Opinion of the European Central Bank of 17 October 2008 at the request of the Greek Ministry of Economy and Finance on a draft law on, inter alia, the establishment of the ‘Depositors and Investors of Credit Institutions Compensation Fund’ (CON/2008/51)
Date: 2008-10-17
Institutions: European Central Bank
Subjects: Greece, bank deposit, credit institution, financial stability, guarantee, national law, public institution

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 17 October 2008 

at the request of the Greek Ministry of Economy and Finance  

on a draft law on, inter alia, the establishment of the ‘Depositors and Investors of Credit 

Institutions Compensation Fund’ 

(CON/2008/51) 

Introduction and legal basis 

On 24 September 2008 the European Central Bank (ECB) received a request from the Greek Ministry of 

Economy and Finance for an opinion on a draft law on, inter alia, the establishment of the ‘Depositors 
and  Investors  of  Credit  Institutions  Compensation  Fund’1  (hereinafter 

law’).  On 

the  ‘draft 

10 October 2008 the ECB received a related consultation request from the Ministry on a draft provision 

raising  the  coverage  limit  of  the  present  deposit  protection  scheme  in  Greece  (hereinafter,  the  ‘draft 
amendment on the amount of guaranteed deposits’), which is to be adopted separately from the draft law2 

and  which  stems  from  the  decisions  taken  at  the  Ecofin  Council  meeting  held  in  Luxembourg  on 

7 October 2008 to address the current turmoil in the financial sector. This opinion covers both the draft 

law and the draft amendment on the amount of guaranteed deposits.   

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European Community and the third and sixth indents 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  regarding  draft 
legislative provisions3, as the draft law relates to the Bank of Greece and to rules applicable to financial 

institutions  insofar  as  they  materially  influence  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  

2  

3  

The  full  title  of the  draft  law  is  as follows:  ‘Law  on  the  Depositors  and  Investors  of  Credit  Institutions  Compensation 
Fund, the Athens Stock Exchange Members Guarantee Fund, the Dematerialised Securities System and other provisions’. 
The draft amendment on the amount of guaranteed deposits was submitted to the Greek Parliament on 9 October 2008 as 
an amendment-addendum to a draft law on the protection of borrowers which had already been submitted to Parliament 
at this point.   
OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
 
                                                 
1.  

Purpose of the draft law 

1.1  The  part  of  the  draft  law  relating  to  compensation  schemes  is  intended  to  achieve  the  following 
objectives:  (i)  replace  the  provisions  of  Law  2832/20004  currently  governing  deposit  guarantees; 

and (ii) codify the arrangements on deposit guarantees and investor compensation schemes in cases 

of  insolvency  of  credit  institutions,  with  the  view  to  establishing  a  set  of  coherent,  efficient  and 

transparent  compensation  arrangements,  enhancing  confidence  in  the  financial  system  and  in  the 

capital market. These objectives are to be achieved by the following means: 

(i) 

Institutional consolidation of Greek compensation schemes with regard to credit institutions. 

This will be achieved by establishing a single entity under the name of the ‘Depositors and 

Investors of Credit Institutions Compensation Fund’ (hereinafter the ‘Fund’) which will be 
the  compensation  scheme  for  both  deposits  and  covered  investment  services5  provided  by 
credit  institutions  to  their  clients6.  The  Fund  will  replace  the  current  ‘Hellenic  Deposit 
Guarantee Fund’7 (HDGF) which has only guaranteed compensation payments to depositors 

with credit institutions, while other entities that provide investment services and are already 

members  of  the  Athens  Stock  Exchange  Members  Guarantee  Fund  (ASEMGF)  under 
Law 2533/19978 will continue to be covered by the ASEMGF. In line with the extension of 

the  Fund’s  scope  to  cater  for  investor  protection  vis-à-vis  credit  institutions,  the  draft  law 

provides  for  two  separate  dedicated  branches  within  the  Fund,  which  would  secure 

compensation payments for depositors and for investors, as the case may be. Moreover, the 

draft  law  introduces  specific  arrangements  as  regards  the  scope  of  the  Fund’s  coverage  as 

well as its financing and governance, as referred to in paragraphs 2 to 4 of this opinion. 

