3) and (4). 
This provision shall not apply to collective investments in 
transferable securities. 
Art icle 6 
1. Member States shall ensure that the managers of the credit institution 
provide depositors with the information necessary for them to identify 
the deposit-guarantee scheme in which the institution and its branches 
take part within the Community. The limits or ceilings applicable 
under the deposit-guarantee scheme shall be indicated in a readily-
comprehensible manner. 
2. The information provided for in paragraph 1 shall be available in the 
official language(s) of the Member State in which the branch is 
established and the guarantee limits or ceilings and the level of 
payments shall be expressed in ecus and in national currency. 
- 30 -
Art icle 7 
1. Payments under the guarantee provided for in Articles 4 and 5 shall be 
effected within three months of the date on which the deposit becomes 
unavailable, or of a court or other authority finding that payment has 
ceased if this has occurred prior to that date. 
2. For justified reasons, relating solely to certain depositors or certain 
deposits, the guarantee scheme may request the supervisory authority 
for an extension of the time limit. Such extension may not exceed 
three months. 
3. The time limits referred to in paragraphs 1 and 2 may not be invoked by 
the guarantee scheme in order to deny the benefit of the guarantee to a 
depositor who, due to absence or for any other justified reason, has 
been unable to assert his claim to a payment under the guarantee in 
t ime. 
4. The documents relating to the conditions and formalities to be 
fulfilled in order to benefit from a payment under the guarantee 
referred to in paragraph 1 shall be drawn up in detail in the official 
language(s) of the Member State in which the guaranteed deposit is 
located. 
5. Payment under the guarantee shall be effected in the national currency 
of the Member State in which the guaranteed deposit is located or in 
ecus irrespective of the currency in which the deposits are 
denominated. 
- 31 -
Article 8 
1. Member States shall bring into force the laws, regulations and 
administrative provisions necessary to comply with this Directive by 
1 January 1994. They shall forthwith inform the Commission thereof. 
When Member States adopt these provisions, these shall contain a 
reference to this Directive or shall be accompanied by such reference 
at the time of their official publication. The procedure for such 
reference shall be adopted by Member States. 
2. Member States shall communicate to the Commission the text of the main 
laws, regulations and administrative decisions which they adopt in the 
field governed by this Directive. 
Art icle 9 
This Directive is addressed to the Member States. 
Done at Brussels, For the Council 
The President 
- 32 -
ANNEX 
List of deposits referred to in Article 4(2) 
1. Deposits of financial institutions within the meaning of Article 1(6) 
of Directive 89/646/EEC. 
2. Deposits of insurance companies. 
3. Deposits of the government and central administrative authorities. 
4. Deposits of provincial, regional, local or municipal authorities. 
5. Deposits of undertakings for collective investment in transferable 
securities. 
6. Deposits of pension or retirement funds. 
7. Deposits of directors, managers, members personally liable, holders of 
at least 5% of the capital of the credit institution, members of the 
external auditing bodies and depositors with similar status in 
subs idiar ies. 
8. Deposits of close relatives and third parties acting on behaIf of the 
depositors referred to at point 7. 
9. Non-nom i na t i ve depos i t s. 
10. Deposits for which the depositor has, on an individual basis, obtained 
from the credit institution rates and financial concessions which have 
helped to aggravate the financial situation of that credit institution. 
11. Debt securities issued by the credit institution. 
- 33 -
STATEMENT OF IMPACT ON COMPETITIVENESS AND EMPLOYMENT 
Title of the proposal: Coordination of laws, regulations and administrative 
provisions relating to deposit-guarantee schemes. 
1. What is the main reason for introducing the measure? 
The main reason is the need to ensure throughout the Community that, in the 
event of a financial crisis in a credit institution having its head office 
in the Community, all depositors receive a payment of up to ECU 15 000 
within three months. 
This minimum protection is also intended to prevent massive withdrawals of 
funds where rumours emerge (whether or not justified) about a bank's 
solvency. 
2. Features of the businesses concerned 
The businesses required to join a guarantee scheme are credit institutions, 
i.e. a category of Iicenced businesses subject to prudential supervision. 
Apart from the exceptions given in an exhaustive list, deposit coverage 
extends to all deposits of less than ECU 15 000 made by depositors, whether 
natural or legal persons. 
3. What direct oblioations does this measure impose on business? 
The businesses concerned, i.e. credit institutions, must join their head 
office's guarantee scheme in order to cover their depositors and those of 
their branches situated in the Community. They also have a duty to inform 
their depositors. 
- 34 -
The businesses benefiting from the deposit guarantee have no obligations 
imposed on them by the Directive itself. 
4. What indirect obligations are local authorities likely to impose on 
bus iness? 
s The branches of credit institutions having their head office outside the 
Community might be obliged to join the guarantee scheme of their host 
country. 
5. Are there any special measures in respect of SMEs? If so. what are 
they? 
There is no provision in the directive that deals specifically with SMEs 
but, to the extent that the deposits of legal persons are covered in the 
same way as those of natural persons, they wiII benefit from this extension 
of the guarantee to legal persons (not provided for in some existing 
schemes). 
6. What is the likely effect on: 
(a) the competitiveness of business? 
(b) employment? 
There should be no direct effect on competitiveness or employment. This 
measure comes into play when the solvency of the credit institution is 
seriously compromised and its recovery is, under normal circumstances, no 
longer possible. 
7. Have both sides of industry been consulted7 What are their views? 
The various European federations of credit institutions have been 
• consulted, as has EUROFIET, the body representing the employees of credit 
inst i tut ions. 
AlI the associations concerned are in favour of introducing a minimum 
payment of ECU 15 000 by way of a guarantee. They have submitted comments 
on some of the detailed rules governing that guarantee. 
ISSN 0254-1475 
COM(92) 188final 
DOCUMENTS 
EN 10 
Catalogue number : CB-CO-92-270-EN-C 
ISBN 92-77-45286-2 
Office for Official Publications of the European Communities 
L-2985 Luxembourg