Commission staff working document - Impact Assessment - Accompanying document to the Proposal for a Directive …/…/EU of the European Parliament and of the Council on Deposit Guarantee Schemes [recast] and to the Report from the Commission to the European Parliament AND to the Council Review of Directive 94/19/EC on Deposit Guarantee Schemes COM(2010) 368 COM(2010) 369 SEC(2010) 835
Date: 2010-07-12
Institutions: European Commission
Subjects: bank deposit, banking, credit guarantee, credit institution, financial institution, impact study, management audit

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EUROPEAN COMMISSION 

Brussels, 12.7.2010 
SEC(2010) 834 final 

COMMISSION STAFF WORKING DOCUMENT 

IMPACT ASSESSMENT 

Accompanying document to the 

Proposal for a 

DIRECTIVE …/…/EU OF THE EUROPEAN PARLIAMENT AND OF THE 
COUNCIL 

on Deposit Guarantee Schemes [recast] 

and to the  

REPORT FROM THE COMMISSION  
TO THE EUROPEAN PARLIAMENT AND TO THE COUNCIL 

Review of Directive 94/19/EC on Deposit Guarantee Schemes 

COM(2010) 368 
COM(2010) 369 
SEC(2010) 835 

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TABLE OF CONTENTS 

INTRODUCTION........................................................................................................ 5 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES... 6 

POLICY CONTEXT AND SCOPE OF THE IMPACT ASSESSMENT ................... 7 

Policy context............................................................................................................... 7 

Scope of the impact assessment ................................................................................... 8 

PROBLEM DEFINITION ........................................................................................... 9 

Differences in the level and scope of coverage of DGS .............................................. 9 

Inadequate payout procedures.................................................................................... 16 

Insufficient depositor information.............................................................................. 18 

Inappropriate financing of DGS................................................................................. 19 

Limited mandates of DGS.......................................................................................... 21 

Fragmentation and limited cross-border cooperation between DGS ......................... 22 

Exemption of mutual and voluntary guarantee schemes from the DGS Directive .... 23 

Baseline scenario........................................................................................................ 24 

SUBSIDIARITY ........................................................................................................ 27 

OBJECTIVES ............................................................................................................ 27 

POLICY OPTIONS: IMPACT AND COMPARISON ............................................. 30 

Level of coverage....................................................................................................... 31 

Exemptions from the coverage level.......................................................................... 34 

Scope of coverage: eligibility of depositors............................................................... 37 

Scope of coverage: protected products ...................................................................... 39 

Payout delay and modalities....................................................................................... 42 

Capability of DGS to deal with payout situations...................................................... 48 

Depositor information ................................................................................................ 50 

Funding mechanisms and levels................................................................................. 52 

Bank contributions to DGS ........................................................................................ 59 

1. 

2. 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

4.8. 

5. 

6. 

7. 

7.1. 

7.2. 

7.3. 

7.4. 

7.5. 

7.6. 

7.7. 

7.8. 

7.9. 

7.10.  Mandate of DGS ........................................................................................................ 64 

7.11.  Cross-border cooperation of DGS and a pan-EU DGS.............................................. 67 

7.12.  Other issues ................................................................................................................ 70 

8. 

8.1. 

8.2. 

8.3. 

9. 

OVERALL IMPACT OF THE PREFERRED POLICY OPTIONS ......................... 71 

Micro- and macroeconomic impacts of the preferred policy options ........................ 71 

Social impact.............................................................................................................. 78 

Administrative burden................................................................................................ 78 

MONITORING AND EVALUATION ..................................................................... 79 

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LIST OF ANNEXES 

ANNEX A:   Comparison of the Commission proposal with the final text of Directive  

2009/14/EC ........................................................................................................ 80 

ANNEX B:   Inclusions in the scope of coverage applied in Member States ......................... 81 

ANNEX C:   Differences between DGS and other financial protection schemes  .................. 82 

ANNEX D:   DGS mandates broader than 'payboxes' in Member States  ............................... 83 

ANNEX E:   Comparison of selected provisions of Directives DGS (94/19/EC) and CRD 

(2006/48/EC)  ..................................................................................................... 84 

ANNEX F:   Topping up ......................................................................................................... 85 

ANNEX G:   Mutual and voluntary guarantee schemes  ......................................................... 87 

ANNEX H:   Additional issues raised by stakeholders  ........................................................... 91 

ANNEX J:   Preferred options (summary)  ............................................................................. 92 

ANNEX K:   Costs analysis: impact on DGS and member banks (summary) ........................ 94 

LIST OF STATISTICAL ANNEXES 

Statistical annexes: sources, definitions and methodologies ................................................... 97 

ANNEX 1:   Coverage levels in EU Member States and EEA countries before and after  

the aggravation of the financial crisis (as of 30 October 2009) ....................... 100 

ANNEX 2:   Data on the amount and number of deposits in Member States (as of 31 

December 2007)  .............................................................................................. 103 

ANNEX 3:   Potential impact of the harmonised coverage levels in terms of deposit 

protection ......................................................................................................... 104 

ANNEX 4:   Potential impact of the harmonised coverage levels on bank contributions to 

DGS  ................................................................................................................. 106 

ANNEX 5:   Potential impact of the harmonised coverage levels on operating profits  

of banks  ........................................................................................................... 107 

ANNEX 6:   Potential impact of the harmonised coverage levels on depositors  ................. 108 

ANNEX 7:   Average deposits held by households in Member States  ................................ 109 

ANNEX 8:   Selected data on house prices in Member States ............................................. 110 

ANNEX 9:   Potential exemptions from the fixed level of coverage – temporary high  

deposit balances ............................................................................................... 111 

ANNEX 10:  Selected data on deposits and depositors in the EU (incl. enterprises)  ........... 114 

ANNEX 11:  Potential impact of the inclusion or exclusion of some depositors into/from  

the scope of coverage  ...................................................................................... 116 

ANNEX 12:  Selected data relating to the payout process in the EU  ................................... 118 

ANNEX 13:  DGS funds and contributions to DGS  ............................................................. 121 

ANNEX 14:  Potential total costs of setting a target level for DGS under various scenarios 125 

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ANNEX 15:  Number of Member States able to handle the costs under various scenarios  

on a target level for DGS ................................................................................. 129 

ANNEX 16:  Current capability of DGS to cope with a bank failure of a certain size (using  

ex-ante funds, contributions and additional contributions available under the 
current regime)  ................................................................................................ 130 

ANNEX 17:  Current capability of DGS to cope with a bank failure of a certain size (using  

ex-ante and additional contributions available under the current regime)  ...... 131 

ANNEX 18:  Harmonized scenarios on DGS funding: potential impact on total DGS funds 

and bank contributions  .................................................................................... 133 

ANNEX 19:  Harmonized scenarios on DGS funding: potential impact on banks  

– variation in bank operating profits ................................................................ 136 

ANNEX 20:  Harmonized scenarios on DGS funding: potential impact on depositors ........ 137 

ANNEX 21:  Potential cumulative impact on banks and depositors during the first 5 years: 

harmonized scenario on payout, funding and scope/level ofcoverage  ............ 139 

ANNEX 22:  Potential cumulative impact of various harmonised scenarios on banks  ........ 141 

ANNEX 23:  Results for the harmonized scenario on borrowing by DGS  ........................... 142 

ANNEX 24:  Estimated administrative costs if the de-minimis rule is applied  .................... 143 

ANNEX 25:  Potential models for calculating risk-based contributions ............................... 144 

ANNEX 26:  Funds invested by ex-ante DGS  ...................................................................... 146 

ANNEX 27:  Permanent, temporary and additional workforce of DGS  ............................... 147 

ANNEX 28:  Potential structure of a pan-EU DGS  .............................................................. 148 

ANNEX 29: Mutual borrowing of DGS – maximum amount to be lent by DGS to face 

potential failures ............................................................................................... 149 

ANNEX 30: Historical database of DGS interventions ......................................................... 150 

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This  document  commits  only  the  Commission  services  involved  in  its  preparation  and  does 
not prejudge the final form of any decision to be taken by the Commission 

1. 

INTRODUCTION 

No  bank,  whether  sound  or  ailing,  holds  enough  liquid  funds  to  redeem  all  or  a  significant 
share of its deposits on the spot. This is why banks are susceptible to the risk of bank runs if 
depositors  believe  that  their  deposits  are  not  safe  and  try  to  withdraw  them  all  at  the  same 
time. This can seriously affect the whole economy. 

Since 1994, Directive 94/19/EC on Deposit Guarantee Schemes1 (DGS) has ensured that all 
EU  Member  States  have  in  place  a  safety  net  for  depositors  if  banks  fail  to  pay.  First  and 
foremost,  bank  failures  are  prevented  by  the  prudential  supervision  ensured  by  national 
supervisory  authorities  and  harmonised  throughout  the  EU  to  a  relatively  high  extent.  If 
nevertheless  a  bank  has  to  be  closed,  its  DGS  steps  in  and  reimburses  depositors  up  to  a 
certain ceiling (i.e. the coverage level), thereby financing depositors' needs. The existence of 
DGS also means that most depositors (those who are fully covered) do not have to participate 
in  lengthy  insolvency  procedures  which  usually  lead  to  insolvency  dividends  representing 
only a fraction of the original claims. 

The events in 2007 and 2008 have shown that the existing fragmented system of DGS has not 
delivered on the objectives set by the Directive in terms of ensuring depositor confidence and 
maintaining  financial  stability  in  times  of  economic  stress.  The  Commission  has  therefore 
been requested to comprehensively review Directive 94/19/EC. This impact assessment aims 
at providing for an evidence-based analysis of the existing and potential problems stemming 
from the current guarantee system, spells out possible policy options designed to address the 
problems in line with the objectives set, shows the possible impacts of the policy options and 
tests these options against the effectiveness, efficiency and consistency criteria. 

The  Commission  work  on  DGS  is  part  of  a  package  on  guarantee  schemes  in  the  financial 
sector  consisting  of  DGS,  insurance  guarantee  schemes  (IGS)  and  investor  compensation 
schemes (ICS). The main objective of IGS is the protection of policyholders in the event of an 
insurance company failure. The main purpose of ICS is to compensate investors if a firm fails 
and is unable to repay money in connection with investment services or if it is unable to return 
a  financial  instrument  to  its  client.  Such  a  claim  typically  arises  if  there  is  fraud  or  theft. 
However, a decline in the value of an investment (market risk) is not covered by any scheme. 
More  details  about  the  commonalities  and  differences  between  these  schemes  are  set  out  in 
Annex C. 

The  revision  of  the  Directive  on  Deposit  Guarantee  Schemes  will  be  only  one  among 
numerous  ongoing  initiatives  to  enhance  financial  stability  (e.g.  the  revisions  of  the  Capital 
requirements  Directive  2006/48/EC  and  ongoing  work  on  crisis  management  and  bank 
resolution). 

1  

OJ L 135, 31.5.1994. 

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2. 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  

This impact assessment accompanies both the legislative proposal and the report fulfilling the 
Commission's obligations under Article 12 of Directive 2009/14/EC that entered into force on 
16  March  20092.  The  Directorate-General  Internal  Market  and  Services  (DG  MARKT)  has 
been in the lead (items 74 and 76 on its work programme). Sections 4.1.1, 4.4.2, 4.5, 4.6, 7.9, 
7.10 and 7.12 relate to the report and all other chapters concern the legislative proposal. 

The  Inter-Service  Steering  Group  included  the  following  Directorates-General:  Secretariat 
General,  Legal  Service,  Economic  and  Financial  Affairs,  Employment  and  Social  Affairs, 
Health and Consumers, Competition, Enterprise and Industry, Taxation and Customs Union, 
and  the  Joint  Research  Centre  (JRC).  The  group  met  in  February,  April,  May,  July, 
September,  November  2009  and  January  2010.  The  minutes  of  the  last  meeting  have  been 
transmitted to the IA Board. The European Central Bank was also consulted in the course of 
preparation of the IA report. The JRC gathered numerical and statistical information for the 
IA report3. All figures are quoted from a draft JRC report unless indicated otherwise4.  

External expertise was used to prepare this proposal. In March 2009, an informal roundtable 
with  experts  was  held5.  Member  States'  expertise  was  provided  at  the  three  meetings  of  the 
Working Group on Deposit Guarantee Schemes (DGSWG) – in June and November 2009 and 
February 2010. In the context of the Commission Communication of 2006 on the review of 
the  DGS  Directive,  the  JRC  was  asked  to  submit  reports  on  the  coverage  level  (2005),  the 
possible  harmonisation  of  funding  mechanisms  (2006  and  2007),  the  efficiency  of  deposit 
guarantee schemes (2008) and the possible models for introducing risk-based contributions in 
the  EU  (2008  and  2009)6.  This  work  was  supported  by  the  European  Forum  of  Deposit 
Insurers  (EFDI),  which  in  2008  also  finalised  several  reports  on  specific  issues7.  This  work 
has been taken into account for the current proposal. 

A  public  consultation  was  held  from  29  May  to  27  July  2009.  All  104  contributions  and  a 
summary  report  have  been  published  in  August  20098  and  stakeholders'  views  have  been 
taken into account in this impact assessment. 

This impact assessment was presented to the Impact Assessment Board on 24 March 2010. In 
its  opinion  issued  after  the  meeting,  the  Board  assessed  that  "the  report  [i.e.  this  impact 
assessment]  presents  a  large  amount  of  analysis  in  a  clear  manner"  and  "quantitative 
estimates  are  provided  for  most  impacts".  Moreover,  as  stated  by  the  Board,  "the  report 
largely  respects  the  standards  set  out  in  the  IA  guidelines  and  presents  complex  issues  in 
understandable  language".  At  the  same  time,  the  Board  made  some  recommendations  for 
improvement.  They  were  related  to  (i)  strengthening  the  evidence  and  the  arguments 
underpinning the problems with the current level of harmonisation; (ii) providing a stronger 
justification for the preferred options; (iii) assessing the size of the most relevant impacts and 
the  possibility  of  mitigating  measures  for  individual  stakeholders;  and  (iv)  integrating  more 

2 
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4 
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6 
7 
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OJ L 68, 13.3.2009. 
In principle, the JRC calculations are based on the data from all Member States (if the data from some 
Member States are unavailable, the calculations are based on the remaining Member States). 
The final JRC report will be published in spring 2010. 
For more details, see http://ec.europa.eu/internal_market/bank/guarantee/index_en.htm.  
Ibid.  
The relevant reports issued by EFDI in May 2008 are all available at www.efdi.eu. 
See http://ec.europa.eu/internal_market/consultations/2009/deposit_guarantee_schemes_en.htm. 

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transparently  the  results  of  the  public  consultation.  These  recommendations  were  taken  into 
account in the following way:  

The  evidence  base  has  been  further  strengthened  given  the  scale  of  the  suggested  policy 
changes  and  the  cost  implications  (see  in  particular  7.8).  Several  quantitative  annexes  have 
been  added.  A  more  extensive  analysis  of  the  problems  with  the  current  level  of 
harmonisation has been provided (see in particular 4.1). The subsidiarity and proportionality 
of  the  suggested  increase  in  harmonisation  and  the  phasing-out  of  national  DGS  features 
offering  higher  coverage  has  been  assessed  in  greater  depth  (see  5.).  The  report  has  also 
provided a stronger justification for specific parameters, notably the nominal coverage level 
(see 7.1), the preference for a single payout within a short delay (see 7.5), the split between 
ex-ante  and  ex-post  financing  and  the  target  level  for  funds  at  DGS  disposal  (see  7.8).  The 
report has indicated clearly (where appropriate) where these will be particularly relevant for 
certain  Member  States  or  stakeholders.  Finally,  the  results  of  the  public  consultation  have 
been visibly and transparently integrated into the analysis (see in particular Chapter 7). Some 
annexes were added in order to accommodate the comments of the Board. 

3. 

POLICY CONTEXT AND SCOPE OF THE IMPACT ASSESSMENT  

3.1. 

Policy context 

The Council of the European Union agreed on 7 October 2008 that it was a priority to restore 
confidence and proper functioning of the financial sector. It committed to take all necessary 
measures  to  protect  the  deposits  of  individual  savers  and  welcomed  the  intention  of  the 
Commission  to  bring  forward  urgently  an  appropriate  proposal  to  promote  convergence  of 
DGS. The Council also agreed 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  
€50 000,  acknowledging  that  many  Member  States  de termined  to  raise  their  minimum  to  at 
least €100 000.  

Following that, on 15 October 2008, the Commission adopted a proposal to amend the DGS 
Directive. It underwent some changes during the legislative proceedings and the final text was 
published on 13 March 2009 (see Annex A).  

There  was  general  agreement  between  the  Council,  the  European  Parliament  and  the 
Commission that those amendments could only be an emergency quick-fix measure when the 
crisis aggravated in order to restore and maintain the confidence of depositors. The need for 
swift negotiations (adoption by the European Parliament within two months) would not have 
allowed  a  satisfactory  response  to  all  open  issues.  This  is  why  the  amendments  include  a 
broad review clause on all aspects of DGS.  

The  need  to  reinforce  DGS  by  appropriate  legislative  proposals  has  been  reiterated  in  the 
Commission Communication of 4 March 2009 on 'Driving European recovery'9 and is part of 
the political guidelines of President Barroso of 3 September 2009. 

In its Communication of 20 October 200910, the Commission consulted on the tools that are 
considered necessary for an EU crisis management framework. These tools range from 'early 

9 
10  

COM(2009)114, p. 4. 
COM(2009)561. 

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intervention'  actions  by  banking  supervisors  aimed  at  correcting  irregularities  at  banks,  to 
bank  resolution  measures  which  involve  the  reorganisation  of  ailing  banks,  to  insolvency 
frameworks  under  which  failed  banks  are  wound  up.  The  current  review  of  DGS  should  be 
seen in this context as well since DGS are only triggered if a bank cannot be saved by other 
measures. The better the crisis management tools are, the lower the probability that DGS are 
triggered.  Moreover,  a  discussion  of  crisis  management  also  raises  the  question  to  which 
extent DGS should be actively involved in it provided that they are soundly financed, which 
will  be  dealt  with  in  section  7.10  of  this  report  and  in  forthcoming  initiatives  on  crisis 
management. 

3.2. 

Scope of the impact assessment  

This  impact  assessment  is  a  basis  for  both  the  report  to  the  European  Parliament  and  the 
Council and for the legislative proposal to amend Directive 94/19/EC. It covers the following 
issues which are determined by the review clause of Article 12(1) of the Directive: 

“(a)  the  harmonisation  of  the  funding  mechanisms  of  deposit-guarantee  schemes  addressing,  in 
particular, the effects of an absence of harmonisation in the event of a cross-border crisis, in regard to 
the availability of the compensation payouts of the deposit and in regard to fair competition, and the 
benefits and costs of such harmonisation; 

(b)  the  appropriateness  and  modalities  of  providing  for  full  coverage  for  certain  temporarily 
increased account balances; 

(c) possible models for introducing risk-based contributions; 

(d) the benefits and costs of a possible introduction of a Community deposit-guarantee scheme; 

(e)  the  impact  of  diverging  legislations  as  regards  set-off,  where  a  depositor’s  credit  is  balanced 
against its debts, on the efficiency of the system and on possible distortions, taking into account cross-
border winding-up; 

(f) the harmonisation of the scope of products and depositors covered, including the specific needs of 
small and medium enterprises and local authorities; 

(g)  the  link  between  deposit-guarantee  schemes  and  alternative  means  for  reimbursing  depositors, 
such as emergency payout mechanisms. 

If necessary, the Commission shall put forward appropriate proposals to amend this Directive.” 

Furthermore, Article 10(1) of Directive 2009/14/EC sets out that: 

“by 16 March 2011, the Commission shall submit to the European Parliament and to the Council a 
report  on  the  effectiveness  and  delays  of  the  payout  procedures  assessing  whether  reduction  to  10 
working days of the delay referred to in the first subparagraph could be implemented.” 

Article 7 of Directive 2009/14/EC required Member States to increase the coverage level to at 
least €50 000 by the end of June 2009 and obliged 
them to implement the coverage level of 
€100  000  by  the  end  of  2010.  This  level  will  be  fixed,  i.e.  in  general  DGS  will  not  be 
permitted to offer higher or lower coverage.  

The Commission has been tasked to assess retroactively whether this increase is appropriate 
and  whether  it  is  viable  for  Member  States.  In  this  context,  it  has  to  be  borne  in  mind  that 
DGS are financed by banks and the Commission intends to maintain this requirement. That 
means that the budget of Member States is not directly concerned by the DGS Directive. The 
recent crisis has shown that in a systemic crisis, DGS may reach their limits. However, even if 
in such cases governments stepped in under strict obedience of state aid rules, this would not 

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be triggered under a legal obligation in the DGS Directive and 'viability for Member States' is 
therefore not subject of this impact assessment11.  

4. 

PROBLEM DEFINITION  

Currently,  there  are  39  DGS  in  27  Member  States.  They  are  very  different  as  regards  the 
number of member banks (ranging between 6 and 1209 in 2008), their human and financial 
resources  (between  0  and  168  persons  of  permanent  staff  –  see  Annex  27),  their 
administrative  setup  (16  schemes  are  private,  13  schemes  are  public,  10  schemes  are 
characterised  by  both  public  and  private  elements)  and  the  available  ex-ante  financial 
resources  (between  €0  and  €6.5  billion  in  2007 
–  see,  for  example,  Annex  13).  In  some 
Member  States,  notably  in  DE  and  AT,  there  are  also  mutual  and  voluntary  guarantee 
schemes, which reinforce or replace  statutory DGS subject to the Directive. 

The problems inherent to this fragmentation of DGS are spelled out below and summarised in 
a 'problem tree' at the end of this chapter.  

4.1. 

Differences in the level and scope of coverage of DGS 

4.1.1.  Diverging and inappropriate level of coverage 

The approach of minimum harmonisation, introduced by the Directive 94/19/EC, has resulted 
in significant differences between the coverage levels in the EU. They currently range from 
the minimum of €50 000 in nine Member States to €103 291 in IT 12 (see Annex 1 for more 
details).  The  coverage  ratios,  i.e.  the  ratios  between  available  DGS  funds  and  eligible 
deposits, are also very different throughout the EU (see Annex 16).When the financial crisis 
aggravated  in  autumn  2008,  most  Member  States  either  raised  their  coverage  levels  to  €50 
000 or €100 000 or issued unlimited guarantees,  sometimes covering not only deposits but all 
liabilities  of  banks.  First,  on  20  September  2008,  the  Irish  government  announced  its 
commitment  to  provide  increased  coverage  of  €100  000  for  Irish  banks  but  for  a  few  days 
excluding subsidiaries of foreign banks. Moreover, the government law of 30 September 2008 
gave  temporary  unlimited  state  guarantees  for  major  Irish  banks.  As  a  result,  depositors 
quickly shifted money to banks covered by higher or unlimited guarantees, notably from UK 
to IE13. This created heavy liquidity strains to the banks not covered by such guarantees. In 
this  situation,  in  early  October  2008,  the  UK  authorities  were  forced  to  raise  the  coverage 
level from £35 000 to £50 000. In order to avoid competitive disadvantages and prevent the 
outflow of deposits, other Member States were also forced to increase radically their coverage  
(for  example,  in  early  October  2008,  AT  adopted  law  on  temporary  unlimited  coverage  for 
individuals,  and  the  governments  in  GR  and  DE  also  declared  unlimited  deposit  guarantees 
but  they  were  not  followed  by  any  legislative  action).  Those  actions  were  undertaken 
unilaterally in an uncoordinated way, and – as they were followed by other Member States – 
contributed to serious competitive distortion between Member States, undermining depositor 
confidence  and  threatening  the  overall  stability  of  the  EU  financial  markets.  In  order  to 

11  

12 
13 

However,  since  the  fiscal  support  measures  for  banks  in  the  financial  crisis,  in  particular  the 
recapitalisation measures (expressed as a percentage of eligible deposits) were by far more expensive 
than the measures proposed here, it can be concluded that the increase in coverage level introduced by 
Directive 2009/14/EC would be viable even if governments were forced to repay depositors. 
In Norway (EEA country), the coverage level is equivalent to over €240 000. 
http://www.breakingnews.ie/ireland/savers-shifting-cash-to-irish-banks-379909.html; 
http://www.guardian.co.uk/politics/2008/oct/02/alistairdarling.ireland.  

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maintain  depositor  confidence  and  prevent  runs  on  banks,  the  ECOFIN  Council  had  to 
intervene urgently14.  