(ii)  Enhancement of the Bank of Greece’s supervisory functions relating to the operation of the 

Fund 

This  arrangement,  based  on  the  supervisory  function  performed  by  the  Bank  of  Greece  in 

relation  to  the  banking  sector  in  Greece,  will  include  measures  such  as:  (i)  the  Bank  of 

4  

5  

6  

7  

8  

Law  2832/2000  on  the  codification  of  the  provisions  on  the  establishment,  organisation  and  operation  of  the  deposit 
scheme and supplementing the Statute of the Bank of Greece (FEK Vol. A 141, 13.6.2000) codified and supplemented 
the provisions of Law 2324/1995 (FEK Vol. Α 146, 17.7.1955) which, inter alia, transposed Directive 94/19/EC of the 
European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes, OJ L 135, 31.5.1994, p. 5. 
‘Covered  investment  services’  include  those  listed  in  Article  4(1)(a)  to  (d),  (f)  and  (g)  of  Law  3606/2007  on  financial 
instrument  markets  and  other  provisions  (FEK  Vol.  Α  195,  17.8.2007)  and  the  ancillary  service  referred  to  in 
Article 4(2)(a) of the same law. 
According  to  the  explanatory  memorandum  to  the  draft  law,  the  proposal  for  combined  coverage  of  deposits  and 
investment  services  provided  by  credit  institutions  has  been  put  forward  by  the  Bank  of  Greece,  the  Hellenic  Bank 
Association and the HDGF itself, as an arrangement which has also been adopted by other EU legislators (e.g. Austria, 
Luxembourg, the Netherlands and Sweden). 
The HDGF, established under Article 2 of Law 2832/2000, is a legal person governed by private law and supervised by 
the Minister for Economy and Finance.  
Law 2533/1997 on the stock exchange derivates market and other provisions (FEK Vol. Α 228, 11.11.1997) established 
the ASEMGF as a legal person governed by private law and supervised by the Hellenic Capital Market Committee. Its 
provisions  replaced  those  of  Legislative  Decree  No  3078 of  11 October  1954 establishing  the  ASEMGF’s  predecessor 
fund,  by  restructuring  and  renaming  it  in  order  to  better  meet  the  needs  of  investment  protection  and  ensure 
harmonisation  with  Directive  97/9/EC  of  the  European  Parliament  and  of  the  Council  of  3  March  1997  on  investor-
compensation schemes (OJ L 84, 26.3.1997, p. 22). 

2 

                                                 
Greece’s  power  to  decide  on  the  equivalence  of  coverage  of  Greek  branches  of  credit 

institutions having their registered office outside the EU under the respective home country 

scheme;  (ii)  closer  cooperation  between  the  Bank  of  Greece  and  the  EU  supervisory 

authority concerned in the event of non-compliance by a Greek branch of a credit institution 

with a registered office in a Member State; and (iii) enhanced representation of the Bank of 

Greece on the Fund’s Board. 

1.2  Moreover, under the draft amendment on the amount of guaranteed deposits, the deposit guarantee 

will increase from EUR 20 000 to EUR 100 000, with the rates for calculating credit institutions’ 

contributions to the deposit-guarantee scheme being adjusted accordingly. This arrangement will be 

valid until 31 December 2011 and may be extended by a decision of the Minister for Economy and 

Finance  

2.  General observations 

2.1  The ECB welcomes the consolidation of compensation schemes for both deposits and investment 

services  provided  by  credit  institutions  in  Greece,  as  it  will  increase  operational  efficiency  and 

enhance the confidence of credit institutions’ clients in the scheme responsible for compensation in 

case  of  insolvency.  However,  it  is  noted  that  according  to  the  draft  law’s  final  and  transitional 

provisions,  credit  institutions  that,  at  the  time  of  entry  into  force  of  the  draft  law,  are  already 

members of the ASEMGF will continue as such and will have no obligation to join the Investors’ 

Cover  Branch  (ICB).  This  means  that  some  credit  institutions  will  not  join  the  ICB  of  the  Fund. 

The ECB notes that to ensure a level playing field, all credit institutions should be subject to the 

same regime as regards the calculation of contributions payable to the compensation scheme.  