Therefore, the above experience confirms two aspects: 

- the approach of minimum harmonisation as to coverage levels lead to unwanted side-effects 
and seriously jeopardised financial stability, and, on the other hand 

- the level of coverage as stipulated by Directive 94/19 (minimum €20 000) was too low .  

This  current  level  of  coverage  is  insufficient  since  even  before  the  crisis  (in  2007),  the 
average  household  deposits  amounted  to  more  than  €50  000  in  at  least  five  Member  States 
and were only slightly below this amount in two other Member States (see Annex 7).15 The 
events have also shown that there is a lack of cooperation between Member States, which is 
aggravated by the fragmentation of DGS (several DGS in many Member States) that makes 
cooperation even more difficult. 

Moreover, under a coverage level of €50 000 16, only 91% of the number of eligible deposits 
would  be  covered17.  This  means  that  at  least  9%  of  depositors  are  likely  to  run  on  a  bank. 
Given that many depositors perceive themselves wealthier than they are, at a coverage level of 
€  50  000,  there  might  even  be  more  than  9%   running  on  their  bank.  Papers  of  the  Basel 
Committee for Banking Supervision define deposits as 'unstable' if there is a run-off-factor of 
7.5% of depositors18. A coverage level at €50 000 would therefore be dangerously low. 

As to the minimum harmonisation, the threat to consumer's confidence and financial stability 
will exist as long as there are different coverage levels in Member States. In this context, it 
should  be  noted  that  sizeable  deposit  movements,  based  solely  on  one  factor  (the  coverage 
level),  may  involve  significant  costs  for  depositors  (as,  for  example,  they  may  lose  some 
interest rate earnings due to switching from one bank to another), banking industry (as such 
sudden  and  significant  outflow  of  deposits  may  create  heavy  liquidity  strains  to  the  banks 
experiencing it), as well as real economy (as banks may limit their lending activity in times of 
financial instability, and eventually government intervention and the use of public funds may 
be necessary).  

14  

15  

16 

17 

18 

The ECOFIN Council agreed on 7 October 2008 that all Member States would, for an initial period of 
at least one year, provide deposit protection for individuals for at least € 50 000, acknowledging that 
many  Member  States  had  already  determined  to  raise  their  minimum  to  at  least  €  100  000.  The 
ECOFIN  Council  also  welcomed  the  intention  of  the  Commission  to  bring  forward  urgently  an 
appropriate proposal to promote convergence of DGS. 
In particular,  the  coverage  level  of  €50 000  is  inappropriate  for  the  old Member  States  (EU-15).  The 
average size of household deposits in the EU-15 was about €41 400 as of end-2007. Assuming similar 
deposit growth rates as in the previous years (about 5% per year), one could expect an average deposit 
in those Member States of roughly €53 000 or €58 000 within the next 3-5 years respectively.  
Directive 2009/14/EC required Member States to increase the coverage level to at least €50 000 by end 
of June 2009 and obliges them to implement coverage level of €100 000 by the end of 2010 
It would not be useful to refer to total deposits since they contain a large part of ineligible deposits (i.e. 
by  financial  institutions)  and  their  comparison  with  covered  deposits  would  consequently  not  lead  to 
relevant results.  
Basel  Committee  on  Banking  Supervision,  International  framework  for  liquidity  risk  measurement, 
standards and monitoring, December 2009/April 2010. 

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As  indicated  in  recent  international  research19,  differences  in  deposit  insurance  guarantees 
across countries (as well as within a given country, i.e. co-existing different levels of deposit 
insurance  for  host-country  banks  and  branches of  foreign  banks)  may  have  implications  for 
competition  among  banks  operating  in  these  markets  as  well  as  give  rise  to  consumer 
protection  issues.  It  is  also  argued  that  deposit  insurance  coverage  –  like  any  guarantee  – 
gives  rise  to  moral  hazard  and  it  is  most  relevant  in  the  case  of  either  implicit  or  explicit 
provision  of  unlimited  coverage  (such  as  those  announced  by  some  governments  in  autumn 
2008).  Finally,  speaking  of  moral  hazard  and  unlimited  coverage,  it  is  argued  that  once  a 
government granted (limited or unlimited) guarantees, there may be a general perception that 
a government guarantee will always be made available during a crisis situation.  

Moreover, in times of stability, some depositors might base their choice of product or service 
not on its price and quality but on the merits of the DGS that covers it, potentially distorting 
competition and limiting the benefits of the Internal Market since banks cannot choose their 
DGS.  On  the  contrary,  it  could  be  argued  that  depositors  might,  in  order  to  avoid  having 
deposits above the coverage level, split up deposits and open accounts at several banks, which 
could  actually  enhance  competition.  However,  it  should  be  considered  that  such  behaviour 
would  seem  to  highly  depend  on  the  product  (with  savings  accounts  seeming  easier  to  split 
than  current  accounts),  on  banks'  policies,  in  particular  'product  tying',  i.e.  offering  better 
conditions if savings and current accounts are held at the same bank, and on the bank fees that 
could  multiply.  In  UK,  splitting  up  deposits  was  considered  'accidental'20  and  in  the  public 
consultation, on request only anecdotal evidence was provided that sometimes such splitting 
had been observed.  

The current Directive intends to mitigate such distortions by topping up arrangements. For a 
better  understanding  of  their  function,  it  is  essential  to  know  that  the  sole  responsibility  to 
reimburse depositors lies with the DGS of the country where the bank has its registered seat, 
regardless whether the bank is a stand-alone company or a subsidiary controlled by another 
company. This responsibility extends to all legally dependent parts of a bank, i.e. its branches, 
even if they are located in another Member State. 

However,  in  case  of  branches,  if  the  coverage  in  the  host  country  is  higher  or  more 
comprehensive than in the home country, the current regime provides the option for the bank 
to  join  the  host  country  DGS  for  the  difference  in  coverage.  This  is  called  'topping  up 
arrangement'  and  means  that  two  DGS  (from  home  and  host  country)  are  involved  when 
depositors  of  such  a  branch  are  to  be  paid  out.  Topping  up  arrangements  are  very  complex 
because  the  current  Directive  has  only  harmonised  DGS  on  a  minimum  level  and  frictions 
occur  if  DGS  operating  under  different  national  rules  must  cooperate.  Topping  up  can  also 
lead to delays in payout since two DGS, which have to coordinate their actions, are involved 
in the process. Such arrangements cause confusion for depositors who do not understand why 
they have to deal with two DGS for one account as is evident from complaints in the context 
of the failure of Icelandic banks. 

19  

20 

See S. Schich, Challenges associated with the expansion of deposit insurance coverage during fall 2008, 
May 2009 (http://www.economics-ejournal.org/economics/journalarticles/2009-20). 
FSA,  Consumer  awareness  of  the  Financial  Services  Compensation  Scheme,  Research  Paper  no.  75, 
January 2009, p. 9 (http://www.fsa.gov.uk/pubs/consumer-research/crpr75.pdf). 

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4.1.2.  Non-harmonised exemptions from a fixed coverage level 

From end-2010, Member States will be required to fix coverage at a certain level for the DGS 
being subject to the Directive. Currently, exceptions from this fixed level are only granted to 
Member  States  where  they  had  been  in  force  on  1  January  2008  ('grandfathering').  Such 
exceptions,  if  limited  to  a  few  Member  States,  could  lead  to  an  unlevel  playing  field  as 
described below in the context of diverging scope and eligibility criteria throughout the EU.  

In particular, in DK, pension deposits are covered far beyond the coverage level, and in FI, 
temporary high account balances resulting from real estate transactions are also covered at a 
higher  level.  UK  is  considering  the  introduction  of  such  protection  extended  to  pension 
payments  and  compensations  for  damages  or  injuries  (if  paid  as  lump  sums)  and  other  life 
events,  such  as  inheritance,  divorce,  etc.  On  the  one  hand,  such  exemptions  could  improve 
depositor  confidence  by  better  protecting  their  wealth  in  exceptional  circumstances.  On  the 
other  hand,  the  more  numerous  and  complicated  the  exemptions,  the  more  resources  of  the 
DGS (staff, time and money) are bound during the payout process. 

4.1.3.  Eligibility of depositors – discretionary exclusions  

Annex I of Directive 94/19/EC allows Member States to exclude protection for many different 
types  of  depositors.  Currently,  Member  States  exclude  most  deposits  and  depositors 
enumerated in Annex I of the Directive (see Annex B to this report). 

In  general,  the  fact  that  the  exclusions  are  discretionary  entails  some  problems.  First,  it  is 
questionable whether the protection is appropriate, i.e. if the depositors and deposits subject to 
the  discretionary  exclusions  should  be  protected  or  not.  While  the  inclusion  of  certain 
depositors or products could improve depositor confidence by better protecting their wealth, 
their exclusion would save money to DGS and banks financing them. Second, the wide range 
of  discretion  may  lead  to  the  same  problems  as  widely  diverging  coverage  levels:  market 
distortions  if  depositors  choose  the  most  comprehensive  DGS,  not  the  best  product.  (see 
Section  4.3).  Only  well-informed  depositors  would  act  in  this  way.  However,  the  fact  that 
some depositors were alerted by the media in the financial crisis as far as failures of particular 
banks were considered likely does not mean that the majority of depositors were profoundly 
informed about their function. Consequently, it is also relevant that depositors may not always 
be  informed  whether  they  are  eligible  or  not.  Finally,  differences  in  depositor  and  product 
eligibility  stemming  from  the  lack  of  harmonisation  affect  the  ability  of  DGS  to  make  fast 
payouts  since  such  differences  (notably  if  numerous)  complicate  the  process  of  claims 
verification.  

The discretionary exclusions and specific problems resulting from them can be categorised as 
follows: 

•  Enterprises  in  the  financial  sector,  i.e.  financial  institutions,  insurance,  investment  funds, 
pension  funds  (Annex  I  no.  1,  2,  5  and  6  of  the  Directive).  Banks  are  ineligible  under 
Article 2 of the Directive.  

•  Authorities at central and local level (Annex I no. 3 and 4). Authorities can be expected to 
act  responsibly  and  not  to  run  on  banks.  They  are  also  quite  limited  in  numbers  in 

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comparison  with  depositors21  and  are  subject  to  DGS  coverage  only  in  7  Member  States 
(CZ, DE (partially), DK, FI, GR, LT, PL and SE).  

•  Depositors having a relationship with the failed bank, like managers, directors, important 
shareholders  (>5%),  auditors  (and  their  close  relatives),  companies  in  the  same  group, 
depositors that obtained special conditions aggravating the financial situation of the bank 
(Annex I no. 7, 8, 9 and 11). Most of these depositors are difficult to identify and it leads to 
unnecessary payout delays to verify their eligibility. Moreover, such exclusions generally 
punish depositors who might not at all be responsible for the bank failure. In case of such 
exclusions, individual responsibility would be insinuated by law or determined by the DGS 
and not by the competent authorities and courts.. 

•  Depositors who opened their account anonymously (Annex I no. 10). Anonymous accounts 
are now forbidden under Article 6(1) of Directive 2005/60/EC on the prevention of the use 
of the financial system for the purpose of money laundering and terrorist financing22.  

•  Small  and  medium  enterprises  (SME).  Currently,  only  deposits  of  companies  that  are 
permitted  to  draw  up  abridged  balance  sheets23  must  be  covered  (Annex  I  no.  14).  This 
definition  deviates  from  the  Commission  Recommendation  on  micro,  small  and  medium 
enterprises24 (Annex 10a to this impact assessment contains a comparison of the different 
categories of SME). 

The  Commission  has  been  explicitly  tasked  to  examine  whether  the  coverage  of  SME  is 
appropriate. Since, according to Eurostat, there are 20 million SME representing the majority 
of  enterprises  in  the  EU  (99.8%),  their  confidence  is  crucial  as  to  the  risk  of  bank  runs. 
Among micro, small and medium enterprises, the largest group is the first one, but they are 
comparable in terms of the amount of their eligible deposits (see Annex 10c-d). 

The  existence  of  smaller  enterprises  may  be  jeopardised  if  they  have  no  access  to  their 
deposits after a bank failure, which may lead to negative consequences for the economy as a 
whole and strain public welfare. Moreover, determining during the payout procedure whether 
a company is an SME, i.e. if it is permitted to draw up abridged balance sheets (this comprises 
even  companies  whose  balance  sheet  is  not  abridged),  is  time  consuming,  resource  binding 
and therefore delaying payout for all depositors. 

21 
22  
23 

24 

Throughout the EU, there are 121 000 local authorities and more than 450 million depositors. 
OJ L 309, 25.11.2005. 
More precisely, companies which – as of their balance sheet dates – exceed the limits of at least two of 
the  three  following  criteria:  a  balance  sheet  total  of  €4.4  million,  a  net  turnover:  €8.8  million  or  an 
average number of 50 employees during the financial year. Only companies can be excluded, i.e. not 
self-employed  natural  persons  or  partnerships  (unless  they  are  special  partnerships  where  shares  are 
issued; for details see Article 1(1) of Directive 78/660/EEC).  
Article 8(1) of the Annex to the Commission Recommendation 2003/361/EC of 6 May 2003, OJ L 124, 
p.36:  "Any  Community  legislation  or  any  Community  programme  to  be  amended  or  adopted  and  in 
‘SME’,  ‘microenterprise’,  ‘small  enterprise’  or  ‘medium-sized  enterprise’,  or  any 
which the term 
other similar term occurs, should refer to the definition contained in this Recommendation." In contrast 
to the current regime that allows the exclusion of certain companies, an SME can have any legal form. 

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4.1.4. 

Scope of covered products  

Currently,  coverage  of  at  least  €50 000  per  depositor  and  per  bank 25  is  required  by  the 
Directive.  Several  deposits  at  the  same  bank  are  aggregated.  There  are  considerable 
differences in the scope of deposits covered by DGS across the Member States (see Annex B). 
The mere existence of these differences raises level-playing field issues since depositors may 
choose the product according to the deposit protection offered, which a bank cannot choose 
and banks which cannot 'offer' such protection may suffer from competitive disadvantages.  

Structured products 

The  current  definition  of  'deposit'  in  Article  1(1)  of  the  Directive26  leaves  some  room  for 
interpretation as regards the coverage of so-called 'structured products'27. A structured product 
is a combination of a deposit and an investment product, where the return is dependent on the 
performance of some underlying financial instrument such as market indices, equities, interest 
rates, commodities, foreign exchange, etc. These products incur market risk (i.e. the risk of a 
changing market price of the underlying) which is not covered by any protection scheme if the 
underlying  is  acquired  directly.  If  only  the  interest  is  subject  to  a  certain  underlying,  the 
principal  of  the  deposit  should  be  repaid  in  the  worse  case  scenario  at  par;  otherwise,  the 
depositor could be repaid less than 100% of his deposit. Even though the current definition in 
Article 1(1) is not very concise and there is no other definition of deposits in Community law 
on financial services, it seems to be clear from the general meaning of the word deposit (i.e. to 
place  for  safekeeping  or  in  trust)  that  deposited  items  usually  have  to  be  returned  in  full. 
Moreover, deposits have an inherent 'guarantee' as it is their key feature that they are 100% 
repayable so that there is no need for a guarantee apart from a deposit guarantee28.  

If products (i) which incur market risk, (ii) are subject to a particular guarantee, or (iii) whose 
principal is not repaid at par, were to be covered by DGS, it could lead to additional losses for 
DGS if they had to cover particular risks incurred by such products. As explained above, ICS 
would not cover market risk either (for more information on ICS, see Annex C). 

Debt certificates issued by a credit institution 

The coverage of debt certificates issued by a credit institution (Annex I of the Directive, no. 
12) is subject to the discretion of Member States. In case of debt securities issued by a bank, 
their market price (if any) depends mainly on the insolvency risk of the issuer (i.e. the bank) 
and a change of interest rates.  

In  contrast  to  this,  in  case  of  debt  securities  issued  by  non-banks  these  risks  are  covered 
neither by DGS nor by ICS. Consequently, banks as issuers of debt securities are privileged 

25 
26 

27 

28 

Exceptions apply, see Article 8 of Directive 94/19/EC. 
"'Deposit' shall mean any credit balance which results from funds left in an account or from temporary 
situations deriving from normal banking transactions and which a credit institution must repay under 
the  legal  and  contractual  conditions  applicable,  and  any  debt  evidenced  by  a  certificate  issued  by  a 
credit institution." 
See  also  the  Communication  on  Packaged  Retail  Investment  Products  (PRIPS),  COM(2009)402  (p.4) 
for a distinction between structured securities and structured deposits 
It should be noted that guaranteed repayments are also subject to a different prudential treatment than 
deposits. Repayment guarantees concerning a product incurring a loss when repayment is due, have to 
be  treated  as  off-balance  sheet  items  under  Article  78  of  Directive  2006/48/EC  and  its  Annex  II. 
Provision thus has to be taken in addition to the general prudential requirements that indirectly also aim 
at protecting deposits. 

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over other issuers. This argument was also raised during the public consultation by investment 
funds associations who feared competitive distortions since deposits of investment funds are 
not covered by DGS either. 

Moreover, holders of debt securities can in general not exercise their claims against the bank 
before  maturity,  so  unlike  with  regard  to  holders  of  savings  or  current  accounts,  there  is  a 
limited risk for bank runs. 

More  specifically,  the  current  setup  regarding  debt  securities  is  inconsistent  in  itself.  While 
'debt evidenced by a certificate' is covered by DGS, 'debt securities and liabilities arising out 
of own acceptances and promissory notes' can be excluded from coverage. However, despite 
the  different  terms  both  categories  seem  identical  since  a  debt  security  is  typically  a  debt 
evidenced by a certificate. Own acceptances and promissory notes are also debt evidenced by 
a certificate. 

This is also confusing for depositors. In all but three Member States (HU, LV and SE)29 'debt 
securities  and  liabilities  arising  out  of  own  acceptances  and  promissory  notes'  are  excluded 
(see Annex B). 

Deposits in currencies of non-EU countries 

The coverage of deposits in currencies of non-EU countries (Annex I no. 13) is subject to the 
discretion of Member States. In 6 Member States, such accounts are currently excluded (AT, 
BE, CY, DE, LT and MT). However, exclusion of such deposits may lead to an inappropriate 
coverage,  in  particular  for  SME  which  might  need  such  accounts  for  dealing  with  non-EU 
countries.  Moreover,  in  a  globalised  world,  such  accounts  may  be  necessary  where  some 
members of families live abroad. Their exclusion could thus be regarded unfair for them.  

Overlap between DGS and investor compensation schemes (ICS) 

In contrast to the DGS Directive, Directive 97/9/EC on ICS shall cover losses of investors in 
securities,  such  as  equities  and  bonds,  but  also  money  linked  to  transactions  in  those 
investments in specific cases (see Chapter 1 and Annex C).  

However,  securities  (i.e.  debt  evidenced  by  a  certificate  issued  by  a  credit  institution)  and 
money linked to transactions in investments (such as  the proceeds arising from  a sale  of an 
investment product or money paid for buying an investment product so long as the transaction 
has not been executed yet) can fall within the scope of both the DGS and ICS Directives. In 
such cases Member States have discretion to choose one scheme they consider appropriate so 
as to prevent a reimbursement taking place twice30. 

However,  ICS  and  DGS  provide  different  kinds  of  safeguards  for  consumers.  The  recent 
changes of DGS by Directive 2009/14/EC (notably the increase of the coverage level to €100 
000) have not been taken over by the ICS Directive. In particular, compared with DGS there 
are no strict time limits for triggering the ICS. Whereas from end-2010 onwards the DGS has 
to  be  triggered  at  the  latest  one  week  after  the  inability  to  repay  deposits,  there  is  no 
comparable deadline for ICS but changes are underway. 

29 

30 

In  DE,  such  products  are  included  by  mutual  guarantee  schemes.  However,  these  schemes  are  not 
subject to Directive 94/19/EC. 
Directive 97/9/EC on investor compensation schemes, Article 2(3).  

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An  unlimited  discretion  for  Member  States  to  choose  the  scheme  if  the  products  concerned 
fall  both  within  the  scope  of  ICS  and  DGS  could  therefore  circumvent  the  improvements 
achieved  for  depositors.  This  could  in  extremis  mean  that  it  is  in  the  discretion  of  Member 
States to pay depositors much less after a longer period of time. 

4.2. 

Inadequate payout procedures  

4.2.1. 

Inappropriate payout delay 

Under  the  current  regime,  depositors  must  be  paid  out  within  3  months  after  the  bank  has 
declared to be unable to repay deposits. From the end of 2010, this delay has to be reduced to 
20  working  days  with  a  possible  extension  of  further  10  working  days  (i.e.  4  to  6  weeks). 
Currently,  competent  authorities  must  determine  the  'inability  to  repay  deposits'  (i.e.  the 
triggering date) within 21 days and from end-2010 onwards within 5 working days (i.e. one 
week)31. These delays must be taken into account for calculating the actual payout delay. The 
maximum delay from 2010 onwards will thus be 7 weeks. However, there are better practices. 
Even if the US scheme (which pays depositors out within two working days32) is not a fully 
relevant  example  for  EU  DGS  at  the  moment33,  it  should  be  noted  that  the  UK  authorities 
envisaged shortening the payout delay to one week34.  

The  payout  delay  of  4-6  weeks  is  simply  too  long  since  depositors  need  constant  access  to 
their funds in order to buy food, pay bills, etc. If depositors have the choice to withdraw their 
deposits before the DGS is triggered or to wait several weeks after the DGS steps in, they will 
run  on  their  banks  since  most  of  them  would  not  have  the  funds  for  their  usual  expenses 
available for more than a few days35. Thus, the possibility of long delays would prompt a run 
on a bank even if deposits were 100% covered. Furthermore, bank customers with a current 
account need access to basic banking services. 

Long payout delays are also caused by late access to information about deposits and the lack 
of  human  and  technical  resources  of  DGS36.  Three  quarters  of  all  DGS  have  to  rely  on 
external workforce (see Annex 27), half of DGS have no regular access to deposit information 
and only one third has any contingency planning in place37. 

31 

32 

33  

34 

35 

36 

37 

According to the collected data, 93% of deposits were repaid within 3 months, and around 97% within 9 
months;  concerning  the  number  of  reimbursed  depositors,  the  average  ranged  from  72%,  within  3 
months, to 82%, within 9 months. 
"It is the FDIC's goal to make deposit insurance payments within two business days of the failure of the 
insured institution" (see http://www.fdic.gov/consumers/banking/facts/payment.html).  
The US FDIC has a much broader mandate than EU DGS (it acts as supervisor, paybox and receiver). 
Moreover, it makes payouts after a 90-day pre-closing period. 
Bank of England, HM Treasury, FSA, Financial stability and depositor protection: further consultation, 
July  2008,  p.  74  (http://www.fsa.gov.uk/pubs/cp/jointcp_stability.pdf);  see  also  Ernst  &  Young,  Fast 
payout  study  –  final  report,  November  2008  (report  commissioned  by  the  FSA,  BBA  and  FSCS, 
available at http://www.fsa.gov.uk/pubs/other/fast_payout_report.pdf). 
FSA, Consumer awareness of the Financial Services Compensation Scheme, op.cit., p. 11: "With regard 
to how long they felt they could cope if they were cut off from their current or deposit accounts (i.e. if 
their  bank  failed),  respondents’  answers  varied  with  their  circumstances:  those  with  only  a  current 
account,  limited  savings  and few  or  no  cards  to  fall  back  on  felt  they  could  only  manage  for up  to a 
couple  of  weeks,  which  they  would  do  by  borrowing,  primarily  from  family  members.  Some  felt  they 
could not manage for more than a few days or a week."  
EFDI, Report on improvement of payment delays to depositors and promotion of best practices, May 
2008, pp. 35, 37, 42 and 43. 
Ibid, p. 38. 

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At  any  rate,  the  forthcoming  deadline  being  calculated  in  working  days  (according  to  the 
proposal  as  finally  adopted  –  see  Annex  A)  entails  additional  problems.  Since  there  are 
different national holidays, this is not only opaque for depositors but can also lead to different 
payout delays in cross-border cases.  

4.2.2. 

Inadequate payout modalities 

In  their  correspondence  to  the  Commission,  depositors  raised  concerns  about  the  payout 
modalities. Many depositors were concerned that in some recent bank failures there was no 
information provided by DGS in depositors' language about the state of play and on how to 
submit claims (or information was late and outdated). The mere need for claims – often still to 
be  submitted  on  paper  and  based  on  information  that  in  case  of  'internet  banks'  may  not  be 
accessible when websites of such a bank are not operational – constituted a serious problem 
for depositors. Any difficulty and lack of transparent processes before and during the payout 
procedure may undermine depositor confidence in DGS. 

Currently, 30 DGS pay depositors out in the currency of their Member State whereas 5 DGS 
pay  them  out  in  the  currency  'as  paid  in'38.  Some  depositors  were  worried  that  they  would 
receive  their  reimbursement  in  the  currency  of  the  bank's  home  country  even  though  their 
deposits were denominated in euro. The possibility to transfer currency risk to depositors may 
undermine their confidence in DGS and – at least together with other problems – induce a run 
on  banks.  Moreover,  a  payout  in  a  different  currency  than  the  one  of  the  DGS  is  likely  to 
delay the process. 

It  should  be  noted  that  this  risk  of  delay  does  not  only  materialise  in  case  of  deposits  in 
currencies other than the currency of the Member State where a bank or a branch is located 
but  also  in  the  situation  where  e.g.  a  bank  from  a  country  outside  the  euro  area  opens  its 
branch  in  a  euro-area  country  and  deposits  are  taken  in  euro.  In  this  respect,  a  payout  in 
another currency than paid in could also have distortive effects since deposits with branches 
of foreign banks would become less attractive then. 

Currently, two thirds of DGS pay interest until the date of failure; those paying longer apply a 
fixed rate, a market rate or the originally agreed rate39. Depositors were worried that payout 
might not include interest payments if those would only be due after the time of failure.  

This shows that under the current approach depositors have no clear picture about how payout 
is executed and what they receive in case interest has not yet been credited to their account, in 
particular when the failure happens before interests are due, i.e. before maturity. The impact 
of this uncertainty on the possibility of bank runs may be low since interest rates on current 
accounts, are normally quite low and savings deposits may - pending their conditions - not be 
eligible for withdrawal before maturity or if so, interest payments would be reduced anyway. 
However,  any  uncertainty  does  not  contribute  to  trust  in  DGS  which  is  a  prerequisite  for 
financial stability.  

Moreover, with regard to structured products, the calculation of the interest payment may be 
difficult and time-consuming or may even sometimes not be calculable at all. Similarly, banks 
offering exceptionally high interest rates could lead to financing problems of DGS if this has 

38 
39 

Ibid, p. 27. 
Ibid, p. 40. 

EN 

17 

   EN 

                                                 
not been taken into account when calculating the contributions of such banks. Both issues are 
not dealt with by the current Directive. 

4.2.3. 

Inappropriate set-off arrangements  

Currently,  22  Member  States  allow  that  deposits  are  set  off  against  due  liabilities  of  the 
depositor  (e.g.  instalments  of  mortgages)  at  the  same  bank  or  counterclaims  against  the 
depositor (e.g. the entire mortgage loan). This is not the case under normal circumstances if 
instalments are duly paid. In such case, if liabilities reach or exceed deposits, set off with due 
claims or counterclaims reduces and, in extreme cases, eliminates any payout from a DGS. If 
depositors  know  that  their  deposits  and  liabilities  will  be  set  off,  they  will  prefer  to  run  on 
their banks in order to get their deposits paid out in full. Those who do not do so might be 
paid  out  nothing  and  put  under  financial  stress.  Moreover,  determining  liabilities  and 
matching them with deposits is time consuming and therefore likely to delay payout40. 

4.3. 

Insufficient depositor information 

Currently,  actual  and  intending  depositors  must  receive  the  information  about  the  DGS 
covering their deposits including the amount and scope of coverage and whether their deposits 
are  eligible  or  not.  That  information  must  be  made  available  in  a  readily  comprehensible 
manner.  Information  must  also  be  given  on  request  on  the  conditions  for  compensation  and 
the  formalities  which  must  be  completed  to  obtain  compensation.  All  information  must  be 
given in the languages of the Member State in which the bank or the branch is established. It 
is within the discretion of Member States how exactly the information is provided. 

If depositors do not know whether and to what extent their deposits are protected, there is a 
risk that they will run on their banks in times of crisis. They may also hesitate to deposit their 
money at foreign banks or branches if they do not know how other country schemes function. 
They might be concerned that in case of a bank failure, they might not get their money back 
since  they  might  not  know  or  understand  the  procedures  to  follow.  Depositors  might  be 
susceptible to financial losses if they discovered only after the fact that they are not eligible or 
that  not  all  their  financial  products  are  covered  or  that  all  their  deposits  at  one  bank  are 
aggregated  in  order  to  determine  whether  they  are  covered.  And  if  they  are  uncertain  about 
any of these aspects of deposit protection, it could lead to the lack of confidence in DGS, thus 
contributing to the possibility of a run on banks. 

In 2008 and 2009, the Commission received many requests from citizens who wanted to know 
how their deposits are protected. The Commission services understand that DGS or consumer 
organisations also received many such requests. The lack of awareness about the key features 
of the responsible DGS is illustrated by recent consumer research undertaken in the UK41. 

40 

41 

Ibid,  p.23:  "Out  of  those  DGS  that  apply  set-off,  40%  have  experienced  deposit  payout.  Five  DGS 
applying set-off had asked for an extension of the three months period (45%)." 
FSA,  Consumer  awareness of  the  Financial  Services  Compensation Scheme,  op.cit.,  p. 19: "Although 
awareness  of  the  FSCS  [the  UK  DGS]  by  name  was  very  low  among  the  groups,  many  respondents 
thought  there  was  ‘something’,  and  a  few  of  the  wealthier  respondents mentioned  a  figure  of  around 
£30,000-£35,000  of  savings  which  was  guaranteed.  All  the  Northern  Rock  customers  knew  it  was 
£35,000 but were still unfamiliar with the FSCS by name. Almost nobody knew anything more about the 
scheme or how it worked (e.g. with regard to protection being based on a bank's authorisation or debt 
and savings relationships), and none knew how it was funded. (…) Without guidance, most assumed it 
to be a government scheme or some form of private sector insurance." 

EN 

18 

   EN 

                                                 
Even though a relatively high number of depositors was alerted by the media in the financial 
crisis  about  the  strength  of  their  DGS  in  particular  cases  and  sometimes  this  led  to  shifting 
deposits  elsewhere  as  described  above,  the  correspondence  addressed  to  the  Commission 
services shows that many depositors did not feel profoundly informed about the function of 
DGS. 

For  example,  depositors  at  branches  of  Icelandic  banks  complained  to  the  Commission  that 
the  distinction  between  branches  and  subsidiaries,  which  can  lead  to  different  DGS  dealing 
with payout, was confusing (see Section 4.6). Those depositors preferred a point of contact in 
their  country  of  residence  and  consequently,  in  their  language.  Others  were  worried  that 
payout might not include interest payments if the interest payments would only be due after 
the time of failure. Currently, these issues are indeed not dealt with by the Directive. This lack 
of clarity compromises depositor confidence.  

All deposits of a depositor at a bank including its branches are aggregated. If a depositor has 
e.g.  a  savings  account  of  €30  000  and  a  current   account  of  €40  000  at  the  same  bank,  the 
if  this  is  the  coverage  level  in  a  Member  State.  This 
depositor  would  only  receive  €50  000 
may  lead  to  problems  if  different  products  such  as  savings  and  current  accounts  are  traded 
under  different  brand  names  even  if  they  are  sold  by  the  same  bank42.  In  such  a  case,  the 
depositor may not know that both accounts are aggregated for the purpose of calculating the 
coverage level. 

A lack of information about what and to which extent products are covered by DGS may also 
lead to choosing inappropriate products and consumers may thus not fully exploit all options 
available in the Internal Market. 

4.4. 

Inappropriate financing of DGS 

4.4.1.  Different DGS funding mechanisms and bank financing obligations across the EU 

DGS are principally funded by banks paying contributions to them. Currently, in 21 Member 
States such contributions are paid in advance on a regular basis (ex-ante) while in six Member 
States  (AT,  IT,  LU,  NL,  SI  and  UK)  banks  only  contribute  after  a  failure  (ex-post).  Other 
financing sources are loans taken by the DGS or direct state interventions.  

Consequently, the level of DGS funding is very different throughout the EU. Ex-post funded 
DGS have no funds available when there is no bank failure. In terms of the ratio between ex-
ante funds and eligible deposits (coverage ratio, see also Annex 16), there is a range between 
0.01% and 2.3%. For smaller banks (i.e. banks not belonging to the top-10 deposit takers at 
each  DGS),  these  ratios  are  much  higher  with  an  average  of  7.9%.  To  illustrate  these 
percentages,  the  amount  of  ex-ante  funds  ranged  in  2007  between  €6.9  million  in  MT  and 
€6.5  billion  in  ES.  At  the  same  time,  the  ma ximum  resources  available  to  DGS  (ex-ante 
schemes  plus  ex-post  contributions)  amounted  to  between  €27  million  and  €8.1  billion  in 
those Member States respectively. For comparison, the amount of eligible deposits in the EU 
is about €9.3 trillion and the amount of covere d deposits (under Directive 2009/14/EC and the 
coverage level of €100 000) is about €6.7 

trillion (see Annexes 2, 3 and 13a).  

When  the  financial  crisis  aggravated  in  autumn  2008,  DGS  have  turned  out  to  be 
underfinanced.  The  most  prominent  example  is  Iceland,  an  EEA  country  where  the  DGS 

42 

This situation occurs in particular in UK. 

EN 

19 

   EN 

                                                 
Directive  applies.  The  DGS  had  available  ISK  15  billion  (approx.  €120  million  as  of  1 
September  2008)  in  ex-ante  funds,  equivalent  to  0.5%  of  deposits  and  ISK  6  billion 
guarantees as additional resources43. The savings deposits at branches of two Icelandic banks 
(Landsbanki and Kaupthing) in DE, NL and UK alone amounted to more than €8 billion 44.  

In the context of the above, it is argued that in order to make deposit guarantees credible it is 
important  to  specify  how  they  will  financially  be  provided.  The  need  for  sound  funding  to 
ensure  the  effectiveness  and  credibility  of  DGS  was  emphasized  by  the  developments  in 
autumn  2008  when  most  Member  States  raised  their  coverage  levels  without  any  financial 
strengthening  of  their  DGS.  Therefore,  there  may  be  questions  regarding  the  capacity  of 
(some)  governments  to  provide  for  the  implicit  or  explicit  guarantee  that  they  have 
announced45. 

The Commission's research has shown that DGS in 6 Member States would not be capable to 
cope  with  a  medium-sized  bank  failure46.  In  one  Member  State  (SK),  the  scheme  has  just 
overcome a deficit in which it had been for years. In DE, the voluntary DGS had to apply for 
a state guarantee of €6.7 billion following  the  fa ilure  of a subsidiary of Lehman Brothers47. 
Even  if  a  single  DGS  might  never  be  able  to  cope  with  a  failure  of  a  large  cross-border 
banking group, they should at least be able to deal with medium-sized failures. It should be 
noted that the DGS Directive is applicable regardless of whether there is a systemic crisis or 
not. Otherwise it could not fulfil its objective to prevent bank runs. If DGS have insufficient 
funds,  depositors  may  be  paid  out  only  after  a  very  long  delay  or  not  paid  out  at  all.  If 
depositors  are  aware  of  this,  they  will  lose  confidence  in  DGS  and  may  potentially  run  on 
their banks. 

The lack of harmonisation as regards DGS funding may affect not only depositor confidence 
but also banks' competitiveness and behaviour (as it  leads to  significant  differences  in bank 
contributions  to  DGS).  First  of  all,  mere  ex-post  funding  is  pro-cyclical:  it  encourages  risk-
taking  in  good  times,  but  drains  liquidity  from  banks  in  times  of  stress  which  might  have 
implications  on  the  level  and  conditions  of  credit  supply  by  banks.  Moreover,  unlike  in  ex-
ante schemes the failed bank does not contribute to payout (moral hazard). Banks that do not 
have  to  pay  ex-ante  contributions  are  able  to  generate  returns  on  these  funds,  which 
constitutes  a  competitive  advantage  vis-à-vis  their  competitors  in  other  Member  States  with 
ex-ante funded DGS. This was raised by many banks and banking associations in the public 
consultation conducted by the Commission last year.48 

The  access  to  funding  beyond  ex-ante  funds  is  different,  too.  All  but  7  DGS  can  borrow 
money from different sources, but 3 DGS only to a limited extent. This is problematic since 

43 
44 
45  

46 

47 
48 

K. Jännäri, Report on banking supervision in Iceland: past, present and future, 30 March 2009, p. 8. 
Ibid, p. 17. 
S.  Schich,  Challenges  associated  with  the  expansion  of  deposit  insurance  coverage  during  fall  2008, 
op.cit. 
The six Member States were BE, CY, IE, IT, LV and MT. A medium-sized failure was defined in this 
context (representing a failure of intermediate size which occurred in an EU-12 country in 2003) as a 
failure  concerning  0.81%  of  eligible  deposits.  Many  other  Member  States  had  to  rely  on  unlimited 
borrowing  facilities  in  order  to  cope  with  a  failure  of  that  size  (see  JRC  Report  on  the  efficiency  of 
DGS, May 2008). 
Commission Decision no. 17/2009 of 21 January 2009 (see press release IP/09/114). 
In contrast to this, there is research concluding that "mispriced deposit insurance and capital regulation 
were of second order importance in determining the capital structure of large US and European banks" 
(see R. Gropp, F. Heider, The determinants of bank capital structure, ECB Working Paper No. 1096, 
September 2009). 

EN 

20 

   EN 

                                                 
ex-ante  funds  alone  may  not  be  sufficient  to  pay  out  depositors.  Where  ex-ante  funds  are 
collected, the ratio between extraordinary (including ex-post) funds and total funds is between 
1.4% in SE and 82% in CY (see Annex 13a). If needed, all ex-ante funded DGS can request 
supplementary  contributions  from  banks  but  the  extent  is  very  different  (see  Annex  13b). 
Taking into account additional ex-post financing facilities for ex-ante financed schemes, the 
coverage ratio ranges between 0.1% and 3.1%, while for smaller banks (as defined above) the 
average is 19.6%.  

If not all DGS are equally sound and capable to deal with a bank failure of a certain size, there 
may  also  be  repercussions  for  the  functioning  of  the  Internal  Market.  Banks  from  Member 
States  with  very  weak  DGS,  which  establish  branches  in  another  Member  State,  can  do  so 
without being hindered by the host country. However, if the home country DGS is considered 
incapable by the host country to deal with a bank failure, the host country may not like to rely 
on  the  prudential  supervision  exercised  by  the  home  country.  In  the  context  of  the  recent 
Icelandic bank failures, this has led to Member States reflecting upon measures which might 
create obstacles to the freedom of establishment (i.e. to set up branches), implying a less open 
Internal Market49.  

Moreover, banking groups intending to reorganise themselves under the European Company 
statute  have  perceived  it  as  tedious  and  burdensome  to  change  the  DGS  when  their 
subsidiaries  would  turn  into  branches,  in  particular  because  they  did  not  receive  their 
previously paid contributions back from the scheme they left but also had to pay contributions 
to the new scheme. 

4.4.2.  Banks contributions to DGS not adjusted to risk 

In most Member States banks pay their contributions to DGS as a fixed percentage of deposits 
(usually  eligible  deposits).  The  degree  of  risk  incurred  by  a  given  bank  is  not  taken  into 
account. This may be perceived by risk-averse banks as a competitive disadvantage and as a 
disincentive  for  sound  risk  management  which  may  also  make  the  financial  system  more 
vulnerable and induce adverse selection. 

This report does not, however, deal with systemic risk since criteria for measuring it are only 
being developed on international level. 

4.5. 

Limited mandates of DGS 

The  powers  to  manage  bank  crises  are  split  between  different  domestic  authorities,  ranging 
from  supervisory  authorities  to  central  banks,  governments,  judicial  authorities  and  in  some 
cases DGS. Also, the extent of powers and the conditions governing their use differ according 
to  each  national  system.  This  entails  inefficient  cross  border  bank  resolutions  process  and 
suboptimal outcomes50.  

In this context, the Commission Communication on an EU framework for cross-border crisis 
management in the banking sector (COM(2009)561) states the following: 

49 

50 

FSA, The Turner Review – A regulatory response to the global banking crisis, March 2009, p. 100 et 
seq. (http://www.fsa.gov.uk/pubs/other/turner_review.pdf). 
Impact  Assessment  accompanying  the  Communication  on  an  EU  framework  for  cross-border  crisis 
management in the banking sector, SEC(2009)1389, p. 30. 

EN 

21 

   EN 

                                                 
"Deposit guarantee schemes could include the possibility of funding resolution measures. This 
would  have  the  advantage  that  the  banking  sector  would  contribute  directly  to  ensuring  its 
own stability. However, this should not be to the detriment of compensating retail depositors 
in the event of a bank failure. In its review of the operation of deposit guarantee schemes to 
be brought forward in early 2010, the Commission will examine the use of deposit guarantee 
schemes in the context of the crisis. Alternatively, as some Member States do, the Commission 
could  explore  the  creation  of  a  resolution  fund,  potentially  funded  by  charges  on  financial 
institutions which might be calibrated to reflect size or market activity." 

An assessment of the creation of a resolution fund would go beyond this impact assessment 
and will be performed as a follow-up to the Communication referred to above. 

Currently,  in  11  Member  States  DGS  have  varying  powers  beyond  the  mere  payout  of 
depositors  ('paybox'  function)  such  as  liquidity  support,  restructuring  support  or  liquidation 
role (see Annex D). Such transactions may be rational if the cost for successful reorganisation 
is smaller for the DGS than the total payout to the same bank in the event of bankruptcy (the 
so-called  'least-cost  principle').  The  lack  of  coherence  between  national  DGS  roles  may 
further  impede  coordinated  actions  on  a  cross-border  basis.  If  a  DGS  can  use  its  funds  to 
support a bank in one Member State but this is not the case in another Member State, private 
sector  in  the  former  may  not  be  willing  to  participate  in  the  negotiations  concerning  e.g.  a 
reorganisation of the bank51 if the private sector does not contribute to a similar extent than in 
the latter. A reorganisation of a bank could fail for such a reason, leaving the taxpayer to pay 
or  causing  financial  and  economic  turmoil  when  a  bank  has  to  be  liquidated.  This  is 
aggravated by the fragmentation of DGS since even a reorganisation in a Member State may 
be difficult if only one of several DGS can provide support and the other schemes refuse. 

The  funds  of  a  soundly  financed  DGS  originate  from  the  banks  themselves.  However,  the 
current  financial  crisis  has  shown  that  when  banks  threatened  to  fail,  they  were  bailed  out 
mainly with taxpayers' money amounting to almost €13 billion in the EU 52. 

In  most  Member  States,  the  funds  of  DGS  are  either  not  sufficiently financed  to  even fulfil 
their  'paybox'  role  (see  Section  4.4)  or  lack  the  power  to  participate  in  early  interventions 
aiming at preventing a failure. If DGS have broader mandates, there could be a double impact 
by a restructuring and a payout at the same time even if occurring at different banks. 

4.6. 

Fragmentation and limited cross-border cooperation between DGS 

The  high  degree  of  fragmentation  may  mean  that  DGS  with  fewer  resources  would  be  hit 
more by a relatively big failure than a DGS with more resources be hit by a failure of a bank 
of the same size ('insurance effect'). This uneven distribution of risk is aggravated by the fact 
that  there  is  no  mutual  borrowing  between  schemes  of  different  Member  States  and 
sometimes not even between schemes within the same country. As a result, it is likely that the 
taxpayer would have to step in if a DGS has insufficient financial resources. 

51 

52 

As defined in Article 2 of Directive 2001/24/EC: "measures which are intended to preserve or restore 
the  financial  situation  of  a  credit  institution  and  which  could  affect  third  parties'  pre-existing  rights, 
including  measures  involving  the  possibility  of  a  suspension  of  payments,  suspension  of  enforcement 
measures or reduction of claims". 
Without guarantees that are only commitments and not effective when granted (source: Public Finances 
in EMU (2009), p. 44, http://ec.europa.eu/economy_finance/publications/publication15390_en.pdf). 

EN 

22 

   EN 

                                                 
This is illustrated by the failure of an Icelandic bank that operated mainly via Internet and had 
a branch with 30 000 depositors in DE. Many depositors complained that German authorities 
and German DGS referred depositors to the Icelandic DGS. This is why a general obligation 
to  mutually  cooperate  has  already  been  introduced  by  Directive  2009/14/EC.  However,  this 
obligation is rather generic and does not require the host country DGS to assist and pay out 
depositors whose deposits are with a branch of a bank from another Member State (and the 
home DGS is primarily responsible). A payout by the host DGS on behalf of the home DGS 
has  been  requested  in  many  complaints  and  petitions  from  depositors53.  It  can  thus  be 
concluded that currently there is no incentive for home country DGS to care about depositors 
in other Member States (i.e. host countries). 

In  the  context  of  the  new  EU  financial  supervisory  architecture54  it  has  become  more  and 
more  obvious  that  the  supervisory  cooperation  for  cross-border  banking  groups  must  be 
improved. Since banking supervisors are involved in the decision whether a bank should be 
saved  or  the  DGS  triggered,  the  fragmentation  of  DGS  does  not  provide  incentives  for 
supervisors to reach a solution that is in the interest of all depositors of a banking group and 
takes  into  account  the  potential  impact  on  the  financial  stability  of  all  Member  States 
concerned  as  required  by  Article  42a(3),  second  subparagraph,  of  Directive  2006/48/EC. 
While progress on burden sharing and resolution mechanisms is deemed critical to reinforcing 
trust between national authorities, the current degree of fragmentation would set incentives to 
deal separately with each subsidiary which could favour some creditors or depositors in one 
country compared to others55. 

Moreover, on 23  September 2009,  the Commission adopted proposals for three Regulations 
establishing the European System of Financial Supervisors including the creation of the three 
European  Supervisory  Authorities.  The  new  European  Banking  Authority  will  further 
coordinate  banking  supervision,  in  particular  by  setting  technical  standards  and  settling 
disagreements. 

4.7. 

Exemption of mutual and voluntary guarantee schemes from the DGS Directive  

Mutual  guarantee  schemes  are  schemes  ensuring  mutual  protection  of  their  members,  i.e. 
preventing a bank failure56. They exist mainly in the sector of cooperative and savings banks 
in AT and DE. Consequently, there is in principle no need to pay out depositors since their 
banks’ operations would not cease. Voluntary guarantee schemes do not protect banks from 
failures  but,  based  on  a  contract  between  members,  in  case  of  failure  offer  coverage  of 
deposits that is higher and/or wider in scope than the statutory DGS subject to the Directive. 
Currently, there is only one such a scheme in DE that offer quasi-unlimited protection.  

Mutual  guarantee  schemes  are  exempt  from  the  Directive  if  they  fulfil  the  criteria  under 
Article  3(1)  and  are  acknowledged  under  Article  80(8)  of  Directive  2006/48/EC  in  another 
context (zero risk-weight of exposures between banks adhering to such scheme). Both articles 

53 
54 

55 
56 

See e.g. Petition no. 1567/2008. 
Commission Communication of 27 May 2009 on European financial supervision (COM(2009)252) and 
Proposal for a Regulation establishing a European Banking Authority (COM(2009)501). 
COM(2009)561, p. 8. 
A mutual guarantee system protects the credit institution itself and ensures its liquidity and solvency. In 
an  emergency,  the  other  members  of  the  system  step  in  and  support  the  bank.  Such  systems  have  in 
particular been established by cooperative and savings banks in AT and DE. 

EN 

23 

   EN 

                                                 
are  not  consistent  with  each  other  (see  Annex  E  for  details).  Voluntary  schemes  are  not 
covered by the Directive at all.  

Mutual  guarantee  schemes  have  been  advertising  with  'unlimited  protection'57  even  though 
they do not offer higher coverage as such. Depositors have thus not been adequately informed 
about  their  functioning.  Maintaining  the  status  quo,  i.e.  leaving  such  schemes  apart  and 
further  advertising  with  'unlimited  protection',  could  lead  to  competitive  distortions  if  from 
end-2010 onwards all DGS under the Directive are prohibited to increase their coverage levels 
above €100 000.  

Voluntary  and  mutual  schemes  are  based  on  a  contract between their members and most of 
them  do  not  provide  rights  to  depositors  to  claim  reimbursement  in  the  event  of  a  bank 
failure58. However, Article 10 sets out that depositors shall have a claim against DGS under 
the Directive (for those DGS that are not exempt like the mutual schemes). This is not clearly 
mentioned on the above schemes' websites leading to the lack of depositor information. 