2.2  Moreover,  the  ECB  welcomes  the  draft  amendment  on  the  amount  of  guaranteed  deposits 

increasing the guaranteed amount for deposits to EUR 100 000 in accordance with the conclusions 
of the Ecofin Council held on 7 October 20089. This proposed measure should facilitate prevention 

of the financial turmoil’s impact on the real economy in Greece, while improving the stability of 

the banking system and protecting the deposits of individuals.   

3. 

Financing of the Fund  

3.1  The  initial  capital  of  the  Fund  will  be  taken  over  from  the  HDGF,  to  which  the  Fund  is  the 

universal successor, and which has had its capital covered as to 60 % by the Bank of Greece and as 
to  40  %  by  those  credit  institutions  which  are  members  of  the  Hellenic  Bank  Association10.  The 

Fund’s  assets  will  be  grouped  in  two  distinct  branches,  namely  the  Depositors’  Cover  Branch 

9  

10  

The Council (Ecofin) agreed in its 7 October meeting that ‘all Member States would, for an initial period of at least one 
year,  provide  deposit  guarantee  protection  for  individuals  for  an  amount  of  at  least  EUR  50  000,  acknowledging  that 
many Member States determine to raise their minimum protected amount to EUR 100 000’. See the press release of the 
2894th Council meeting (13784/08), available on the Council’s website, www.consilium.europa.eu. 
See Article 2(5) of the draft law. 

3 

 
 
                                                 
(DCB)  and  the  ICB  and  will  be  exclusively  dedicated  to  serving  their  respective  purposes,  i.e. 
compensation  payments  to  depositors  and  investors  concerned11.The  Fund’s  operating  costs 

relating to the DCB and the ICB will be determined on an annual basis by a decision of the Board. 

Specifically, the costs incurred by the ICB will be allocated to each participating credit institution 
in proportion to the value of its participation12. 

3.2  Article  4  of  the  draft  law  lists  the  DCB’s  resources13  and  Article  4(4)  specifies  the  amount  of  a 

credit  institution’s  regular  annual  contribution  and  the  details  of  its  calculation  on  the  basis  of 

scales.  By  decision  of  the  Fund’s  Board,  the  contribution  calculated  will  be  adjusted,  from 

1 January  2009  onwards,  using  a  coefficient  ranging  from  0.90  to  1.10,  according  to  the  ranking 

which, solely for the purposes of the application of the draft law’s provisions establishing the Fund, 

will  be  attributed  to  the  credit  institution  concerned  by  a  decision  of  the  Bank  of  Greece.  The 

ranking  will  take  into  account  the  criteria  of  capital  adequacy,  liquidity  and  adequacy  of  internal 

audit  systems,  as  reflected  in  Law  3601/2007  implementing  Directives  2006/48/EC  and 
2006/49/EC14. In this respect the ECB welcomes the principle of risk-based premiums, which will 

align the calculation of a credit institution’s contributions to the Fund to its risk profile. 

4. 

Governance of the Fund  

4.1  Article 23 of the draft law introduces certain changes to the current regime, namely it proposes an 

increase  to  the  number  of  members  of  the  Fund’s  Board  from  seven  to  nine.  The  Board  will 

continue to be chaired by one of the Deputy Governors of the Bank of Greece, the other members 

coming  from  the  Ministry  of  Economy  and  Finance  (one  member),  the  Bank  of  Greece  (three 

members  as  opposed  to  two  under  the  current  regime),  the  Hellenic  Bank  Association  (three 

members)  and  the  Association  of  Cooperative  Banks  of  Greece  (one  member).  It  also  introduces 

the  possibility  to  renew  the  Board’s  five-year  mandate  more  than  once  and  enables  the  Board 

Chairman to delegate representation of the Fund before any authority or third party, judicially and 

extra-judicially  to  another  Board  member,  the  Director  or  another  officer  of  the  Fund.  The  ECB 