Moreover,  since  mutual  schemes  are  exempt  from  the  Directive,  depositors  would  not  be 
covered if a mutual system collapses59. In this context, it should be noted that details about the 
funds available to mutual and voluntary schemes have not been disclosed, even on request. It 
leaves plenty of room for speculation about their financial capacity. The voluntary scheme for 
private banks in DE, which promises coverage of up to one third of the bank’s own funds per 
depositor (i.e. de facto unlimited), asked for €6.7 billion state aid in 2008 (see Section 4.4.1) 
and  has  recently  doubled  contributions  to  be  paid  by  its  members60.  A  large  insurance 
company  has  recently  explained  that  it  did  not  trust  the  deposit  insurance  of  the  private 
banks61.  Despite  the  voluntary  and  mutual  schemes  in  Germany,  political  unlimited  deposit 
guarantee  was  given.  Moreover,  many  of  the  German  Landesbanken  in  distress  which  are 
members  of  the  mutual  guarantee  scheme  of  German  savings  banks  (except  WestLB62) 
received state aid so that this scheme did not have to be tested. The protection of depositors 
could thus be compromised if they are not protected by a DGS under the Directive. 

4.8. 

Baseline scenario  

If the status quo is maintained, the fixed coverage level of €100 000 – paid out by DGS within 
maximum 4 to 6 weeks from the moment a bank is declared insolvent – will apply EU-wide 
from end-2010 onwards. This long payout delay together with the lack of financial capacity of 
some schemes would be insufficient to deter depositors from running to their banks in order to 
get all their deposits immediately (which happened in UK in 2007 under a coverage of only £ 
35  000)  and  could  have  severe  economic  consequences.  Moreover,  the  perspective  of 
depositors who owe money to their bank to be reimbursed less or not at all (set-off) in case of 
a  bank  failure  will  not  calm  down  the  depositors  concerned.  Consequently,  the  Directive 

57 

58 

59 

60 
61 
62 

See references in the consultation paper: 
http://ec.europa.eu/internal_market/consultations/2009/deposit_guarantee_schemes_en.htm. 
A notable exception is the 'Raiffeisen-Kundengarantiegemeinschaft Österreich' for cooperative banks in 
AT. Article 14 of their statutes stipulates: "[In case of insolvency of a member], the association has to 
honour the protected claims against the [member] (…). To the extent that the claims are also subject to 
the statutory DGS, the claims are honoured on behalf of the statutory DGS." 
This  is  the  case  in  DE,  but  not  in  AT  where  all  banks  including  members  of  a  mutual  scheme 
('Haftungsverbund' or 'Solidaritätsverein') have to be members of a DGS. 
Handelsblatt, 18 January 2010. 
Süddeutsche Zeitung, 20 January 2010, www.sueddeutsche.de/finanzen/440/500704/text/print.html. 
Frankfurter Allgemeine Zeitung of 25 November 2009, p. 13. 

EN 

24 

   EN 

                                                 
would  not  meet  its  objectives  in  terms  of  protecting  depositor  wealth,  preventing  bank  runs 
and contributing to financial stability. 

A varying scope of covered products and different eligibility criteria for protected depositors 
in the EU, combined with the lack of information on whether deposits are covered, would lead 
to depositors searching for the 'best DGS' when depositing their money instead of looking for 
the 'best product' or 'best service' (see 4.1).  

This and the lack of mutual cooperation between schemes in cross-border situations and the 
perspective of having to deal with a DGS in another language (as shown after the failure of 
the Icelandic banks) would lead to choosing between domestic banks only. The potential of 
the Internal Market would thus remain untapped. The new supervisory architecture described 
under would also be hampered by fragmentation and a lack of coordination (see above 4.5 and 
4.6). 

Banks, in particular those operating cross-border, would still suffer from an unlevel playing 
field if they have to pay high contributions in one Member State, but none in another one so 
long as there is no bank failure. In the latter case, they would have to provide liquidity to the 
DGS  in  times  of  general  stress  on  banks’  liquidity.  Banks  will  also  suffer  from  adverse 
selection, if a sound and prudent bank has to pay the same contributions as a bank of the same 
size operating under an aggressive business model at the margin of prudential regulation and 
incurring higher risks. 

EN 

25 

   EN 

Graph 1: Problem tree 

Source: Commission services. 

EN 

26 

   EN 

 
 
 
5. 

SUBSIDIARITY 

Only EU action can ensure that credit institutions operating in more than one Member State 
are  subject  to  the  same  requirements  concerning  DGS,  which  ensures  a  level  playing  field, 
avoids unwarranted compliance costs for cross-border activities and thereby promotes further 
integration within the Internal Market. Without harmonising the financing of DGS, depositor 
confidence  could  not  be  maintained.  EU  action  therefore  ensures  a  high  level  of  financial 
stability in the EU.  

Namely  the  harmonisation  of  coverage,  scope  and  eligibility  of  depositors,  and  of  payout 
delays  cannot  be  sufficiently  achieved  by  Member  States  because  it  requires  the 
harmonisation  of  a  multitude  of  different  rules  existing  in  the  legal  systems  of  various 
Member States and can therefore be better achieved at EU level.  

This has already been acknowledged by the existing Directives on DGS63, which are all based 
on  Article  53(1)  TFEU.  The  extent  of  harmonisation,  which  goes  far  beyond  the  minimum 
harmonisation  approach  taken  in  1994,  when  the  Directive  entered  into  force,  is  the  only 
measure  achieving  the  objective  of  protecting  depositors,  ensuring  financial  stability  and 
enhancing  the  Internal  Market  since  the  minimum  harmonisation  approach  has  failed  in  the 
recent  crisis.  This  has  been  acknowledged  by  the  ECOFIN  Council  of  October  2008  and 
Article 12 of Directive 1994/19/EC as amended by Directive 2009/14/EC, according to which 
a far-reaching review was necessary. 

6. 

OBJECTIVES 

The  overarching  objectives  of  the  revision  of  the  DGS  Directive  are  identical  with  the 
objectives  enshrined  in  the  Directive:  maintaining  financial  stability  by  strengthening 
depositor confidence and protecting their wealth. The pursuit of these objectives is driven by 
the  need  to  enhance  the  Internal  Market,  which  lies  at  the  heart  of  the  Directive.  The 
following general objectives result from the recitals of the Directive and the Treaty64: 

•  protecting a portion of depositor wealth in order to avoid bank runs, personal hardship and 

stress for social welfare systems;  

•  ensuring  financial  stability  by  strengthening  depositor  confidence  and  a  more  effective 

supervision and resolution of cross-border banks;  

•  enhancing the Internal Market: 

63 
64 

Recital 17 of Directive 2009/14/EC and Recitals (not numbered) of Directive 94/19/EC. 
A general discussion of whether DGS as such induce moral hazard is not part of this impact assessment. 
This general question has been decided when DGS were introduced by Community legislation in 1994. 
Adverse selection from the perspective of banks, however, is addressed in Sections 4.4 and 7.9. More 
specifically, there is no moral hazard for banks since DGS are only triggered if they are closed and DGS 
offer thus no incentives in this regard. Moreover, from the perspective of depositors moral hazard is not 
discussed either since co-insurance, a portion of losses to be borne by depositors, has been abandoned 
by Directive 2009/14/EC and it cannot be assumed that depositors can assess the solidity of banks or 
that banks offering more than a certain interest rate have to be considered unstable. Supervision is the 
task of the competent authorities. 

EN 

27 

   EN 

                                                 
– 

– 

ensuring  a  level  playing  field  between  banks  wherever  headquartered  in  the 
EU; 

allowing  banks  to  choose  the  way  of  providing  cross-border  services  (i.e.  via 
direct  operations  in  another  Member  State,  branch  or  subsidiary)  without 
restraints concerning the DGS regime.  

Last  but  not  least,  it  should  be  noted  that  the  review  maintains  the  principle  set  out  in  the 
recitals of the Directive that banks, not taxpayers, should in principle finance DGS. Therefore, 
this impact assessment does not deal with fiscal support for DGS65. 

The table below shows the hierarchy of the objectives (from general to operational) applicable 
to specific issues.  

65 

The Directive does not distinguish between systemic crises and 'normal times' and it is not intended to 
change  this  approach.  Were  it  changed,  depositors  would  have  no  confidence  since  they  would  be 
implicitly  told  that  their  deposits  were  not  safe  in  a  systemic  crisis.  The  Directive  could  then  not 
achieve its goal to prevent bank runs. 

EN 

28 

   EN 

                                                 
Specific problems stemming from the 
problem drivers 

Operational objectives 

Specific objectives 

General 
objec-
tives 

Table 1: General, specific and operational objectives  

Problem drivers 

1  Differences in and 
appropriateness of 
the level and scope 
of coverage 

If depositors feel that a significant part of their deposits 
is not covered, they will run on their banks. 
Differences lead to complex topping up arrangements 
and long payout delays in cross-border situations. 
Potential depositors may not choose the best product 
but the most comprehensive scheme, potentially 
distorting competition and limiting the benefits of the 
Internal Market. 

2 

Inadequate payout 
procedures 

If depositors have the choice to withdraw their deposits 
before the DGS is triggered or to wait several weeks 
after the DGS steps in, they will run on their banks in 
order to get money for the food, bills etc. 

3 

Insufficient 
depositor 
information on 
functioning of 
schemes 

If depositors do not know whether their deposits are 
protected, they will run on their banks. 
They may also hesitate to deposit their money at foreign 
banks or branches if they do not know how other 
schemes function. 

4  DGS funding 
mechanisms 
different across the 
EU (ex-ante / ex-
post) 

Different funding mechanisms potentially distort 
competition. 
Mere ex-post funding would be pro-cyclical: it drains 
liquidity from banks in times of stress. Moreover, unlike 
in ex-ante schemes, the failed bank does not contribute 
to payout.  

5  Level of funding of 
DGS: insufficient 
and different 
across the EU 

6  Banks 

contributions to 
DGS not based on 
risk exposure 

If DGS have insufficient funds, depositors may not be 
paid out. If they are aware beforehand, depositors will 
lose confidence and will run on their banks. Mere ex-
post funding would be pro-cyclical: it drains liquidity 
from banks in times of stress. Moreover, unlike in ex-
ante schemes the failed bank does not contribute to the 
payout.  

Lack of incentives for sound risk management may 
make financial system more vulnerable. 

7  Limited mandate of 
DGS (only payout, 
no bank resolution) 

If DGS had a broader mandate, their funds originating 
from the private sector could be used to support ailing 
banks – this may reduce the need for taxpayers' money 
for support measures. 

8  Lack of cross-

border cooperation 
between DGS 

High degree of fragmentation may mean that DGS with 
fewer resources would be hit more by a big failure than 
a DGS with more resources. This is aggravated by the 
lack of mutual borrowing between schemes across the 
EU. As a result the taxpayer might have to step in if a 
DGS has insufficient financial resources. 

Determine the appropriate coverage 
level.   
Provide for level playing field and 
enhanced product selection. 
Simplify arrangements applicable in 
cross-border situations 

Reduce payout delays. 

Ensure that deposits are 
covered to the highest 
economically feasible and 
cost-efficient extent also in 
relation to the potential 
number of bank failures.  
Reduce differences in the 
level and scope of coverage.
Provide alternative solutions 
to the current ‘topping up’ 
regime. 

Ensure clear and fair payout 
modalities.  
Ensure that DGS are 
capable to deal with payout 
situations. Involve DGS at an 
early stage. Improve 
information exchange 
between banks and DGS. 

Clarify and elaborate existing 
information obligations of 
banks. 

Inform potential and existing 
depositors of their deposit protection 
conditions. 

Increase convergence 
between DGS. 

Provide for a level playing field. 

Strengthen funding 
mechanisms and reduce 
differences between them. 

Enhance funding of DGS. 

Provide for a level playing field. 

Provide for contributions to 
schemes which adequately 
reflect the degree of risk 
incurred by banks. 

Provide incentives for sound risk 
management. 

Ensure that bank finance DGS. 

Ensure adequate funding for 
DGS with additional tasks. 
Ensure that DGS with 
intervention powers remain 
sufficiently funded to fulfil 
their payout obligation if 
charged with additional 
tasks. 

Provide for a solution which 
would make the schemes 
cooperate effectively. 

Facilitate private sector solutions in 
crisis situations. 

Protect depositor and taxpayer 
welfare regardless where in the EU 
deposits and their holders are 
located. 

t
e
k
r
a
M

l
a
n
r
e
t
n

I

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h
t

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c
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–
h
t
l

a
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w

'

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r
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t
i

s
o
p
e
d
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o
t
r
a
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a
t
c
e
t
o
r
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-

y
t
i
l
i

b
a
t
s
l
a
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c
n
a
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i
f

e
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c
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o
c
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t
i

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o
p
e
d
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e
h
t
g
n
e
r
t
S

9  Mutual and 

voluntary schemes 
exempted from 
DGS  

Depositors would not be covered if a mutual system 
collapses. Letting these schemes further advertising an 
‘unlimited protection’ could lead to competitive 
distortions if from end-2010 all DGS are prohibited to 
increase their coverage levels above €100 000. 

Consider including mutual 
and voluntary guarantee 
schemes in the DGS 
Directive 

Enhance depositor protection. 
Provide for a level playing field for 
the banks across the EU. 

Source: Commission services. 

EN 

29 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7. 

POLICY OPTIONS: IMPACT AND COMPARISON 

This section compares the impacts of policy options for each area on the relevant stakeholders 
(DGS, banks and depositors). The policy options have been assessed in terms of effectiveness 
(i.e. the extent to which they achieve the objectives of the proposal), efficiency (notably cost-
effectiveness) and coherence with other overarching objectives of EU policies. The following 
score system has been used for the assessment of a potential impact: from slightly positive (+) 
to strongly positive (+ + +), from slightly negative (–) to strongly negative (– – –), no impact: 
0. 

For  simplification  purposes,  with  regard  to  most  issues,  a  step-up  approach  has  been  taken, 
i.e. already chosen preferred options serve as the baseline for the assessment of the following 
issues. 

The  analysis  is  mostly  based  on  the  figures  from  the  study  elaborated  by  the  Commission's 
Joint  Research  Centre  (JRC);  in  areas  not  covered  by  this  study  other  sources  have  been 
used66. The JRC developed numerous scenarios (changes in the level and scope of coverage, 
funding mechanisms, payout, etc.) in order to facilitate the assessment of the potential impact 
of various policy options on stakeholders.  In this context, it should be noted that: 

•  The impact on banks has been presented both regarding normal times (when only ex-ante 
contributions  are  being  collected  and  they  influence  operating  profits  of  banks)  and  in  a 
crisis  situation  (when  also  additional  (ex-post)  contributions  need  to  be  paid  by  banks). 
The  latter,  assuming  that  additional  contributions  are  paid  up  to  the  maximum  required 
ceiling (i.e. ¼ of all contributions), would have the strongest impact on bank profitability, 
and thereby it should be regarded as the worst-case scenario67. 

•  Higher  costs  and  lower  profits  for  banks  may  render  them  less  attractive  for  investors, 
mitigating  their  own  funds  and  thus  diminishing  the  capacity  to  grant  credits.  However, 
this effect cannot be measured and it is not expected to be significant in the context of the 
preferred options. 

•  The impact on depositors has been presented as the worst-case scenario assuming that all 
additional bank costs are entirely passed on to depositors. In practice, however, these costs 
may  be  passed  on  not  necessarily  fully  but  only  partially  keeping  in  mind  competition 
between banks. The real impact is thus expected to be lower. 

As  most  of  the  parts  of  the  impact  assessment  pertain  to  the  provisions  of  existing  EU 
legislation, the analysis of the type of policy instrument was assumed to be superfluous. Some 
issues  presented  in  this  impact  assessment,  such  as  the  level  of  coverage,  risk-based 
contributions, DGS mandate and a pan-EU DGS, will likely be subject of a report rather than 
a legislative proposal at this stage.  

66 
67  

See the overview preceding the statistical annexes.  
The  figures  on  the  potential  impact  on  banks  should  be  interpreted  very  carefully  as  the  samples  of 
banks in most Member States (based on available data) are usually small (see ibid).  

EN 

30 

   EN 

                                                 
7.1.  Level of coverage 

The following policy options were taken into account as regards the extent of harmonisation 
of coverage levels in Member States: 

•  Option 1 (current temporary approach): Minimum harmonisation of the coverage level set 
at  €50  000  (Member  States  are  not  allowed  to  apply  coverage  levels  lower  than  the 
minimum set in the Directive, but they are allowed to apply higher coverage levels). 

•  Option  2:  Maximum  harmonisation  of  the  coverage level  (all  Member  States  must  apply 
the  same  fixed  coverage  level  specified  in  the  Directive).  As  regards  this  option,  the 
following sub-options related to the level of coverage were taken into account: 68 

(a) 

fixed coverage level of €50 000 (current approach); 

(b) 

fixed  coverage  level  of  €100  000  ( according  to  Directive  2009/14/EC,  this 
level of coverage is to be applied from 31 December 2010 onwards); 

(c) 

higher fixed level of coverage (e.g. €150 000 or €200 000). 

The  above  options  and  sub-options  within  Option  2  are  mutually  exclusive.  The  options 
implying  unlimited  coverage  and  a  coverage  level  based  on  selected  financial  or  economic 
indicators, e.g. the size of deposits or GDP per capita, have been discarded at an early stage. 

The  approach  of  minimum  harmonisation  (Option  1)  resulted  in  significant  differences 
between  the  coverage  levels  in  Member  States.  If  reverted  to,  potential  serious  competitive 
distortions between Member  States would remain, i.e. in times of financial distress deposits 
could  be  shifted  from  banks  in  Member  States  with  a  lower  coverage  level  to  those  with 
higher  protection.  Such  movements  of  deposits,  based  solely  on  one  factor  (the  level  of 
coverage),  may  involve  some  significant  costs  for  (a)  depositors  (  interest  rate  earnings 
potentially  lost  due  to  switching  from  one  bank  to  another),  (b)  banking  industry  (a  sudden 
and significant outflow of deposits may create heavy liquidity strains) and (c) real economy 
(banks may sizeably limit their lending activity in times of financial instability, and eventually 
government intervention and the use of public funds may be necessary).  

The  approach  of  maximum  harmonisation  (Option  2),  which  requires  a  fixed  level  of 
coverage in all Member States and does not allow any differences in coverage levels within 
the  EU  would  result  in  creating  a  level  playing  field  within  the  Internal  Market,  avoiding 
cross-border  competitive  distortions,  strengthening  depositor  confidence,  abandoning 
complex topping up arrangements, etc. 

Various levels of coverage have been considered as to maximum harmonisation (Options 2a, 
2b,  2c).  The  expected  impact  of  various  coverage  levels  in  terms  of  the  amount  of  covered 
deposits  and  the  number  of  fully  covered  deposits  (in  relation  to  the  amount/number  of 
eligible deposits) have been presented in Table 2.  

68 

The analysed options assume that the coverage level is applied on a 'per depositor per bank' basis (as 
stipulated by the Directive (see Annex F). 

EN 

31 

   EN 

                                                 
Table 2: The amount and the number of covered deposits with relation to the eligible deposits in the EU 

Ratio 

As of  
end-2007 

Coverage level 

€50 000 

€100 000 

€150 000 

€200 000 

Amount of covered deposits 
Amount of eligible deposits 

Number of fully covered deposits  
Number of eligible deposits 

Source: European Commission (JRC). 

61.1 % 

58.6 % 

71.8 % 

81.0 % 

88.4 % 

88.8 % 

91.0 % 

95.4 % 

96.5 % 

97.2 % 

As Table 2 shows, setting the fixed coverage level at €50 000  (Option 2a) would decrease the 
amount  of  covered  deposits  from  61%  (as  of  end-2007)  to  59%  of  eligible  deposits69.  It 
would,  however,  raise  the  number  of  fully  covered  deposits  from  89%  to  91%  of  eligible 
deposits.  Adopting  the  above  coverage  level  would  increase  total  bank  contributions  from 
€1.8  billion  (in  2008)  to  €2.2  billion  (see  Annex 
4).  At  the  same  time,  it  would  decrease 
operating profits of banks by 1.9% (with a stronger impact in EU-12 – see Annex 5). If, in 
theory, bank costs are fully passed on to depositors, the expected reduction of interest rates on 
saving accounts would be less than 0.1% or bank fees on current account maintenance would 
increase by less than €2 per ye ar per account (see Annex 6). 

This  option  could  negatively  influence  both  depositor  confidence  and  financial  stability. 
Currently, 16 Member States either already apply the coverage level of at least €100 000 or 
have legislation in place stipulating the introduction of such coverage in 2010 (see Annex 1). 
Reverting to the coverage level of €50 000 woul d thus be confusing for depositors and could 
undermine their confidence again, unnecessarily aggravating a risk of runs on banks. It could 
also be misinterpreted by the general public and financial markets as a lack of a clear vision 
and consistent overall strategy in the EU related to reforming DGS which are a key element of 
the financial safety net. Therefore, the idea to revert to the coverage level of €50 000 would 
be counter-productive to gradually restoring the still fragile financial stability in the EU. 

Setting  the  fixed  coverage  level  at  €100  000   (Option  2b)  would  increase  the  amount  of 
covered deposits from 61% (as of end-2007) to 72% of eligible deposits. It would also raise 
the number of fully covered deposits from 89% to 95% of eligible deposits (see Annex 3a-b). 
Adopting the above coverage level would increase total bank contributions from €1.8 billion 
(in 2008) to €2.6 billion (see Annex 4). At the sa me time, it would decrease operating profits 
of  banks  by  4%  (with  a  stronger  impact  in  EU-12  –  see  Annex  570).  If  bank  all  costs  are 

69 

70  

In its legislative proposal of 15 October 2008, the Commission stated that, according to estimates, about 
65%  of  the  amount  of  eligible  deposits  were  covered  under  the  previous  regime  (i.e.  the  minimum 
coverage  level  of  €20 000)  and  the newly  proposed   coverage  levels  of €50  000  and  €100  000  would 
cover about 80% and 90% of eligible deposits respectively. However, those figures were calculated on 
the then available data (as of 2003) and since then the amount of eligible deposits noticeably increased 
in the EU, while the amount of covered deposits remained almost unchanged. It is related to the fact that 
the average deposit size has increased in recent years (see Annex 3a). 
According to Annex 5, the average 5.5% decrease in bank profits is expected in EU-12. The strongest 
impact is expected in BG, EE and LV (about 10-15% decreases). The impact is related to the amount of 
eligible deposit and the corresponding operating profit of each bank. If in a sample there are banks with 
a small operating profit (as in the case of BG and EE), the variation of the operating profit will be very 
affected  when  increasing  contributions  (additionally,  in  EE,  the  sample  includes  only  two  banks). 
Moreover, as regards EE and LV the expected impact is high because of their low levels of coverage in 
2007 (less or equal to €15 000).  

EN 

32 

   EN 

                                                 
passed  on  to  depositors,  they  may  expect  a  maximum  reduction  of  interest  rates  on  saving 
accounts of less than 0.1% or increasing current account maintenance fees of around €3.5 per 
year per account (see Annex 6). 

Setting  the  fixed  coverage  level  at  €150  000  or  €200  000   (Option  2c)  would  bring  quite 
substantial  benefits  in  terms  of  increasing  the  amount  of  covered  deposits  (see  Table  2).  At 
the  same  time,  however,  it  would  bring  only  very  marginal  (almost  negligible)  benefits  in 
terms  of  increasing  the  number  of  fully  covered  deposits    –  comparable  to  those  that  could 
already  be  achieved  by  adopting  the  fixed  coverage  level  of  €100  000.  Moreover,  the 
coverage  levels  of  €150  000  or  €200  000  would  have  higher  cost  implications  for  banks  (a 
decrease in operating profits of about 6-7%) and depositors in comparison with the two lower 
levels (see Annexes 5 and 6).  

Finally,  it  should  be  noted  that  during  the  Commission  public  consultation  conducted  last 
year71, most stakeholders were in favour of setting the coverage level at €100  000 (about 50% 
of  those  who  responded  –  compared  to  about  20 %  who  preferred  maintaining  coverage  at 
€50  000).  The  proponents  of  the  €100  000  level  regarded  it  as  simple,  transparent,  stable, 
adequate for restoring depositor confidence, etc. The opponents were afraid that the costs for 
banks  would  not  outweigh  the  rather  marginal  benefits.  About  half  of  the  remaining 
contributors  either  suggested  raising  the  level  to  between  €50  000  and  €100  000  or  notably 
higher  or  even  unlimited  coverage.  About  80 %  of  respondents  were  of  the  opinion  that  the 
level  of  coverage  should  be  fixed  to  create  a  level  playing  field.  This  issue  has  also  been 
consulted with Member States after the public consultation. At the last meetings of DGSWG 
and  EBC  (in  February  and  March  2009  respectively),  only  a  few  Member  States  still 
considered the level of €100 000 as too high; the  others explicitly or implicitly supported it72.  

Conclusion:  The  approach  of  minimum  harmonisation  proved  to  be  ineffective  as  regards 
protecting depositor wealth and is incoherent with the Treaty objective to ensure the proper 
functioning of the Internal Market. The approach of maximum harmonisation would create a 
level playing field for all Member States. Among the harmonised coverage levels, €100 000 
seems  to  be  the  most  effective  one  as  it  would  ensure  a  substantial  progress  in  terms  of 
increased  deposit  protection  compared  to  the  pre-crisis  period.  Moreover,  keeping  in  mind 
that it was stipulated in the Directive quite a long time ago that the level of coverage would be 
applied  from  end-2010,  it  may  be  regarded  as  a  kind  of  'exit  strategy'  for  Member  States 
which introduced unlimited deposit guarantees as a result of the aggravation of the financial 
crisis in autumn 2008. All scenarios involve both benefits (extended depositor protection) and 
costs (increased bank contributions, reduced operating profits, potentially lower interest rates 
on  savings  or  higher  bank  fees).  In  general,  the  higher  the  level  of  coverage,  the  higher 
benefits but also costs. It seems that the level of €100 000 is the balanced solution in terms of 
cost/benefit efficiency since the costs increase more or less proportionally in all scenarios (see 
Annexes 4-6) while the benefits of adopting a higher coverage level than €100 000 are very 
limited. 

71  
72 

See http://ec.europa.eu/internal_market/consultations/2009/deposit_guarantee_schemes_en.htm. 
Depositors in NO are covered up to about €240 000. However, the average deposits amount to only €33 
000 so that a reduction is unlikely to cut off many depositors from protection. If a neighbouring EEA 
country  could  apply  a  140%  higher  coverage  level,  this  would  lead  to  a  significant  competitive 
distortion,  in  particular  in  the  other  bordering  Nordic  Member  States.    For  sake  of  completeness,  it 
should be noted that there is no particular impact on Member State with very low average deposits per 
depositor since then the coverage level is less relevant but does not lead to higher costs since the target 
level (see Section 7.8) would be accordingly lower in absolute figures. 

EN 

33 

   EN 

                                                 
The preferred policy option is therefore Option 2b. 

Operational objectives 

Policy options 

Comparison criteria  

Effectiveness 

Efficiency 

Coherence 

Ensure that deposits are covered to the 
highest economically feasible and cost-
efficient extent also in relation to the 
potential number of bank failures. 

Reducing differences in coverage levels 

Providing alternative solutions to topping 
up  

1. Minimum harmonisation – coverage level of 
€50 000 

2a. Fixed coverage level of €50 000 (current 
temporary approach) 

2b. Fixed coverage level of €100 000  
(final approach – from end-2010 onwards) 

2c. Higher fixed level of coverage 
(e.g. €150 000 or €200 000) 

- 

o 

+ + + 

+ + + 

n.a. 

o 

+ + 

+ 

- 

o 

+ + + 

+ + + 

*n.a. – efficiency (cost-effectiveness) of a measure cannot be estimated if the measure does not achieve the objectives set 

7.2. 

Exemptions from the coverage level 

The  following  policy  options  were  taken  into  account  (of  which  Option  1  and  2  are 
cumulative and Option 3 is mutually exclusive in relation to Options 1 and 2): 

•  Option  1 

Indefinitely  maintaining  exemptions 
considerations in place on 1 January 2008 (i.e. not accepting new exemptions); 

(current  approach): 

for  social 

•  Option  2:  Higher  coverage  for  temporary  high  deposit  balances  (THDB)  stemming  from 
some specific life events (e.g. real estate transactions) and limited in both amount and time; 

•  Option  3:  Phasing-out  the  grandfathering  after  a  transition  period  without  particular 

coverage of THDB73 but allowing a general protection of old-age provision products. 

Maintaining the grandfathering for exemptions for social considerations existing before 2008 
(Option  1)  would  be  related  to  one  Member  State  (unlimited  protection  of  certain  tax-
privileged  deposit  savings  accounts74  in  DK75).  Therefore,  it  could  lead  to  competitive 
distortions within the EU (see Section 4.1.2).  

A higher coverage for temporary high deposit balances (Option 2) refers to a sudden (one-off) 
increase of the amount deposited on a bank account as a result of some specific life events. 

73  

74 

75 

This  would  not  prevent  Member  States  from  repaying  deposits  exceeding  the  coverage  level  if  these 
deposits  result  from  real  estate  transactions  or  are  linked  to  particular  life  events  such  as  marriage, 
divorce, invalidity or decease of a depositor provided that the costs for such repayments are not borne 
by DGS. 
These include savings index-linked accounts, lump-sum pension accounts, personal pension accounts, 
instalment pension accounts, children's savings accounts, home savings contracts, educational savings 
accounts and establishment accounts. 
It is worth noting that the Danish solution is similar but much more generous than the one existing in 
the  US  where  so-called  'certain  retirement  accounts'  (e.g.  all  types  of  individual  retirement  accounts, 
deferred  compensation  plan  accounts  provided  by  state  and  local  governments,  self-directed  defined 
contribution plan accounts, etc.) enjoy a higher coverage level than standard deposits. The FDIC adds 
together  all  retirement  accounts  owned  by the  same  person  at  the  same  insured bank,  and  insures  the 
total amount up to $250 000 (see http://www.fdic.gov/deposit/deposits/insured/ownership2.html). This 
will  remain  even  after  the  standard  coverage  level  (now temporarily  increased  to  $250 000 until  end-
2013) will return to $100 000 in 2014 (see http://www.fdic.gov/deposit/deposits/difactsheet.html). 

EN 

34 

   EN 

                                                 
This has so far been applied only in FI and DK (limited to real estate transactions). It has also 
been considered in the UK. This option would have to entail the following elements: 

– 

– 

– 

definition of covered events76; 

definition of a maximum coverage level; 

definition of a maximum time limit. 

The Commission analysed only the impact of real estate transactions since it was regarded as 
the  most  relevant  case  and  data  on  other  events  (e.g.  personal  injury  compensations  or 
inheritance)  were  not  available  on  EU  level.  The  following  coverage  levels  were  taken  into 
was calculated for the time limits of 
account: €200 000, €300 000 and €500 000. The impact 
3, 6, and 12 months. 

In  general,  the  higher  the  coverage  level  for  THDB  and  the  longer  the  time  limit,  the  more 
costs  for  banks  and  for  depositors  (see  Annex  9).  The  impact  of  coverage  for  THDB  set  at 
€200 000 for 3 months (the THDB scenario with th e lowest impact analysed) would lead to an 
increase in annual contributions to DGS of €46 million after 2010 and a decrease in banks’ 
operating profits of 0.6%. If, in theory, all additional bank costs were completely passed on to 
depositors,  a  decrease  in  interest  rates  on  savings  would  be  negligible  (almost  zero)  and  an 
increase in bank fees on current accounts should not exceed €0.2 per account per year. On the 
other  hand,  under  the  scenario  with  the  highest  impact  analysed  (a  THDB  coverage  of  
€500  000  for  12  months),  annual  bank  contribu tions  would  increase  by  €371  million  after 
2010 and their operating profits would decrease by 2.7%. If bank costs were entirely passed 
on  to  depositors,  bank  interest  rates  would  decrease  only  very  slightly  (by  0.02%)  or  fees 
would increase by less than €1 per account per year.  

The impact on depositors will be low since only a very limited number of depositors will have 
THDB  just  at  the  time  of  a  bank  failure.  According  to  the  Commission  (JRC)  estimates,  in 
2007,  the  average  house  price  was  above  €100  000  in  15  Member  States,  of  which  it  was 
above €200 000 only in 3 Member States (see Annex 8). 77 Therefore, in many Member States, 
an  average  house  transaction  already  falls  within  the  coverage  level  of  €100  000.  Many 
depositors  with  high  balances  can  be  assumed  to  have  sought  financial  advice  on  how  to 
invest  a  THDB,  thereby  lowering  it  (e.g.  by  investing  it).  The  low  number  of  depositors 
concerned also means that THDB coverage would not have an impact on financial stability.  

The introduction  of  THDB  coverage would also lead  to an increase of human and financial 
resources  needed  for  DGS.  The  definition  of  the  three  elements  referred  to  above  would  be 
difficult to harmonise since the need to protect certain events (e.g. inheritance or divorce or 
real estate transactions) would likely be seen differently by Member States. If this was left to 
the  discretion  of  Member  States,  the  risk  of  competitive  distortions  would  even  be  higher. 
Member  States  could  also  improve  the  rank  of  such  depositors  in  an  insolvency  procedure, 

76 

77 

For example, in its consultation paper of March 2009, the FSA proposed that temporary high balances 
should  benefit  from  additional  protection  where  they  arise  from:  (i)  sale  of  a  primary  residence  and 
property  bought  for  dependent  relatives,  for  use  as  their  primary  residence;  (ii)  pension  lump  sums;  
(iii)  inheritance;  (iv)  divorce  settlements;  (v)  redundancy  payments;  (vi)  proceeds  of  pure  protection 
contracts;  (vii)  court  awards  /  out-of-court  settlements  for  personal  injury  (for  more  details,  see 
http://www.fsa.gov.uk/pubs/cp/cp09_11.pdf). 
According to European Mortgage Federation, there are 7 Member States with the average house price 
above €200 000. 

EN 

35 

   EN 

                                                 
e.g.  by  allowing  the  segregation  of  ownership  as  to  such  claims.  Moreover,  payout  would 
likely be delayed.  

Moreover, one could argue that if payments for social reasons or old age provision deposits 
are not covered, there may be an impact on public welfare. In general, there are no lump sum 
payouts in the mandatory state pension schemes in Member States (all Member States pay out 
monthly  instalments  instead  of  lump  sums),  or  where  it  is  possible,  there  is  a  limit  of  the 
entitlements  (e.g.  25%  in  UK  and  SE).  Lump  sum  payouts  are  much  more  wide-spread  in 
privately funded pension schemes, and in this case a 100% payout in lump sum is also often 
used78.  However,  DGS  are  not  designed  to  cover  pensions  since  old  age  provision  can  take 
many  different  forms  (e.g.  investment,  insurance,  deposits  or  state  payments).  It  would 
therefore seem preferable to examine pension protection in a broader context. Although there 
were no sufficient data to evaluate exactly the potential impact and costs of protecting pension 
lump sum payouts, the size of these lump sum payouts is unlikely to be very high implying 
that  only  a  small  fraction  of  them  can  be  expected  to  be  above  the  protection  level  of 
€100 000.  Therefore,  the  impact  would  be  very   limited  as  most  pension  lump  sum  payouts 
would  be  protected  under  the  standard  coverage  level.  This  also  means  that  the  impact  on 
public welfare would be limited. 

Phasing out the grandfathering without introducing particular coverage for THDB (Option 3) 
would have a very limited negative impact since currently only depositors in DK and FI (the 
latter limited to real estate transactions) profit from it. For DK this would mean abandoning 
unlimited  protection  of  certain  tax-privileged  savings  accounts.  Moreover,  only  depositors 
exceeding the coverage level would profit from such exemptions. On average in the EU, their 
number is very low (4.6%). However, their number in DK is much higher (18.8%). Leaving it 
open  to  Member  States  to  introduce  a  general  system  for  protecting  old-age  provision 
products  would  address  social  issues  but  not  lead  to  market  distortion  since  deposits  would 
then not be privileged among other old-age provision  products. 

Finally, it should be noted that during the public consultation conducted by the Commission 
last year, interest in potential exemptions from a fixed coverage level – including temporary 
high balances – was rather low (only half of the respondents replied to the questions on that 
issue).  Most  of  those  who  responded  (60 %)  were  against  any  exemptions  because  it  was 
perceived  as  running  counter  to  harmonisation  of  the  coverage  level  and  confusing  for 
depositors.  About  two  thirds  of  respondents  argued  that  covering  temporary  high  balances 
would be complicated, distorting competition and delaying the payout process.  

Conclusion: Option 3, as compared to Option 1, is particularly effective as to the prevention 
of  competitive  distortion,  i.e.  reaching  a  level-playing  field.  Option  3  is  not  as  effective  as 
Option 2 to protect depositor wealth but more effective than Option 2 as to the avoidance of 
competitive distortions. In comparison with Option 2, Option 3 is very efficient since it saves 
administrative costs and limits contributions of banks to DGS. As regards cost efficiency of 
Option 2, it does not depend too much on a coverage level for THDB (€200 000, €300 000 or 
€500 000), but it depends quite h eavily on a time limit for such protection (3, 6, or 12 months) 
(see Annex 9). 

The preferred policy option is therefore Option 3. Moreover, Option 2 could be considered as 
well provided the time for THDB protection is limited. 

78 

http://ec.europa.eu/employment_social/spsi/docs/social_protection_commitee/final_050608_en.pdf. 

EN 

36 

   EN 

                                                 
Operational 
objectives 

Determining an 
appropriate level 
of coverage  

Policy options 

Comparison criteria  

Effectiveness 

Efficiency 

Coherence 

1. Indefinitely maintaining exemptions for social considerations existing before 
1 January 2008 (current approach) 

2. Higher (limited in time) coverage for temporary high deposit balances 

3. Phasing out the grandfathering after a transition period without 
particular coverage of THDB 

o 

+ + 

+ 

o 

– 

+ 

o 

+ 

+ 

7.3. 

Scope of coverage: eligibility of depositors 

The following policy options were taken into account (of which Options 1 and 2 are mutually 
exclusive while the sub-options are cumulative): 

•  Option  1  (current  approach):  Leaving  all  eligibility  criteria  to  the  discretion  of  Member 
States and mandatorily include only SME permitted to draw up an abridged balance sheet. 

•  Option 2: Harmonised approach to the eligibility criteria. The following sub-options have 

been considered: 

(a) 

excluding  enterprises  in  the  financial  sector,  i.e.  financial  institutions, 
insurance companies, investment funds, pension funds; 

(b) 

excluding authorities at all levels; 

(c) 

including depositors having a relationship with the failed bank, like managers, 
directors,  important  shareholders  (>5%),  auditors  (and  their  close  relatives), 
companies  in  the  same  group,  depositors  that  obtained  special  conditions 
aggravating the financial situation of the bank; 

(d) 

including all enterprises. 

If all categories of depositors were included (apart from banks and the depositors who opened 
their  account  anonymously  that  are  excluded  mandatorily),  there  would  be  an  increase  in 
contributions for each DGS of 7.6% and it would reflect into a maximum decrease in banks’ 
operating profits of 1.1% at EU level. If all categories referred to in Annex I of the Directive 
were excluded from protection, contributions to DGS would decrease on average by 8.7% and 
consequently  banks’  operating  profits  would  increase  by  around  0.7%  at  EU  level  (Annex 
11a-c). 

If costs were (in theory) fully passed on to depositors, an inclusion of all categories (the most 
expensive scenario for banks) would lead to a reduction of 0.02% in interest rates on savings 
or an average increase in current account fees of €0.5 per account  per year. A partial inclusion 
of only some categories would presumably even have a lower impact. 

Leaving the eligibility criteria to the discretion of Member States (Option 1) is ineffective as 
to ensuring appropriate coverage for all depositors in the EU, reducing differences in scope of 
coverage,  enhancing  depositor  confidence,  avoiding  market  distortions  and  improving 
depositor information (see Section 4.1.3). 

EN 

37 

   EN 

Excluding enterprises in the financial sector (Option 2a) would have a rather limited impact79 
since  they  are  already  excluded  in  all  Member  States  but  for  DK,  GR,  FI  and  UK80. 
Enterprises  in  the  financial  sector  can  assess  the  risk  of  their  operations.  Some  investment 
funds associations argued in the public consultation that their deposits should be mandatorily 
covered by DGS since these deposits belong in the end to unit holders. The impact of bank 
failures on collective investment undertakings is already taken into account by Article 52(1)b 
of  Directive  2009/65/EC81,  which  limits  any  investment  (including  deposits)  to  20%  of  the 
fund's size. Such deposits are only covered in 3 Member States (DK, FI and SE)82. 

Excluding authorities at central and local level (Option 2b) would have a limited impact since 
for the majority of them, the coverage level of €100 000 would be insignificant (around 83% 
of local authorities in the EU are estimated to have deposits of more than €50 000 and about 
72% of more than €100 000). Since central author ities are likely to hold even higher deposits 
than  local  authorities,  the  impact  on  them  would  even  be  lower.  The  impact  would  also  be 
limited because authorities are currently included only in 7 Member States (CZ, DK, FI, GR, 
LT, PL and SE83). The amount of their total deposits (i.e. before application of the coverage 
level) can be found in Annex 10e. Since in all other Member States they are excluded from 
coverage, this would not have any impact in 20 Member States. This corresponds to a rather 
small impact on each DGS (a decrease in contributions of 0.2% at EU level). The impact on 
banks' operating profits would be negligible (see Annex 11c). In particular, local and central 
authorities  also  have  easier  access  to  credits  than  citizens84  and  even  if  municipalities  are 
technically insolvent, there will be means under national law to ensure that they can continue 
to  fulfil  their  basic  tasks  towards  citizens.  Their  limited  number  compared  to  all  other 
depositors does also minimise the impact on financial stability in case of a bank failure. 

Including  depositors  having  a  relationship  with  the  failed  bank  (Option  2c)  would  have  an 
impact on depositors in 20 Member States where they have been excluded. They are covered 
only in CY, DK, FI, PL, SK, SI and SE. Dropping the timely verification of eligibility criteria 
would contribute to a reduction of payout and of administrative costs for DGS, which would 
have to be borne by banks contributing to DGS. Only competent authorities and courts would 
decide about the individual responsibility for a bank failure. Since the number of concerned 
depositors seems very low, their inclusion would not lead to a significant increase of costs for 
DGS and banks and may even be counterbalanced by the savings of administrative costs. If, 

79 

80 

81 

82 

83 

84 

Even though only the impact on certain categories of financial institution could be calculated, for the 
following  assessment  it  is  deemed  that  the  impact  on  all  kinds  of  financial  institutions  would  not  be 
significantly different. Furthermore, no data were available as to financial institutions in general, since 
they are a quite inhomogeneous group. 
On  the  contrary,  if  only  insurance  companies  and  pension  funds  were  included  into  the  scope  of 
coverage,  this  would  lead  to  an  increase  in  contributions  for  most  DGS  (on  average  in  the  EU  about 
5%), and a decrease of banks’ operating profit of 0.2% at EU level (see Annex 11b-c). 
Directive  2009/65/EC  of  the  European  Parliament  and  of  the  Council  of  13  July  2009  on  the 
coordination  of  laws,  regulations  and  administrative  provisions  relating  to  undertakings  for  collective 
investment in transferable securities (UCITS), OJ L 302, 17.11.2009, p. 32. 
In  DE,  such  deposits  are  included  by  mutual  guarantee  schemes.  However,  these  schemes  are  not 
subject to the German legislation on DGS. 
However, in CZ and LT the average deposits of municipalities in these Member States are the lowest in 
the EU so that the impact there might be higher than in DK and SE (see Annex 10e). However, no data 
are available as to the covered deposits...  
Under Annex VI, no. 8, 9, 23, 29 and 32, of Directive 2006/48/EC, exposures to local authorities with a 
maturity of less than 3 months are assigned a risk weight of only 20% compared with a risk weight of 
75%  for  retail  exposures.  This  means  that  for  short-term  loans  to  authorities,  banks  have  to  maintain 
less own funds, which makes loans to local authorities more attractive. 

EN 

38 

   EN 

                                                 
however,  these  depositors  were  excluded,  high  investigation  costs  would  be  incurred  with 
little savings due to their low number. 

Including all enterprises regardless of their size (Option 2d) would have an impact on medium 
and large enterprises currently excluded in 13 Member States (AT, BE, DE, EE, IE, LU, MT, 
NL, PL, RO, SK, SI and UK)85. If they were included, contributions to DGS would increase 
by  1.3%.  This  would  result  in  a  0.7%  decrease  in  banks’  operating  profits  at  EU  level  (see 
Annex 11c). On the other hand, if only micro and small enterprises were covered as it is now 
the case, the contributions would drop by €254 million, i.e. by 13% (see Annex 11d). 

Finally, as regards the public consultation conducted by the Commission last year, almost all 
respondents were in favour of harmonisation of eligibility criteria for depositors to ensure a 
level playing field. Nearly all respondents suggested excluding financial institutions (regarded 
as  professional  entities)  and  a  clear  majority  was  in  favour  of  excluding  all  kinds  of 
authorities  (since  taxpayers’  money  should  not  be  covered  by  privately-financed  DGS  and 
authorities should be expected to behave reasonably in a crisis, thus minimising the risk of a 
bank  run).  Some  suggested  covering  only  local  authorities  because  the  coverage  level  of 
€ 100 000 would be signifi cant to them. A majority suggested maintaining coverage for SMEs 
and excluding larger enterprises since they deemed €100 000 relevant to smaller companies. 
Conclusion: Options 2a-d are effective as regards creating a level playing field and ensuring a 
better  protection  of  depositor  wealth  and  they  could  highly  contribute  to  reducing  payout 
delay.  In  this  context  it  should  be  noted  that  it  is  relatively  easy  to  distinguish  between 
categories  of  depositors  but  time-consuming  and  costly  to  distinguish  within  them.  These 
options  would  also  be  efficient  since  they  save  administrative  costs  for  verifications  of 
eligibility during payout and only moderately increase contributions of banks to DGS. 

The preferred policy options are therefore Options 2a-d. 

Operational 
objectives 

Reducing 
differences in 
the scope of 
coverage 

Policy options 

Comparison criteria  

Effectiveness 

Efficiency 

Coherence 

1. Leaving all eligibility criteria to the discretion of Member States (current 
approach) 

2. Harmonised approach to the eligibility criteria 

2a. Excluding enterprises in the financial sector  

2b. Excluding authorities 

2c. Including depositors having a relationship with the failed bank 

2d. Including all enterprises 

o 

+++ 

++ 

++ 

++ 

+ 

o 

++ 

++ 

++ 

+ 

+ 

o 

+ 

+ 

+ 

+ 

+ 

7.4. 

Scope of coverage: protected products 

The  following  policy  options  were  taken  into  account  (they  are  cumulative,  not  mutually 
exclusive – except for Option 1): 

•  Option  1  (current  approach):  Broad  definition  of  deposits  but  discretionary  exclusion  of 
certain  deposits:  structured  products  and  debt  securities  /  liabilities  arising  out  of  own 
acceptances  or  promissory  notes;  allowing  Member  States  to  choose  between  DGS  and 
ICS if products covered by both schemes are concerned by a bank failure. 

85 

Based on the current criterion, i.e. the option to abridge balance sheets (see Annex B). 

EN 

39 

   EN 

 
                                                 
•  Option 2: Excluding coverage of debt evidenced by a certificate issued by the same bank 
and  debt  securities  and  liabilities  arising  out  of  own  acceptances  and  promissory  notes 
(currently optional). 

•  Option 3: Excluding structured products whose principal is not repayable in full (currently 

unclear). 

•  Option 4: Including deposits in non-EU currencies (currently optional). 

•  Option 5: The approach to products covered by DGS and ICS: clarifying that in the event 
of a claim on a credit institution subject to both ICS and DGS, the claim should be dealt 
with by the DGS. 

Retaining the current approach is ineffective (see Section 4.1.4) since depositors may choose 
the  'best  DGS'  covering  the  deposits  they  hold  but  not  the  'best  product  or  service'.  The 
inclusion  of  products  that  have  investment  character  could  lead  to  a  double  protection  of 
depositors  under  DGS  and  ICS  and  the  identification  of  depositors  and  covered  products 
would be complicated and therefore delay payout. 

The impact of excluding debt certificates (Option 2) on depositors would be low since in all 
Member  States  but  HU,  LV  and  SE  debt  securities  and  liabilities  arising  out  of  own 
acceptances and promissory notes are excluded (see Annex B)86. Exclusion would only have 
an impact on depositors at banks registered in these three countries. The impact on DGS and, 
in turn, on banks financing them is that costs are lower since less deposits must be covered. 

Structured  products  (Option  3)  have  not  been  defined  in  the  Directive  and  it  is  unclear 
whether their coverage is required by the Directive or not87. However, they are only covered 
at a minority of DGS88 so their exclusion would lead to only slightly lower costs for DGS and 
banks financing them as fewer deposits would have to be covered.  