11  

12  
13  

14  

In  accordance  with  Article  2(6)  of  the  draft  law,  the  Fund’s  DCB  assets  are  clearly  distinct  from  its  ICB  assets,  as 
specified in the draft law. Moreover, in accordance with Article 4(10) of the draft law, contributions to the DCB’s initial 
capital and any other form of contribution made by a credit institution to the DCB do not constitute assets of the credit 
institution  and  may  not  be  refunded.  To  contrast,  Article  5(2)  stipulates  that  ICB  assets  constitute  a  ‘group  of  assets’ 
managed by the Fund, the individual components of which shall be jointly owned by the participating credit institutions 
in  proportion  to  their  participation  therein.  Consistently,  Article  8  specifies  that  in  the  event  that  a  credit  institution 
withdraws from the ICB, for any legal reason, its individual share’s value, as assessed at the time of withdrawal, will be 
refunded to it in cash. 
See Article 24(4) of the draft law. 
These  include the  following:  (i) initial  and annual  regular  contributions  of  credit  institutions  participating  in the DCB; 
(ii) an additional contribution levied in the event that DCB resources are insufficient to cover compensation payments; 
(iii)  donations;  and  (iv)  revenue  deriving  from  liquidation  of  claims  and  management  of  DCB  assets.  Similarly,  ICB 
resources are listed in Article 6 of the draft law.  
Directives  2006/48/EC  of  the  European  Parliament  and  of  the  Council  of  14  June  2006  relating  to  the  taking  up  and 
pursuit of the business of credit institutions (recast) (OJ L 177, 30.6.2006, p. 1) and 2006/49/EC on the capital adequacy 
of investment firms and credit institutions (recast) (OJ L 177, 30.6.2006, p. 201), implemented by Law 3601/2007 on the 
taking up and pursuit of the business of credit institutions, on capital adequacy of credit institutions and investment firms 
and other provisions (FEK Vol A 178/1.8.2007). 

4 

 
                                                 
further  notes  that  the  draft  law,  as  referred  to  in  paragraph  1.1(ii)  above,  transfers  certain 
supervisory powers previously entrusted to the HDGF15 to the Bank of Greece. The ECB welcomes 

these  proposed  amendments  to  the  extent  that  they  maintain  a  significant  level  of  central  bank 

involvement. 

4.2  As a general point, the ECB repeats its earlier observation that central banks are in general in the 

best  position  to  take  on  responsibility  for  financial  stability,  given  their  insight  into  money  and 

financial  market  developments  and  their  involvement  in  payment  systems  and  monetary  policy 
operations16. At the same time, as deposit-guarantee schemes in particular are a key element of the 

financial safety net, the governance framework should ensure that the important function of such 
schemes  is  carried  out  professionally  and  efficiently17.  Moreover,  effective  coordination  with  the 

overall role of central banks in safeguarding financial stability should be ensured. This aim may be 

achieved,  inter  alia,  through  maintaining  an  adequate  level  of  involvement  of  the  central  bank  in 

the governance and regulation of national deposit-guarantee schemes.  

5. 

Concluding remarks  

For reasons  of consistency and to ensure clarity and legal certainty, the ECB recommends that the two 

sets of provisions, namely the draft law and the draft amendment on the amount of guaranteed deposits, 

should be properly aligned. In particular, as the latter amends Law 2832/2000 and will be adopted prior to 

the draft law, which in turn will replace Law 2832/2000 itself, the draft law should be amended to reflect 

the  exceptional  nature  and,  thus,  the  limited  life  of  the  draft  amendment  on  the  amount  of  guaranteed 

deposits, for example by including a transitional provision or by any other means that the Greek legislator 

considers appropriate.  

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 17 October 2008. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

15  
16  

17  

See Article 3(4) and Article 22(2) of the draft law. 
See e.g. paragraph 7 of ECB Opinion CON/2001/10 of 25 May 2001 at the request of the Austrian Ministry of Finance on 
a draft Federal law establishing and organising the financial market supervisory authority. 
See  Financial  Stability  Forum,  ‘Guidance  for  Developing  Effective  Deposit  Insurance  Systems’,  September  2001, 
point V.1(c)  (‘Basic  governance  arrangements’),  p.  19.  According  to  these  recommendations,  the  governing  body  of  a 
deposit-guarantee  scheme  should  include  individuals  with  the  requisite  knowledge  to  allow  them  to  understand  the 
environment in which the scheme operates. 

5