Deposits in non-EU currencies (Option 4) are covered in all Member States but for AT, BE, 
CY, DE, LT and MT. The only figures available on the amount of such deposits are from AT 
(7%  of  eligible  deposits),  BE  (8%  of  total  deposits),  LT  (11%  of  eligible  deposits)  and  BG 
(14% of eligible deposits). However, in the public consultation conducted by the Commission 
last  year,  stakeholders  from  only  few  Member  States  referred  to  the  importance  of  such 
depositors in their country. On the basis of an average of 5% of eligible deposits, this would 
lead  to  the  rough  estimation  that  there  are  €273  million  of  covered  deposits  in  non-EU 
currencies in the EU. Correspondingly, DGS had to cover this additional amount. The impact 

86 

87 

88 

By nature, also mutual schemes cover them since they protect the bank as such and thus indirectly cover 
all liabilities of a bank. 
Since the current definition in Article 1(1) of the Directive focuses on repayable credit balances in an 
account,  it  could  be  argued  that  products  that  are  not  repayable  in  par  would  not  fall  under  this 
definition.  
EFDI  asked  DGS  whether  deposits  with  embedded  derivatives  were  covered  with  the  result  that  the 
position  of  EFDI-members  differs  but  if  the  terms  of  repayment  are  fixed  and  cover  at  least  the 
originally paid-in capital then the DGS-protection works in all countries. But if there is a market risk to 
the  capital  amount,  not  only  with  the  earning  of  interest  but  also  linked  to  financial  performances  of 
share (or other) indices, the protection is not granted by the DGS in most of the countries. From the (not 
published)  annex  to  the  report  on  scope  of  coverage  under  national  DGS  (2008)  it  seems  that  such 
deposits are only covered in HU. 

EN 

40 

   EN 

                                                 
on banks contributions to DGS under the chosen target level 1.96% of eligible deposits (see 
Section 7.8) would be at maximum €5.3 million (€273 million x 1.96%).

89  

If  the  DGS  Directive  prevails  over  ICS  in  case  of  a  double  coverage (Option  5), depositors 
would be confident that deposits are always reimbursed under the DGS Directive. Compared 
to  the  ‘worst  case  scenario’  of  the  status  quo  (that  a  Member  State  chooses  to  reimburse 
depositors by using the ICS) depositors enjoy – under the current rules – a higher coverage (at 
minimum  €50  000  and  soon  €100  000  compared  to
  a  current  minimum  coverage  in  the 
framework  of  ICS  of  €20  000  raised  to  €50 00 0).  There  is  no  impact  on  banks  because  the 
amount of covered deposits does not change – only the right to choose ceases to exist.  

All options but Option 1 effectively reduce differences in the coverage level since they lead to 
harmonisation. Moreover, Options 3 and 4 ensure a high level of protection with a resulting 
higher  depositor  confidence  into  DGS.  Options  2  and  3  contribute  to  reducing  the  payout 
delay. Options 3 to 5 lead to slightly higher costs but this should be more than outweighed by 
the gain in depositor confidence and financial stability.  

During  the  public  consultation  conducted  by  the  Commission  last  year,  most  respondents 
(about  two  thirds)  were  in  favour  of  covering  structured  deposits.  Opponents  indicated  the 
market risk incurred by such deposits and regarded them as investments that should only be 
covered by ICS and not DGS. As to debt certificates, a slight majority was against including 
them  in  the  scope  of  deposit  protection  since  securities  should  only  be  covered  by  ICS  and 
that they are usually not redeemable before maturity, meaning that a run on banks caused by 
debt certificates would be unlikely. Proponents of including certificates highlighted their role 
as easily accessible savings products (important in some Member States). An overwhelming 
majority  supported  harmonising  coverage  for  both  structured  deposits  and  debt  certificates 
and having clear definitions of such products. Finally, most respondents (about three quarters) 
were in favour of coverage for non-EU currencies. Opponents emphasised the currency risk.  

Conclusion: Options 2-5 are effective in order to achieve a level playing field and to reduce 
the payout delay. These options are also efficient since administrative costs will be saved and 
contributions  can  be  expected  to  remain  stable  (higher  contributions  to  cover  non-EU 
currencies but lower contributions since structured products and debt certificates will not be 
covered). Option 5 is also coherent with the ICS Directive (see Annex C). 

The preferred policy options are therefore Options 2-5.  

89  

The data in this paragraph are from the (not published) annex to the EFDI report on scope of coverage 
(see the previous footnote). 

EN 

41 

   EN 

                                                 
Operational objectives 

Policy options 

Reducing differences in the 
scope of coverage.  

Providing alternative 
solutions to current topping 
up regime. 

1. Retain current approach (all optional) 

2. Exclude structured products not repaid at par  

3. Exclude debt certificates 

4. Include accounts in non-EU currencies 

5. DGS prevails over ICS 

Comparison criteria  

Effectiveness 

Efficiency 

Coherence 

o 

+ 

+ 

+ 

+ 

o 

+  

+ + 

– 

- 

o 

+ 

+ 

+ 

+ 

7.5.  Payout delay and modalities 

The following policy options were taken into account as regards the payout delay (Options 1-
4 are mutually exclusive): 

•  Option  1  (current  approach):  Retaining  the  payout  delay  of  20-30  working  days  (from 
end-2010 onwards). DGS can require depositors to submit application forms on paper. 

•  Option 2: Emergency payout (e.g. €10 000 in 3 days),  but retaining the standard delay of 

20-30 working days for the exceeding deposits. 

•  Option  3:  Reducing  the  payout  delay  to  one  week,  i.e.  7  calendar  days90  (without 
extension)  after  a  transition  period  of  3  years.  Payments  by  DGS  on  their  own  initiative 
without the need for applications91. Requirements for banks to tag eligible deposits and to 
provide a single customer view aggregating all deposits of a depositor. 

•  Option 4: Requiring a transfer of deposits to another bank or a bridge bank within the one-
week delay set in Option 3 (if the transfer is not feasible, Option 3 should be applied). 

The following policy options were taken into account as regards payout modalities (Options 
5-8 are cumulative, but their sub-options are mutually exclusive): 

•  Option 5: Payout of covered deposits must be made: 

(a) 

in the currency chosen by the DGS concerned (current approach); 

(b) 

in the same currency as the deposits were paid in; 

(c) 

in the currency of the DGS (counter value of the deposits on date of payout). 

•  Option 6: Interests that have not been credited at the time of a bank failure: 

(a) 

are paid or not, within the discretion of the Member States (current approach); 

90 

91 

It would lead to a clear definition of the payout delay, not blurred by different dates of national holidays 
in Member States and possibly different definitions of a ‘working day’. 
Without  prejudice  to  request  to  depositors  to  (preferably  electronically)  indicate  their  new  account  if 
necessary (unless e.g. cheques are used for payout). 

EN 

42 

   EN 

 
                                                 
(b) 

are paid out according to the rate agreed with the bank until the date of failure 
but replaced with interest payments on the basis of current average market rates 
if interest cannot be calculated with reasonable efforts; 

(c) 

are not paid by the DGS at all.  

•  Option 7: Dealing with small deposits: 

(a) 

(b) 

all deposits regardless of their size must be paid out by DGS in full up to the 
coverage level (current approach); 

introduction of a 'de minimis' rule (i.e. deposits below a certain size, e.g. €10 or 
€20, would not have to be paid out). 

•  Option 8: Set-off arrangements: 

(a) 

set-off and counterclaims unlimited but optional (current approach); 

(b) 

limiting set-off to claims that have fallen due or are delinquent; 

(c) 

discontinuing  set-off  for  depositors,  but  limiting  set-off  in  the  insolvency 
procedure  (against  the  DGS  that  has  subrogated  into  the  depositors'  claims 
against the bank); 

(d)  discontinuing set-off completely. 

Retaining the current approach (Option 1) would mean that depositors have to wait 1 month to 
6 weeks for their money. This delay would likely lead depositors to withdrawing their money 
and running on a bank in order to avoid this delay. 

The option stipulating an emergency payout (Option 2) would mean that DGS would have to 
pay out twice (for most depositors, i.e. those who have more deposits than e.g. €10 000). Even 
though  the  costs  assigned  to  payout  (stemming  from  involving  human  and  technical 
resources)  cannot  be  precisely  estimated  due  to  the  lack  of  data,  they  would  likely  almost 
double  as  a  result  of  making  the  payout  exercise  twice.  Making  a  rapid  payout  without  a 
proper  verification  of  claims  (due  to  time  pressure)  may  result  in  a  relatively  high  rate  of 
erroneous payments compared to normal circumstances. As a result, it would involve further 
costs  for  DGS  –  stemming  from  involving  resources  required  to  recover  erroneously  paid 
money. It may be practically very difficult and time consuming as it would likely force DGS 
to  challenge  claims  before  the  courts.  It  would  also  make  false  impression  of  DGS 
incompetence. In general, making an emergency payment would send a very negative market 
signal to depositors who could think that the DGS does not have sufficient funds to pay the 
whole amount; this, in turn, could lead to contagious effects and a run on banks. 

As  to  reducing  the  payout  delay  to  one  week  (without  extension)  after  a  transition  period 
(Option 3), it would entail tagging eligible deposits (i.e. marking them in bank books so that, 
in case of a bank failure, no eligibility test has to be made), data cleansing (i.e. any IT and 
manual  data  cleansing  undertaken  -  e.g.  postcode  or  date  of  birth  of  accounts’  holders  -  to 
allow  the  unique  identification  of  a  customer)  and  creating  a  single  customer  view  (i.e.  a 
comprehensive  identification  of  the  complete  position  of  each  depositor).  They  have  been 

EN 

43 

   EN 

identified in the UK study92 as indispensable for a payout within a week93. The cost analysis 
conducted for the UK and extrapolated to the EU suggests that tagging would incur one-off 
costs  for  EU  banks  around  €1.1  billion,  data  cleansing  about  €1.7  billion  and  the  single  
customer  view  about  €3.5  billion.  These  total  co sts  of  €6.2  billion  are  assumed  to  be  faced 
over 5 years (thus, annual costs would be about €1.2 billion) 94. They are expected to be higher 
for medium-sized banks than for large ones (see Annex 12d). The above costs would translate 
in an average 1.4% decrease of bank operating profits at EU level. In the unlikely case that all 
those costs were passed on to depositors, it would mean a 0.02% decrease in interest rates on 
savings or an increase in bank fees of less than €2 per year per acc ount (see Annex 12 e-f). 
However,  the  single  customer  view  would  also  lead  to  benefits  for  banks  since  they  would 
better know their customers and could offer them products they have not bought yet.  

The option requiring the transfer of deposits to another bank or a bridge bank within one week 
(Option  4)  goes  beyond  the  typical  DGS  mandate  in  the  EU  and  is  typically  part  of  a  bank 
resolution.95 This option is similar to the insured deposit transfer (IDT) transaction used in the 
US as an alternative to the straight deposit payoff; it may ensure the continuity of service to 
depositors96. This option is also similar to the purchase and assumption (P&A) transaction97, 
which is the preferred resolution method used for failing banks in the US (deposit payoffs are 
only used when no acquiring institution can be found or if a bid for a P&A transaction is not 
the least costly option to the insurance fund)98. More recently, the 2009 Banking Act in the 
UK  created  the  Special  Resolution  Regime  (SRR)  which  allowed  the  UK  authorities  to 
transfer all or part of a bank to a private sector purchaser, and to transfer all or part of a bank 
to a bridge bank (a subsidiary of the Bank of England) pending a future sale99. 

As regards the currency used for payout of deposits, Option 5b would not lead to costs for the 
depositor but for the DGS that may have to bear currency risk and transaction costs. Option 5c 

92 

93  

94 

95 
96  

97 

98 

99 

Ernst  &  Young,  Fast  payout  study  –  final  report, November  2008  (report  commissioned  by  the  FSA, 
BBA and FSCS, available at http://www.fsa.gov.uk/pubs/other/fast_payout_report.pdf). 
For  example,  it  was  stated  that  the  lack  of  common  unique  customer  identifiers  in  many  UK  banks 
(such  as  e.g.  the  social  security  number  used  by  the  FDIC  in  the  US)  slowed  down  calculation  of 
compensation across multiple accounts held by a customer. In this context, creating a single customer 
view (SCV)  was  indicated  as  a  key factor  to  allow faster calculation of individual  compensation  (see 
ibid). 
However, if eligibility criteria are radically simplified, the costs can even be expected to be lower since 
the  tagging  will  be  made  easier  and  nearly  obsolete  (as  only  financial  institutions,  authorities  and 
structured products are excluded which should be easy to identify). 
See COM(2009)561. 
The  IDT  transaction  was  created  by  the  FDIC  in  1983.  In  an  IDT,  the  insured  deposits  and  secured 
liabilities  of  a  failed  bank  are  transferred  to  a  healthy  institution  or  institutions  –  the  so-called  'agent 
institution(s)'.  The  agent  institution  does  not  assume  the  direct  liability  in  regard  to  these  deposits;  it 
acts as a 'paying agent' on behalf of the FDIC and disburses insured funds to depositors (it reduces the 
FDIC’s costs to handle the failure). If a depositor requests it, the agent institution may open an account 
for  them,  which  means  that  service  to  customers  with  insured  deposits  continues  uninterrupted.  See 
FDIC Resolutions Handbook (http://www.fdic.gov/bank/historical/reshandbook/ch4payos.pdf) or FDIC 
Claims Manual (http://www.fdic.gov/about/freedom/DRRClaimsManualVol1.pdf). 
A P&A is a resolution transaction in which a healthy institution purchases some or all of the assets of a 
failed bank or thrift and assumes some or all of the liabilities, including all insured deposits. A popular 
type  of  P&A  is  a  bridge  bank  (introduced  in  the  US  in  1987),  i.e.  a  newly  created  national  bank 
designed to maintain the operations of a failed bank until a more permanent solution, i.e. an acquisition 
of the failed bank by a third party (http://www.fdic.gov/bank/historical/reshandbook/ch3pas.pdf). 
Ibid  and  http://www.fdic.gov/about/strategic/report/2008annualreport/ARfinal.pdf.  During  the  current 
financial crisis P&A transactions have also been widely used by the FDIC. 
For  more  details:  http://www.bankofengland.co.uk/financialstability/role/risk_reduction/srr/index.htm, 
http://www.bankofengland.co.uk/financialstability/role/risk_reduction/banking_reform_bill/index.htm. 

EN 

44 

   EN 

                                                 
would  have  the  inverse  impact  on  depositors  and  DGS.  Option  5c  would  make  it  less 
attractive for euro-area depositors to hold deposits with a bank registered in a Member State 
outside the euro area. In turn, this would affect competition within the Internal Market. Option 
5b would consequently put banks outside the euro area on an equal footing with banks from 
the euro area. 

As to interests that have not been credited at the time of a bank failure, Option 6b would lead 
to costs for the depositor only if interest cannot be calculated. As to structured deposits, the 
calculation  of  the  interest  payment  may  be  difficult  and  time-consuming  or  sometimes  may 
even not be calculable at all. In order to avoid a negative impact on the duration of payout, in 
such cases the DGS would be permitted to pay interest on the basis of current average market 
rate. It would of course lead to costs for the DGS and contributing banks. Option 6c would not 
lead to costs for the DGS but for the depositors. The impact of Option 6c on depositors and 
DGS would be high since currently, two thirds of DGS pay interest until the date of failure; 
those paying longer apply a fixed rate, a market rate or the originally agreed rate100. However, 
impact of Option 6c on the possibility of bank runs may be low since interest rates on current 
accounts are normally quite low and the withdrawal of savings deposits may – pending their 
conditions – lead to reduced interest payments. 

The  introduction  of  a  'de  minimis'  rule  (Option  7a)  would  cause  insignificant  losses  for 
depositors but may lead to saving administrative costs of DGS and reducing the payout delay. 
However, it may also lead to undermining depositor confidence since they may doubt whether 
their  money  is  fully  safe  if  some  (even  small)  amounts  are  not  to  be  paid  out.  If  so,  it  may 
provoke  a  run  on  banks.  It  would  also  be  difficult  to  set  a  'de  minimis'  threshold  since, 
keeping in mind different purchasing power in Member States, it might be perceived in one 
Member State as irrelevant but in the other Member State as not negligible. Moreover, there 
are not only benefits stemming form the application of the 'de minimis' rule, i.e. savings for 
DGS  (amounts  that  have  not  been  paid  out),  but  also  administrative  costs  to  determine  the 
amounts  under  the  'de  minimis'  threshold  that  are  not  eligible  for  payout.  The  analysis  has 
shown  that  the  additional  administrative  costs  to  identify  such  deposits  would  likely  be 
substantially higher than the potential savings (see Annex 24). 

Finally, in order to assess the impact of policy options related to set-off arrangements (Option 
8), it is necessary to explain the legally complex follow-up to a bank failure. According to the 
Directive,  DGS  subrogate  to  depositors'  claims  against  banks.  In  order  to  refinance 
themselves, DGS then try to get at least a part of these claims in the insolvency procedure. 

Pending national insolvency legislation, two scenarios can be distinguished. If the liability of 
the  customer  (i.e.  the  claim  the  bank  has  against  him  or  her)  is  sold  by  the  insolvency 
practitioner to another entity, nothing changes for the DGS since the price paid by the buyer 
of the claim will be used to pay the creditors of the failed bank (i.e. also the DGS). However, 
in  some  Member  States,  the  insolvency  practitioner  can  or  even  must  set  off  claims  against 
the  bank  (i.e.  deposits  now  claimed  by  the  DGS  instead  of  the  depositor)  against  liabilities 
(i.e. the claim against the depositor). If the insolvency practitioner exerts this right, the DGS 
would not receive the amount that has been set-off and might thus have refinancing problems, 
leading  to  higher  funding  needs.  The  payment  of  the  DGS  to  the  depositor  would  remain 
untouched. DGS would in such a case have paid off the liability. 

100 

EFDI Report on improvement of payment delays to depositors and promotion of best practices, p.40. 

EN 

45 

   EN 

                                                 
In order not to reduce DGS' efficiency, where they would later suffer from set off against the 
bank by the insolvency practitioner, there are two possible safeguards: either the insolvency 
practitioner is only permitted to set off against the deposits above the coverage limit so that 
the  DGS  would  remain  unaffected,  or  DGS  enjoy  priority  above  other  creditors  in  the 
insolvency procedure (like in the US or Switzerland – see Section 7.8). Due to the different 
insolvency  laws  throughout  the  EU,  it  would  be  left  to  Member  States  to  amend  their 
insolvency law accordingly under option 8c.  

The  impact  of  abandoning  set-off  would  be  relatively  low  but  would  depend  how  set-off  is 
understood. Set off may refer to a set off of claims either against all liabilities or against due 
liabilities. In the latter case, in general only a monthly instalment would be set off (and in only 
few cases a higher amount in case of payment difficulty), which leads to a very mow impact. 
If the whole liability can be set off, the impact is higher but still limited. The following figures 
should be seen as a worst-case scenario that is likely to be quite far away from the real impact 
since reliable data on the correlation between deposits and loans were not available. On the 
basis of the EU-average amount of deposits, the EU average impact would be an increase of 
payments of 3.5%  only  and not  exceeding 11.4% in any Member State. Second,  among  the 
(only four) Member States providing own estimates, in three countries the estimated impact is 
very low (between 0.2% and 7.3%)101.  

As regards the public consultation conducted by the Commission last year, a clear majority of 
respondents  (over  60 %)  were  against  further  reducing  the  payout  delay,  but  many  (almost 
30 %)  were  in  favour  of  shortening  it  to  one  week  (with  a  few  suggesting  an  even  shorter 
period). Respondents were quite equally divided as to a transfer of deposits to another bank or 
an  emergency  payout  (slightly  more  in  favour  of  one  or  both  of  the  above  solutions  than 
against them). Regarding payout modalities, a half of the respondents were of the view that 
deposits should be paid out in the same currency as they were paid in, most respondents (over 
60 %) were in favour of paying interest that has not been credited at the time of failure or until 
insolvency proceedings are opened, while the others (about a quarter) would prefer leaving it 
to  the  discretion  of  Member  States.  A  large  majority  supported  'tagging'  eligible  depositors 
when  an  account  is  opened  and  regularly  updating  this  information  on  account  statements. 
More  respondents  were  in  favour  of  introducing  a  'de  minimis'  rule  than  those  against. 
Respondents  were  fairly  equally  divided  between  those  in  favour  of  DGS  payments  made 
only after applications are received from depositors and those in favour of payments by DGS 
on their own initiative. Finally, most respondents (about 60 %) supported discontinuing set-
off for payout of depositors or limiting it significantly (e.g. only to claims that have fallen due 
or  are  delinquent).  However,  many  contributors  (more  than  35 %)  believed  that  the  current 
approach should be retained.  

Conclusion:  As  to  payout  delay,  Options  3  and  4  would  be  very  effective  to  maintain 
depositor confidence and financial stability since depositors would have quick access to their 
money  after  a  bank  failure  and,  in  turn,  they  would  probably  refrain  from  running  on  their 
banks  (however,  the  feasibility  of  the  latter  option  depends  on  the  future  works  on  bank 
resolution  in  the  EU).  As  to  payout  modalities,  the  following  set  of  options  would  ensure 
maintaining depositor confidence: payout in the same currency as the deposits were paid in, 
interest paid by DGS, no 'de minimis' rule, discontinuing set-off for depositors but limiting it 
in the insolvency procedure (Options 5b, 6b, 7a and 8c).  

101 

HU estimates the impact quite high (40-50%). However, this figure cannot be confirmed by evidence 
but it shows that the results should be interpreted carefully. 

EN 

46 

   EN 

                                                 
As regards the efficiency of policy options, Options 1 and 2 are not efficient as they involve 
various direct or indirect costs that outweigh the benefits (e.g. double work of DGS in case of 
Option 2). On the contrary, in case of Option 3, the benefits (mitigating the risk of bank runs) 
seem to outweigh the costs (quite significant administrative costs for DGS and banks). Also, 
Option  4  would  be  very  efficient  provided  DGS  in  the  EU  are  more  involved  in  bank 
resolution (as this is the case e.g. in the US). As to payout modalities, Options 5c and 6c are 
likely to involve social costs stemming from bank runs as a result of financial loses expected 
by depositors (currency risk, unpaid interests). Option 7b would only be efficient for DGS if 
there are a high number of accounts with very low amounts of money, a situation for which 
no evidence was found. Option 8b would incur fewer costs than Options 8c and 8d, but the 
benefits of the latter two options (avoiding bank runs, public welfare) seem to outweigh these 
costs. Option 8c would allow Member States with an incompatibility between abandoning set-
off and their insolvency laws (according to our information only DE) to adapt their insolvency 
law accordingly. 

Options  1  and  2  referring  to  working  days  would  be  incoherent  with  other  EU  policies 
because no other EU financial services legislation uses this term.  

Therefore, Options 3, 5b, 6b, 7a and 8c are currently preferred. In the future, depending on the 
progress in the area of bank resolution, Option 4 could be considered as well. 

Operational 
objectives 

Policy options 

Comparison criteria  

Effectiveness 

Efficiency 

Coherence 

Ensuring 
adequate 
payout 
procedures 

l

y
a
e
d
t
u
o
y
a
P

s
e

i
t
i
l

a
d
o
m

t
u
o
y
a
P

1. Retaining the current approach 

2. Emergency payout (e.g. €10 000 within 3 days) 

3. Payout delay of 7 calendar days (after a transition period of 3 years) 

4. Transfer deposits to another bank or a bridge bank 

5A. Payout in the currency chosen by the DGS concerned (current approach) 

5B. Payout in the same currency as the deposits were paid in 

5C. Payout of covered deposits in the currency of the DGS 

6A. Interests paid or not - MS’ discretion (current approach) 

6B. Interests paid out according to the rate agreed with the bank until the 
date of failure 

6C. Interest not paid by the DGS at all 

7A. All deposits regardless of their size must be paid out by DGS in full 
up to the coverage level (current approach) 

7B. Introduction of a 'de minimis' rule 

8A. Set-off and counterclaims unlimited but optional (current approach) 

8B. Limiting set-off to claims fallen due or delinquent 

8C.  Discontinuing  set-off  for  depositors,  but  limiting  set-off  in  the 
insolvency procedure  

8D. Discontinuing set-off completely 

o 

+ + 

+ + + 

+ + + 

o 

+  / – 

+ / – 

o 

+ 

– 

o 

+ 

o 

+ 

+ + 

+ + 

o 

– 

+ 

+ + 

o 

+ 

+ / – 

o 

+ 

+ / – 

o 

+ / – 

o 

+ + 

+ + + 

+ + 

o 

o 

+ + 

o 

+ 

+ 

o 

+ 

– 

o 

- 

o 

+ 

+ 

+ 

EN 

47 

   EN 

 
 
 
 
 
7.6.  Capability of DGS to deal with payout situations  

The  following  policy  options  were  taken  into  account  (Options  2  and  3  are  cumulative  but 
alternative to Option 1; sub-options are cumulative): 

•  Option  1  (current  approach):  No  particular  rules  on  exchange  of  information  between 
DGS as well as between DGS and competent authorities and/or member banks (DGS are 
only  informed  about  a  likely  bank  failure  if  appropriate);  no  disclosure  requirements; 
stress testing required in general. 

•  Option 2: Exchanging of information between DGS, competent authorities and banks: 

(a) 

(b) 

requiring  competent  authorities  to  inform  DGS  by  default  if  a  bank  failure 
becomes likely; 

requiring  banks  and  DGS  to  exchange  information  domestically  and  cross-
border on depositors through a common interface in a way which is unfettered 
by confidentiality requirements. 

•  Option 3: Disclosure requirements for DGS: 

(a) 

requiring DGS to regularly disclose the amount of ex-ante funds, their ex-post 
financing  capacity,  their  workforce  and  the  result  of  regular  stress  testing 
exercises and of a regular peer review among DGS; 

(b)  making the above disclosure a precondition for providing cross-border services 

and/or the establishment of branches. 

Retaining  the  current  approach  (Option  1)  would  lead  to  difficulties  since  a  shorter  payout 
delay cannot be achieved by merely introducing a legal requirement to pay within a one-digit 
number of days. If no further measures such as rules on exchange of information, disclosure 
requirements  and  stress  testing  are  taken,  a  short  payout  could  not  be  achieved  even  if  the 
delay were reduced by law. Moreover, the above measures ensure that DGS properly function 
at all, not only with regard to a quick payout. 

As to exchanging of information between DGS, competent authorities and banks, Option 2a – 
requiring  supervisors  to  inform  DGS  by  default  if  a  bank  failure  becomes  likely  –  would 
involve DGS as soon as possible in order to prepare payout. Keeping in mind that DGS are 
main actors in the payout process (see Annex 12 a-c), their early involvement and improving 
the  information  flow  between  competent  authorities  and  DGS  are  crucial  factors  for  quick 
payout102.  There  would  be  insignificant  costs  for  transmitting  information.  The  margin  of 
discretion whether it is appropriate for competent authorities to inform DGS at an early stage 
(i.e.  if  a  failure  becomes  likely)  creates  uncertainty.  The  only  argument  for  the 
inappropriateness to inform a DGS could be confidentiality. However, this issue could easily 

102  

In this context, it is worth to note that in the US, the FDIC – that acts both as a supervisor and paybox – 
is involved at a very early stage (when the leverage ratio of a bank is below the minimum required by 
law and its failure is impending or inevitable if the situation is not corrected within 90 days). During 
this  90-day  pre-closing  period,  the  FDIC  has  the  opportunity  to  review  bank  financial  information, 
make  preliminary  insurance  determination  and  least-cost  test,  choose  the  method  of  resolution,  etc. 
Then, if a deposit payoff in needed, it is made very quickly (within 1-2 business days). For more details, 
see e.g. FDIC Claims Manual (http://www.fdic.gov/about/freedom/DRRClaimsManualVol1.pdf). 

EN 

48 

   EN 

                                                 
be overcome if DGS are public entities governed by officials subject to professional secrecy. 
This may be different if banks (i.e. competitors of the bank in jeopardy) are represented in the 
board  of  a  DGS  or  make  available  their  workforce  to  it,  e.g.  by  detaching  some  of  their 
employees to the scheme. However, in this case Member States could be required to ensure 
that  there  are  'Chinese  walls'  in  order  to  avoid  any  leakages  of  information  or  –  even  more 
effective – that there are no employees of other banks involved at all. The relevance of this 
argument  is,  however,  questionable.  In  the  case  of  DGS  that  can  play  a  role  in  bank 
resolution, DGS must be informed anyway at an early stage. In most DGS with such a broad 
mandate,  banks  are  actually  represented  in  the  board103.  However,  early  action  may  lead  to 
administrative costs for DGS if the bank does not fail but will be rescued. 

Option 2b would enable DGS to start their work and to exchange information with banks as 
soon as possible in order to prepare payout. This option would ensure that information can be 
exchanged electronically without major problems, e.g. the conversion of databases. It would 
lead to costs both for banks and DGS. 

As  regards  disclosure  requirements  for  DGS,  Option  3a  would  exert  peer  pressure  and  the 
pressure  of  the  public  on  the  DGS  to  be  organised  in  a  way  that  it  can  meet  a  very  short 
payout  delay.  By  means  of  regular  stress  testing  DGS  would  know  whether  they  have  to 
improve  their  systems.  Depositors  and  also  competent  authorities  in  other  Member  States 
would be informed about how solid a DGS which protects depositors of a branch in another 
Member State is. The peer review could be performed by the EBA with the participation of 
EFDI. It was argued (mainly from countries where few details about DGS are published) that 
such  information  would  scare  depositors  and  undermine  DGS  credibility  since  the  funds 
available to them would never be equivalent to deposits. If some DGS  fear  that, they could 
explain why this is the case and that – like in the financial crisis – political decisions would 
have to be made whether and how to save a bank. Option 3b would make the establishment of 
branches dependent on disclosure of the above information. This would restrict the freedom 
of establishment.  

During  the  public  consultation  conducted  by  the  Commission  last  year,  a  clear  majority  of 
respondents (about 70 %) supported involving DGS at an early stage, notably in cases likely 
to  trigger  DGS.  Half  of  respondents  were  of  the  opinion  that  DGS  should  have  access  to 
relevant  bank  records  when  the  schemes  are  notified  by  the  competent  authorities,  while 
others  (about  a  quarter)  were  against.  More  respondents  were  in  favour  of  than  against  as 
regards establishing a common interface between DGS and banks, but they believed it should 
be  restricted  to  the  minimum  necessary  and  subject  to  confidentiality  provisions.  Most 
respondents  were  also  in  favour  of  stress  testing  and  regular  peer  reviews  among  DGS,  but 
there was no agreement on regular disclosure of key information by DGS (e.g. the amount of 
ex-ante funds, their workforce, result of stress tests, etc.).  

Conclusion:  Option  1  would  be  both  ineffective  and  inefficient  in  terms  of  shortening  the 
payout  delay  and  preventing  bank  runs.  Options  2a  and  2b  would  be  effective  to  ensure 
information of DGS at an early stage that is crucial for a quick payout. Option 3a would also 
be effective in ensuring a quick payout as well as depositor confidence and financial stability. 

103 

IT: http://www.fitd.it/chi_siamo/organi_consortili.htm; 
ES: http://www.fgd.es/es/info_regulacion_sistema2.html;  
PL (representatives of banking associations): 
http://www.bfg.pl/doc_media/wezel_807/100_ustawa-bfg-1994.pdf.pdf;  
PT (representative of banking association): http://www.fgd.bportugal.pt/default_e.htm.  

EN 

49 

   EN 

                                                 
 
Disclosure, in general, would make DGS more credible (however, disclosure of some specific 
information, e.g. the results of stress testing could be both effective and ineffective – similarly 
to Option 3b). All but Option 1 are efficient (with benefits outweighing rather insignificant or 
moderate costs). Only Option 2b would be costly, but the benefits of depositor confidence and 
financial  stability  are  expected  to  outweigh  the  costs  for  banks  and  DGS.  Finally,  all  but 
Option 3b are coherent with other EU legislation (CRD, data protection law). Option 3b raises 
legal issues as to the freedom of establishment stipulated in the Treaty. 

The preferred policy options are therefore Options 2a, 2b and 3a. 

Operational 
objectives 

Ensuring that 
DGS are 
capable to deal 
with payout 
situations 

Involving DGS 
at an early stage 

Improving 
information 
exchange 
between banks 
and schemes 

Policy options 

Comparison criteria  

Effectiveness 

Efficiency 

Coherence 

1. No particular rules on exchange of information between DGS, competent 
authorities and banks, no disclosure requirements, stress testing required in 
general (current approach) 

o 

o 

2a. Requiring competent authorities to inform DGS by default by when 
triggering of DGS becomes likely 

+ + + 

+ + + 

2b. Requiring DGS and their member banks to have a common 
interface to quickly exchange information 

3a. Requiring DGS to regularly disclose the amount of ex-ante funds, 
the workforce and the result of regular stress testing exercises and of a 
regular peer review among DGS 

+ + 

+ / – 

+ + 

+ + 

3b. Making such disclosure a precondition for cross-border services or 
establishment of branches 

– 

n.a. 

o 

+ 

+ 

+ 

– 

*n.a. – efficiency (cost-effectiveness) of a  measure cannot be estimated if the measure is inconsistent with the existing EU 
legislation  

7.7.  Depositor information 

The following policy options were taken into account as to depositor information (Options 2 
and 3 are cumulative but alternative to Option 1): 

•  Option  1  (current  approach):  Member  States  decide  how  depositors  are  informed  about 
DGS  coverage,  and  how  to  prevent  the  use  of  information  advertising  to  affect  financial 
stability. 

•  Option 2: Depositors must countersign information given before entering into a contractual 
relationship  and  receive  a  copy.  This  information  is  harmonised  by  means  of  a  template 
enumerating  specific  elements  of  information104  and  it  would  be  given  in  the  language 
chosen by the depositor. 

(a) 

a template is annexed to the Directive; 

104 

Name and address, telephone and website/e-mail of the scheme; function (i.e. DGS, mutual or voluntary 
scheme)  and  explanation  of  the  function  including  the  payout  delay;  level  of  coverage,  treatment  of 
joint  and  trust  accounts,  aggregation  of  several  accounts  at  the  same  bank  even  if  banks  are  trading 
under  different  names  (if  relevant,  identification  of  several  brands  of  the  bank  concerned);  scope  of 
coverage; eligibility of depositors; explanation how a depositor can claim reimbursement. 

EN 

50 

   EN 

                                                 
(b) 

the  template  is  to  be  developed  by  stakeholders  and  adopted  as  an 
Implementing  Measure  under  Article  290  of  the  Treaty  on  the  functioning  of 
the EU. 

•  Option 3: There must be a reference to DGS if a product is covered in advertisements and 
account statements. Advertising shall be restricted to a factual reference to the scheme to 
which a credit institution belongs.  

As correspondence and research in Member States have shown (see Section 4.3), the current 
approach  (Option  1)  is  ineffective  since  depositors  are  not  sufficiently  informed  about  the 
function and coverage of the DGS responsible for them. 

A template that has to be countersigned (Option 2) would lead to EU depositors receiving the 
same  information.  Costs  incurred  by  a  template  (i.e.  printing  and  processing/filing  costs) 
would not seem substantial. If contracts are concluded online, costs would be even lower. 

A reference in advertisements and account statements (Option 3) would complement Option 2 
with regard to potential depositors or depositors who signed a contract long ago. Information 
should be limited to the necessary, i.e. a mere reference to the DGS and its web site. This is 
already  optional  under  current  law.  It  would  ensure  that  depositors  know  that  a  product  is 
covered and, if the reference is missing, that it is not covered. Additional costs for banks are 
not  substantial  since  this  short  reference  would  not  take  much  payable  advertising  space. 
Costs for marketing material to be discarded or reprinted do not seem significant. Mentioning 
DGS  in  account  statements  would  add  a  further  line  to  statements  of  account  as  is  now  the 
case  for  IBAN  and  BIC  on  statements  of  current  accounts105.  The  eligibility  of  the 
accountholder would be implicitly confirmed by this statement.  

As regards the public consultation conducted by the Commission last year, most respondents 
(about  two  thirds)  supported  developing  a  template  for  standardised  information  (possibly 
annexed  to  the  Directive)  to  ensure  that  all  depositors  get  the  same  or  similar  information. 
However,  there  were  mixed  views  on  when  and  how  depositors  should  be  informed.  Most 
respondents (40 %) preferred retaining the current approach, but many (30 %) were in favour 
of making reference to information on DGS on account statements and/or requiring depositors 
to countersign information on DGS before depositing money at a bank. Less support (15 %) 
was  expressed  for  making  reference  to  such  information  in  advertisements,  notably  if 
mandatory. In general, requests were made to keep information brief and clear and to strike a 
balance between raising depositor awareness and costs for banks.  

Conclusion: Options 2a and 3 are effective in clarifying and elaborating depositor information 
and efficient with low expected costs and high benefits as to the information of depositors and 
consequently, depositor confidence. 

The preferred policy options are therefore Options 2a and 3. 

105 

For  example:  "This  deposit  is  covered  by  the  DGS  [reference  to  DGS  website]  up  to  €100  000.  This 
limit applies per depositor and per bank [including brand names …]." 

EN 

51 

   EN 

                                                 
Operational 
objectives 

Clarifying and 
elaborating 
information 
obligations of 
banks 

Policy options 

1. Retaining the current approach  

2. Developing a standard template including specific information for 
depositors 

3. Requiring a reference to DGS in advertisements and on statements of 
account 

Comparison criteria 

Effectiveness 

Efficiency 

Coherence 

o 

+ + 

+ + 

o 

+ 

+ 

o 

+ + 

+ + 

7.8.  Funding mechanisms and levels 

The  following  policy  options  were  taken  into  account  (Options  2  and  3  are  cumulative  but 
alternative to Option 1; Options 4 and 5 are cumulative to Options 1, 2 or 3): 

•  Option 1 (current approach): No harmonisation of funding mechanisms and no particular 

requirements on DGS funding levels. 

•  Option 2: Harmonised approach to selected elements of DGS funding: 

(a) 

a target level for the total (ex-ante and ex-post) funds that should be available 
to DGS in order to make them able to cope with a bank failure of a certain size 
(e.g. a mid-size or big failure); ex-post funds would be needed if the number of 
amount of payouts would necessitate it; 

(b) 

a limit for ex-post funds (to ensure that ex-post funds would not be collected 
without limits during a crisis as it could negatively influence healthy banks); 

(c) 

a limit for borrowing by DGS106.  

•  Option  3:  Harmonised  approach  to  funding  mechanisms  and  levels,  i.e.  making  ex-ante 
funding mandatory supported by ex-post funding (other elements, such as the contribution 
base, the scope of coverage, the target level and limits for ex-ante/ex-post funds, need to be 
harmonised as well) – to be achieved within a specified period of time (e.g. 5 or 10 years 
since  an  immediate  high  target  level  could  not  be  achieved  by  banks  in  Member  States 
with ex-post financed DGS). 

•  Option  4:  Using  the  liquidity  remaining  in  a  bank  at  the  time  of  failure  to  reimburse 
depositors. This would necessarily entail that depositors are privileged (at least up to the 
coverage level) over all other creditors in the insolvency proceedings. Such a regime is in 
place in Switzerland107 and also in the US108. 

106 
107 
108 

Borrowing has in practice included borrowing from the state/public authorities. 
See http://www.efd.admin.ch/00468/index.html?msg-id=29000&lang=de.  
In  the  US,  the  law  of  1993  (National  Depositor  Preference)  gave  payment  priority  to  depositors, 
including  the FDIC  as  subrogee, over general  unsecured creditors.  Claims  against  the  failed bank  are 
paid from monies recovered by the receiver through its liquidation efforts. Under the above law, claims 
are  paid  in  the  following  order  of  priority:  (1)  administrative  expenses  of  the  receiver;  (2)  deposit 
liability claims (the FDIC claim takes the position of all insured domestic deposits); (3) other general or 

EN 

52 

   EN 

 
                                                 
•  Option 5: Limiting the annual maximum contribution to DGS 

Retaining  the  current  approach  (Option  1)  would  maintain  the  drawbacks  of  the  existing 
framework  linked  to  the  co-existence  of  both  ex-ante  and  ex-post  DGS:  an  unlevel  level 
playing field between banks operating in Member States with ex-ante and ex-post DGS, pro-
cyclicality as ex-post DGS requires banks to pay all – sometimes very high – contributions in 
times of financial stress, etc (see Section 4.4). Moreover, in bad times, it is more difficult to 
receive  any  additional  funds  in  financial  markets;  therefore,  if  DGS  are  not  sufficiently 
funded,  it  may  result  in  the  need  to  use  the  taxpayer  money.  Finally,  without  specific 
requirements on the level of funding, some DGS (not only ex-post ones but ex-ante ones as 
well) would likely remain undercapitalized, as this is the case today. 

As  regards  the  harmonised  approach  to  a  target  level  for  the  total  funds  (Option  2a),  it  is 
assumed in the Commission (JRC) research that the choice of a target level for the funds may 
be related to the capability of DGS to handle a bank failure of a specific size based on bank 
recapitalisations  by  Member  States  during  the  financial  crisis  (from  a  small  failure  to  a  big 
one  –  ranging  from  0.36%  and  7.25%  of  the  amount  of  eligible  deposits  respectively).  In 
particular, the following scenarios have been analysed: 

Table 3: Analysed scenarios as to the target level for the total funds 

Scenarios 

Scenarios based on the size of a failed banks 

Big bank failure 

Failure of a big member bank (average of top-10 member banks, funds to be collected in 10 years)  

Small bank failure 

Failure of a small member bank (average of other than top-10 banks, funds to be collected in 1 year) 

Scenarios based on DGS payout  

Big DGS payout 

Maximum cost to DGS for a failure occurred in the EU MS in 2008 (funds to be collected in 10 years) 

Medium DGS payout 

Average costs to DGS for a failure occurred in the EU MS in 2008 (funds to be collected in 1 year) 

Source: Joint Research Centre. 

Size of the failure  
(% of the total amount 
of eligible deposits) 

7.25% 109 

0.36% 

1.96% 

0.60% 

The  impact  of  adopting  target  levels  that  would  allow  DGS  to  cope  with  bank  failures 
corresponding to those from the above table has been measured by comparing incurred costs 
with  both  ex-ante  and  ex-post  funds.  The  main  findings  are  summarized  below  (see  also 
Annexes 14-17):110 

•  Considering the target level allowing DGS to cope with the biggest failure (i.e. 7.25% of 
eligible deposits to be achieved in 10 years), two Member States would be able to handle 
this failure with the funds at their disposal (ex-ante). Considering both ex-ante funds and 

109 

110  

EN 

the 

institution; 

liabilities  of 

(4)  subordinated  obligations; 

senior 
(http://www.fdic.gov/bank/historical/reshandbook/ch7recvr.pdf). 
This  is  the  simple  average  of  the  data  from  32  DGS  in  21  Member  States  (the  average  weighted 
according to eligible deposits is very similar, i.e. 7%). 
The figures in the below bullet points describe in principle the impact in normal times when only ex-
ante contributions are collected. The impact in a crisis situation, when also ex-post contributions need to 
be  collected  (up  to  the  maximum  limit  –  see  further  part  of  this  section)  is  presented  in  Table  4  and 
Annex 14. 

(5)  shareholder  claims 

53 

   EN 

                                                                                                                                                         
additional contributions, and assuming to collect all contributions in 10 years, 4 Member 
States would be able to handle such a failure (see Annex 15). From the banks’ perspective, 
this  would  translate  into  a  decrease  of  29%  in  operating  profits  at  EU  level.  As  to  the 
impact  on  depositors  at  EU  level,  interest  rates  on  savings  would  be  reduced  of  about 
0.35%  or  current  account  fees  would  increase  by  around  €31  per  account  per  year  (see 
Annex 14). 

•  As regards the target level allowing DGS to cope with a medium-sized failure in a crisis 
(1.96%  of  eligible  deposits  to  be  achieved  in  10  years  –  as  in  the  'big  DGS  payout' 
scenario),  seven  Member  States  would  be  able  to  handle  this  failure  with  their  ex-ante 
funds,  and  14  Member  States  would  be  able  to  handle  this  failure  when  considering 
additional funds (see Annex 15). From the banks’ perspective, this would translate into a 
decrease  of  less  than  5%  in  operating  profits  at  EU  level.  From  a  point  of  view  of 
consumers, the impact at EU level would be a reduction of about 0.04% in the interest rates 
granted on deposits and/or an average increase of €4.5 per acc ount per year in bank fees 
(see Annex 14).  

•  Finally,  as  to  the  target  level  allowing  DGS  to  cope  with  the  smallest  failure  in  a  crisis 
(0.36% of eligible deposits to be achieved in 1 year), 15 Member States would be able to 
handle this failure with ex-ante funds and 17 Member States would be able to handle this 
failure  when  considering  additional  funds  (see  Annex  15).  From  the  banks’  perspective, 
this would translate into a decrease of less than 5% in operating profits at EU level. From a 
consumer point of view, the impact at EU level would be a reduction of about 0.04% in the 
interest rates granted on deposits and/or an average increase  of about €4 per  account per 
year in account fees (see Annex 14). 

Table 4: Scenarios on the target level: potential impact on annual bank operating profits at EU level 

Big bank failure 
(fund built up over 
10 years) 

Small bank failure 
(fund built up over  
1 year) 

Big DGS payout 
(fund built up over 
10 years) 

Medium DGS 
payout (fund built 
up over 1 year) 

-29.20% 

-41.76% 

-4.81% 

-7.35% 

-4.66% 

-11.02% 

-7.34% 

-17.61% 

Impact in normal times  
(only ex-ante contributions are collected) 

Impact in a crisis situation  
(both ex-ante and ex-post contributions are collected) 

Source: Joint Research Centre. 

With regard to the harmonised approach to a limit for ex-post funds (Option 2b), it would be 
useful  to  consider  the  so-called  'extraordinary  ratio',  i.e.  the  ratio  between  extraordinary 
contributions111 and the total DGS funds. The ratio expresses the weight of the extraordinary 
component with respect to the total amount of funds available to a scheme. Setting the ex-post 
component at a fixed percentage of the total funds collected for all Member States would lead 
to a considerable increase in the amount of this component. When setting the 'extraordinary 
ratio' at 21.06% (the EU average value in 2007 – see Annex 13a), ex-post components would 
increase  by  140%  at  EU  level.  This  would  in  turn  be  reflected  in  a  decrease  in  banks’ 
operating profits of almost 12% at EU level. If, in theory, all bank costs were fully passed on 
to  depositors,  the  impact  at  EU  level  would  be  a  reduction  of  0.05%  in  interest  rates  on 
savings or an increase in account fees of almost €4 per account per year.  

111  

Extraordinary  contributions  are  defined  in  practice  as  the  difference  between  maximum  and  ordinary 
contributions whenever the DGS Statutes set a maximum level for members’ contributions. 

EN 

54 

   EN 

 
                                                 
As to the harmonised approach to DGS borrowing (Option 2c), the EU borrowing limit (€99 
billion) has been set by the Commission (JRC) as a percentage (1.75%) of the total amount of 
covered deposits. The percentage has been estimated according to the US data, i.e. the ratio 
between the borrowing limit ($100 billion – equivalent of about €68 billion) 112 and the total 
amount of deposit insured by the FDIC in 2008 (equivalent of about €3.9 trillion). 113 

Assuming that each DGS would repay the loan within 10 years, it would lead to an average 
increase  in  banks'  contributions  to  DGS  at  EU  level  by  205%  (see  Annex  23).  On  average, 
four times the 2008 contributions should be collected every year to repay the loan within 10 
years. At EU level, this would result in a decrease of banks’ operating profits by around 3%. 
From depositors’ point of view, an increase in contributions would translate into an average 
interest rate reduction by about 0.04% or into an average annual increase by €4 per account. 
Currently, only 7 Member States are able to repay the estimated loan within 10 years without 
calling for new additional contributions. 

Taking into account a harmonised approach to funding mechanisms and levels (Option 3), the 
Commission  has  developed  a  harmonised  scenario  by  combining  key  aspects  of  funding 
mechanisms.  The following assumptions have been put forward114: 
•  Target level for total DGS funds: 1.96% of the amount of eligible deposits115 – according 
to  the  'big  DGS  payout'  scenario  (it  would  mean that the target level for ex-ante  and ex-
post  funds  would  be  about  1.5%  and  0.5%  respectively  –  see  assumptions  on  the 
proportions between ex-ante versus ex-post components);  

•  Contribution base: the amount of eligible deposits116 – as it is  currently the case in most 

DGS (22 DGS, representing 17 Member States – see Section 7.9); 

•  Ex-ante versus ex-post component: 75% and 25% respectively117 (ex-post component close 

to the actual 'extraordinary ratio' in the EU118); 

112 

113 
114 

115 

116 

117  

118  

In  March  2009,  Congress  increased  the  FDIC's  borrowing  authority  from  $30  billion  to  $100  billion 
(permanent level) and – as a temporary measure (by end-2010 only) – up to a maximum of $500 billion. 
Before, in October 2008, Congress allowed the FDIC to borrow, if necessary, unlimited amounts from 
the US Treasury (by end-2009). 
FDIC Annual Report 2008 (http://www.fdic.gov/about/strategic/report/2008annualreport/ARfinal.pdf). 
There  is  no  assumption  as  to  the  coverage  level  since  the  calculations  have  been  based  on  eligible 
deposits (thus, the level of coverage – contrary to the scope of coverage – does not affect the results). 
The coverage level would be recalculated on the basis of covered deposits – after a transition period and 
under the comitology procedure (see also the previous footnote). 
After a transition period, the contribution base would be changed from eligible to covered deposits (see 
Section  7.9).  This  change  (from  a  broader  to  narrower  contribution  base)  would  inevitably  require 
changing (increasing) the nominal value of the target level in order to maintain the total amount of DGS 
funds unchanged. 
In principle, the DGS funds should consist of both ex-ante and ex-post elements. Keeping in mind the 
drawbacks of pure ex-post funding (pro-cyclicality, competitive disadvantages, disincentives for sound 
risk  management,  etc),  the  ex-ante  element  should  be  clearly  dominant.  It  means  that  it  should  be 
significantly (and not merely slightly) higher than 50% of the total funds. At the same time, taking into 
account the importance of additional funding that may be needed in a crisis situation, a pure (100%) ex-
ante system is not desirable. Therefore, the balanced proportions between ex-ante and ex-post elements 
could  be  roughly  75%-25%  or  80%-20%.  In  both  cases,  the  ex-post  element  would  be  close  to  the 
actual  'extraordinary  ratio'  in  the  EU  (see  the  next  footnote).  Since  the  latter  proportion  would  be 
slightly more costly for the banking industry in normal times, the former seems to be more preferred.  
The 'extraordinary ratio' in the EU (simple average) is 32.9% for all Member States or 21.1% if MT and 
CY are excluded (as their indicators - 72% and 83% respectively - are much higher than the indicators 

EN 

55 

   EN 

                                                 
•  Scope of coverage: two options considered – exclusion and inclusion of deposits held by 
non-financial enterprises, central/local authorities, and/or enterprises in the financial sector 
(see Section 7.3). 

It is assumed that the scenarios developed on the basis of the above assumptions (see Table 5) 
should be achieved within 10 years. The phase-in period of 10 years seems to be a balanced 
solution  compared  to  both  shorter  and  longer  periods.  A  shorter  phase-in  period  such  as  5 
years has shown to result in excessive financial burden on banks since (i) the expected costs 
within the 10-year period are already relatively high, (ii) Member States, notably those with 
ex-post DGS, need some mitigating measures (such as a sufficiently long transition period) in 
order  to  build  up  their  ex-ante  funds  according  to  the  required  levels,  and  (iii)  it  should  be 
kept in mind that there are also other initiatives aimed at strengthening the financial sector to 
be  implemented  in  the  coming  years  (however,  the  assessment  of  the  impact  of  those 
initiatives  on  banks  is  outside  the  scope  of  this  impact  assessment).  On  the  other  hand, 
choosing a longer phase-in period than a decade involves the risk that the entire initiative to 
build  up  a  system  of  soundly  financed  DGS  would  be  perceived  as  'watered  down'  and  not 
treated seriously. 

Table 5: Harmonised scenarios on DGS funding 

Harmonised 
scenarios 

Target 
level 

Contribution 
base 

Ex-ante vs. ex-post 
component 

Scope of coverage 

Number of years to 
reach the target  

Scenario A 

1.96 % 

Scenario B 

1.96 % 

Scenario C 

1.96 % 

Eligible 
deposits 

Eligible 
deposits 

Eligible 
deposits 

Source: Joint Research Centre. 

75 % - 25 % 

Exclude financial and non-financial enterprises 
and authorities 

75 % - 25 % 

Include non-financial enterprises, exclude 
authorities and enterprises in the financial sector 

75 % - 25 % 

Include financial and non-financial enterprises 
and authorities 

10 years 

10 years 

10 years 

As a result of the above scenarios, DGS would be much better capitalised that currently. For 
Scenario  B  (built  on  the  preferred  option  concerning  scope  of  coverage  assuming  the 
inclusion of all non-financial enterprises and the exclusion of all authorities and all financial 
sector enterprises – see Section 7.3), DGS would collect together within 10 years the amount 
of  ex-ante  funds  of  about  €149  billion  and  €49.7 
billion  potentially  available  as  ex-post 
contributions (compared to total ex-ante and ex-post funds of DGS of €23 billion in 2008 – 
see  Annex  18a).  In  normal  times,  when  only  ex-ante  contributions  are  collected,  it  would 
require an average increase in contributions of 393% at EU  level119. The aggregated annual 
llion  at  EU  level120  (see 
ex-ante  contributions  would  increase  from  €1.8  billion  to  €9.4  bi

119  

120  

of other Member States). As to the EU weighted average (according to the amount of eligible deposits), 
it is 21.2% when including CY and MT and 19.0% if they are excluded – see Annex 13a).  
There would be a particularly high impact in FR (a 2450% increase in contributions). This is because 
the  amount  of  eligible  deposits  is  very  high,  while  the  funds  at  DGS  disposal  are  not  proportionally 
high.  For  example,  in  2008,  total  DGS  funds  in  FR  were  almost  5  times  lower  than  the  funds  in  ES 
although in 2007 eligible deposits in FR were more than twice as high as deposits in ES (see Annexes 2 
and 18a).  
The highest level of annual ex-ante contributions would be expected in FR and UK (each €2.4 billion), 
while  the  lowest  one  in  LV  (€8  million)  (see  Annex  18b).  As  to  FR,  it  should  be  noted  that  in  2008 
contributions  to  its  DGS  were  more  than  6  times  lower  compared  to  those  in  GR  although  in  2007 
eligible deposits in FR were more than 10 times higher than in GR (see Annexes 2 and 18b).  

EN 

56 

   EN 

                                                                                                                                                         
Annex 18b). However, the 2008 contributions are already higher in some Member States than 
estimated contributions to be collected in order to reach the target within the time limit. Also, 
in  some  Member  States  cumulated  funds  are  already  higher  than  the  target  ex-ante 
component. From banks’ perspective, an average decrease in operating profits would be about 
2.5% at EU level (with a stronger impact in EU-15 than in EU-12 where, on average, a slight 
increase in bank profits is expected121 – see Annexes 19 and 22b). For depositors, if all banks 
costs were passed on to them, the impact on interest rates would mean a decrease of less than 
0.1%, and additional bank fees of around €7 per account per year (see Table 6 and Annexes 
18-20).  Of  course,  under  the  worst-case  scenario,  i.e.  a  crisis  situation  when  ex-post 
contributions must be collected up to the maximum ceiling (25% of the total fund, i.e. about 
0.5% of eligible deposits), the above figures would be substantially higher (e.g. the decrease 
in the operating profit would be over 6% and additional bank fees about €12 – see Annexes 
19, 20 and 22a). 

Table 6: Potential impact of the harmonised scenarios on DGS funding at EU level in normal times 

Harmonised 
scenarios 

Total  
ex-ante funds 
collected after 
10 years  
(€ thousands) 

Total  
ex-post funds 
available after 
10 years  
(€ thousands) 

Ex-ante 
contributions 
to be collected 
annually 
within 10 years 
(€ thousands) 

Increase in 
annual ex-ante 
contributions 
(compared to 
2008) 

Decrease in 
bank operating 
profits 

Decrease in 
interest rates 
on savings 

Increase in 
bank fees on 
current 
accounts  
(€) 

Scenario A 

127 938 303 

42 646 101 

7 655 420 

Scenario B 

149 015 250 

49 671 750 

9 368 379 

Scenario C 

171 556 596 

57 185 532 

10 561 256 

As of 2008 

18 635 489 

4 467 624 

1 812 589 

289% 

393% 

437% 

– 

1.01% 

2.46% 

0.06% 

0.07% 

3.26% 

0.08% 

– 

– 

7.02 

7.08 

8.43 

– 

Source: Joint Research Centre. 

It should be noted that the harmonised scenarios on funding would have a significant impact 
on  ex-post  financed  DGS  whose  ex-ante  funds  are  by  definition  zero.  Under  the  above 
scenario  B,  ex-post  DGS  in  six  Member  States  would  have  to  collect  together  about  €47 
billion within 10 years, roughly a half of which the UK alone (see Annexes 18).  

If the remaining bank liquidity is used (Option 4), DGS and their member banks would have 
to  pay  significantly  less  since  a  large  part  if  not  all  depositors  could  be  paid  out  with  this 
liquidity.  On  the  other  hand,  the  same  amount  saved  by  DGS  and  banks  would  have  to  be 
borne  by  all  other  creditors  and  depositors  who  are  not  protected  by  the  DGS  or  whose 
deposits exceed the coverage level since corresponding to the priority of the DGS their claims 
would  become  more  subordinate  and  therefore  they  will  get  a  smaller  insolvency  dividend. 
Since many of these 'other creditors' are banks, losses caused by a lower insolvency dividend 
for them may counterbalance the savings as to their contributions to DGS. However, this only 
occurs to the extent banks have not had collateral for their claims against the failed bank.  

During  the  public  consultation  conducted  by  the  Commission  last  year,  a  large  majority  of 
respondents (about 70%) supported ex-ante funding while a minority of them (less than 15 %) 

121  

Some  EU-12  Member  States  have  their  funds  which  are  considerably  high:  if  they  want  to  reach  the 
target  level  in  10  years  they  can  reduce  their  contributions  which,  in  turn,  would  be  translated  into 
increasing operating profits of banks. The highest increase in bank operating profits is expected in BG 
(13%) and EE (23%), while the strongest decrease is expected in AT (16%) and BE (18%). 

EN 

57 

   EN 

                                                 
were in favour of solely ex-post funding (those from Member States with ex-post systems – 
AT,  IT,  NL  and  UK).  Proponents  of  ex-ante  funding  indicated  several  advantages:  a  level 
playing  field,  avoiding  pro-cyclicality,  speeding  up  payout,  addressing  moral  hazard  and 
unfairness  stemming  from  the  fact  that  riskier  banks  are  de  facto  subsidised  by  safer  ones, 
etc122. Opponents argued that ex-ante funding is an inefficient use of financial resources, may 
be  very  costly  for  Member  States  with  ex-post  systems,  and  –  together  with  the  recent  and 
planned CRD amendments – may lead to higher capital requirements for banks. There were 
also rather mixed views on a target level for ex-ante funds, with many more respondents in 
favour than against (roughly two thirds to one third), but only a few suggestions were made 
on how high this target level should be (e.g. the level necessary to cover 4-5 smaller banks or 
2-3 medium-sized banks). Most respondents agreed that a maximum contribution level would 
be  desirable  to  avoid  excessive  pro-cyclicality  (notably  during  a  crisis  when  unlimited 
contributions  may  be  very  burdensome  for  banks).  Practically  all  respondents  agreed  that 
additional financing sources should be allowed if needed by DGS. 

Finally, Option 5 would ensure that banks would not have to pay contributions to an extent 
that  might  bring  them  into  financial  difficulties.  The  maximum  contribution  would  have  to 
ensure (i) that the target level can be built up over 10 years (1.5% / 10 = 0.15%), (ii) that the 
extraordinary contributions can be paid (0.5%), and (iii) that there is a safety margin in case 
the DGS funds are depleted. The current maximum annual contributions throughout EU DGS 
oscillate  around  0.2%  in  most  Member  States  or  are  set  at  1.5  or  1.875%  (BG  and  GR).  In 
some countries, they are set as a percentage of own funds (PL, AT, DE). 

Conclusion:  The  drawbacks  stemming  from  the  current  approach  could  be  eliminated  by  a 
more harmonised approach to funding mechanisms and levels. Keeping in mind the relevant 
operational objectives (increasing convergence between DGS, enhancing  DGS  funding),  the 
harmonised  approach  would  be  much  more  effective  if  applied  to  all  key  aspects  of  DGS 
funding (Option 3) than merely to selected aspects (Option 2). Ex-ante funding is much more 
efficient  than  ex-post  financing  because  of  its  counter-cyclical  nature.  Therefore,  the  most 
effective solution seems to be a 'mixed system' (mandatory for all Member States), where ex-
ante  funding  would  be  dominant  and  supported  by  ex-post  funds  collected  if  necessary 
(Option 3). Borrowing by DGS does not need to be harmonised because this touches upon the 
organisation of the financial system in Member States and, in line with the subsidiarity rule, 
should be left to Member States' discretion.  

Setting a target level for DGS funds would ensure that schemes are credible and capable to 
deal with medium-sized bank failures. The most cost-efficient target level would be 1.96% (or 
simply  2%)  of  eligible  deposits  (to  be  achieved  within  10  years)  because  it  would  increase 
DGS funds to cope with a medium-sized bank failure; and despite quite substantial increase in 
contributions,  it  would,  on  average,  only  moderately  affect  bank  profits  at  EU  level  (with  a 
stronger impact in some Member States) and lead to very limited costs for depositors. Also, 
Option  4  would  be  effective  and  efficient;  it  would  not  involve  new  costs  for  banks  while 
ensuring a quick payout and sound financing. However, this option – contrary to other options 
–  does  not  seem  coherent  with  the  fact  that  there  is  no  harmonised  approach  to  bank 
insolvency  in  the  EU  yet.  Option  5  would  also be  effective  and  efficient.  It  would  ensure  a 
sound financing of the DGS but avoid unwanted side-effects if contributions were too high. 

122  

Similar advantages of ex-ante funding were also indicated by the International Association of Deposit 
Insurers  (IADI)  –  see  IADI,  Funding  of  Deposit  Insurance  Systems.  Guidance  Paper,  6  May  2009 
(http://www.iadi.org/docs/Funding%20Final%20Guidance%20Paper%206_May_2009.pdf). 

EN 

58 

   EN 

                                                 
The preferred policy option is therefore Option 3. 

Operational 
objectives 

Policy options 

1. No harmonisation of funding mechanisms and no particular requirements on 
DGS funding levels (current approach) 

2a. Harmonised target level for the total (ex-ante and ex-post) funds 

Increasing 
convergence 
between DGS 

Enhancing 
DGS funding 

2b. Harmonised limits for ex-ante and ex-post funds 

2c. Harmonised limit for borrowing by DGS 

3. Harmonised approach to funding mechanisms and levels (mandatory 
ex-ante funding supported by ex-post funding, other elements/limits 
harmonised) – to be achieved within a specified period of time (e.g. 5 or 
10 years) 

Comparison criteria 

Effectiveness 

Efficiency 

Coherence 

o 

++ 

+ + + 

– 

+ + + 

o 

+ 

+ + 

– 

+ 

o 

+ + 

+ + 

+ 

+ + 

4. Using the liquidity remaining in a bank at the time of failure to reimburse 
depositors 

+ + + 

+ + 

– 

7.9.  Bank contributions to DGS 

The  following  policy  options  were  taken  into  account  (Options  2-5  are  cumulative  but 
alternative to Option 1 and each sub-option is alternative to the other sub-options): 

Option 1 (current approach): No requirements as to bank contributions; 

Option 2: Harmonised approach to the contribution base: 

(a) 

eligible deposits as the contribution base in all Member States; 

(b) 

covered deposits as the contribution base in all Member States. 

Option  3:  General  common  approach  to  the  calculation  of  risk-based  contributions,  i.e.  the 
total amount of contribution depends on both the contribution base and risk indicator(s): 

(a) 

using a single risk indicator for calculating risk-based contributions; 

(b)  using multiple risk indicators for calculating risk-based contributions. 

Option 4: Partially or fully harmonised approach to the choice of risk indicators in order to 
calculate risk-based contributions: 

(a) 

requiring Member States to apply risk-based contributions and allowing them 
to develop their own risk indicators; 

(b)  developing a set of indicators and allowing Member States to choose relevant 

indicators in order to calculate risk-based contributions; 

(c) 

developing  a  set  of  core  indicators  (mandatory  for  all  Member  States)  and 
another set of supplementary indicators (optional); 

(d)  developing a common set of indicators to be used in all Member States in order 

to calculate risk-based contributions; 

EN 

59 

   EN 

Option 5: Harmonised approach to the contributions for banks joining or leaving a scheme: 

(a) 

requiring  annual  contributions  without  down  payments  if  a  bank  joins  the 
scheme and requiring DGS to reimburse the last contributions paid by a bank if 
it  becomes  a  member  of  another  DGS  due  to  changes  of  its  legal  status 
(subsidiary / branch); 

(b)  permitting down payments if a bank joins the scheme and forbidding DGS to 

reimburse any contributions of a bank. 

One  option  discarded  at  an  early  stage  is  worth  mentioning.  If  banks  were  required  to 
contribute without limitation to DGS, this could drive them into illiquidity or even insolvency, 
which would be counterproductive. Such a case occurred when the funds of the German ICS 
were  emptied  and  extraordinary  contributions  were  temporarily  suspended  by  a  court  order 
because  there  was  a  risk  that  contributors  (i.e.  investment  firms)  could  also  be  driven  into 
insolvency.  Such  a  situation  could  also  happen  at  a  DGS  since  the  financing  mechanism  of 
DGS and ICS is the same. In most Member States, however, there is a ceiling for maximum 
contributions of banks usually based on a percentage of eligible deposits (see Annex 15b). 

Currently, DGS apply very different approaches to bank contributions (e.g. they use different 
contribution  bases;  some  of  them  have  introduced  risk-based  contributions  while  the  others 
have  not).  Retaining  the  current  approach  (Option  1)  would  maintain  the  situation  where 
contributions in Member States are still not fully comparable and the same risk within a cross-
border banking group is reflected in contributions in a different way in Member States. 

As regards the harmonised approach to the contribution base (Option 2), selecting the amount 
of eligible deposits as a contribution base (Option 2a) for all DGS would lead to an increase in 
the contributions for those DGS using currently the amount of covered deposits (11 DGS in 6 
Member States), with an EU average figure of 111%123. It would result in a decrease in bank 
operating  profits  of  about  0.01%  at  EU  level  (with  no  change  for  EU-12).  If  all  costs  were 
passed on to depositors, it would mean a reduction of about 0.06% in interest rates on savings 
or  an  increase  in  current  account  fees  of  around  €7  per  account   per  year.  In  contrast,  the 
impact of assuming the amount of covered deposits as a contribution base (Option 2b) would 
translate into a change for most Member States (currently, 22 DGS in 17 Member States use 
eligible deposits as their contribution bases). This would lead to a decrease in contributions of 
58%  at  EU  level.  From  the  banks’  point  of  view  this  would  translate  into  a  4%  increase  in 
their operating profits. In theory, it should lead to an increase of interest rates on savings or a 
reduction of bank fees to be paid by depositors, but this might not be fully passed on to them. 
In general, the former approach (eligible deposits as the contribution base) would result in an 
slight  increase  of  total  DGS  funds  at  EU  level  (up  to  €18.7  billion),  while  the  latter  one 
(covered deposits as the contribution base) would lead to a decrease in this respect (to €17.5 
billion) – compared to the current situation (total funds of €18.6 b illion as of end-2008). 

As  to  the  common  approach  to  the  calculation  of  risk-based  contributions:  the  use  of  risk 
indicator(s) (Option 3), according to the Commission (JRC) report on risk-based contributions 

123 

This average also includes the decrease of 44% relative to IE which is the only Member States adopting 
the total deposits as contribution base. 

EN 

60 

   EN 

                                                 
published in 2008124, only 8 DGS in the EU adjusted the contributions of all their members, 
taking into account information from indicators which allow for assessing banks' risk profiles. 
Although the approaches currently applied across  Member  States  were  quite  heterogeneous, 
there was a common principle behind the various adjustment procedures: the contributions are 
adjusted by decreasing or increasing them by a percentage (ranging from 75% to 140% of the 
standard  amount)  obtained  by  classifying  DGS  member  banks  into  rating  classes,  linked  to 
scores from a set of indicators. This may serve as a starting point for further discussions. 

Last  year,  the  Commission  (JRC)  in  cooperation  with  the  EFDI125,  investigated  potential 
models for risk-based contributions and assessed their potential impact across Member States. 
The JRC report published in 2009126 presented two potential approaches to calculating such 
contributions that could be applied in the EU, i.e. Single Indicator Model (SIM) and Multiple 
Indicator Model (MIM). Both models are based on practices implemented by DGS adopting a 
risk-based contribution system (key elements from different systems in force were combined 
to  build  models  adaptable  to  different  EU  banking  systems).  Both  models  rely  on  current 
reporting  obligations,  i.e.  existing  accounting-based  indicators  to  assess  the  risk  profile  of 
DGS member banks (8 indicators covering 4 key risk classes commonly used to evaluate the 
financial soundness of banks: capital adequacy, asset quality, profitability, and liquidity – see 
Annex 25). The SIM uses a single accounting ratio to categorise banks into rating classes and 
accordingly calculate banks’ contributions127. In contrast, the MIM combines four ratios (one 
per class) to obtain a single measure of the risk behaviour of DGS members. 

The  JRC  report  presented  also  some  quantitative  analyses  for  the  above  models  in  order  to 
assess  the  impact  that  the  introduction  of  risk-based  contributions  would  have  on  DGS 
members. The SIM was tested by using each of the 8 proposed indicators. Results showed that 
the impact on contributions would be very different depending on the indicator selected. For 
this  model,  the  EU  average  maximum  decrease  in  contributions  for  a  single  bank  would  be 
19.6%, while the EU average maximum increase in contributions would be 27.8%. As regards 
the MIM, it was tested by using two sets of four indicators. Results showed that the variability 
of  the  impact  on  contributions  was  significantly  reduced:  the  EU  average  maximum 
decrease/increase in contributions was -4.1 % and +3.8 % respectively (it was also found that 
changing the set of indicators had not much influence).128 

124 

125  

126 

127 

128 

European Commission, Risk-based contributions in EU Deposit Guarantee Schemes: current practices, 
Joint  Research  Centre,  Ispra,  June  2008  (http://ec.europa.eu/internal_market/bank/docs/guarantee/risk-
based-report_en.pdf). 
EFDI,  Development  of  common  voluntary  approaches  to  include  risk  based  elements  for  deposit 
guarantee schemes, 2009 (http://www.efdi.net/scarica.aspx?id=143&Types=DOCUMENTS). 
European  Commission,  Possible  models  for  risk-based  contributions  to  EU  Deposit  Guarantee 
Schemes,  Joint  Research  Centre,  Ispra,  June  2009  (http://ec.europa.eu/internal_market/bank/docs/ 
guarantee/2009_06_risk-based-report_en.pdf). 
Contributions were calculated as a fixed percentage of the contribution base and subsequently adjusted 
by  a  risk  factor  specific  to  each  member  bank  (see  Annex  25).  The  risk  adjustment  factor  was  a 
percentage used to increase contributions for risky banks and to decrease them for well-behaving banks 
(in the JRC report, those factors varied between 80% for the least risky banks and 150% for the most 
risky banks). 
The  above  results  should  be  carefully  interpreted  since  the  sample  of  banks  did  not  cover  the  entire 
banking sector in any Member State (the banks taken into account are the largest set of banks for which 
values  for  the  indicators  were  available).  Moreover,  the  quantitative  analysis  relied  on  a  number  of 
assumptions and choices being made when assigning values to the model parameters. 

EN 

61 

   EN 

                                                 
Another approach to risk-based contributions was presented in one of the recent research129. It 
presents  a  mathematical  model  for  estimating  the  losses  to  DGS  and  contributions  of  each 
bank according to its risk profile (the model is run via a Monte Carlo simulation). The idea is 
to use this model to estimate the contribution to the total  loss of the system (in percentage) 
that  is  attributable  to  each  bank.  These  risk-based  contributions  are  to  be  estimated  under 
different  assumptions,  depending  on  how  inter-bank  contagion  has  been  taken  into  account. 
The estimation of each bank's risk based contribution is split into its 3 components: (i) the risk 
profile  of  bank's  credit  portfolio  (inter-bank  contagion  is  not  taken  into  account);  (ii)  the 
fragility of the bank due to its inter-bank connection (passive contagion) and (iii) the systemic 
risk  of  the  bank  (active  contagion,  i.e.  the  risk  that  the  bank  causes  others  banks'  defaults 
through its inter-bank exposure). 

Indicators for systemic risk of a bank have not been taken into account since the development 
of criteria for Systematically Important Financial Institutions is still in progress. 

As regards policy options stipulating partially or fully harmonised approach to the choice of 
risk  indicators,  Option  4a  would  not  cause  a  substantial  difference  in  comparison  with  the 
current  situation.  Although,  on  the  one  hand,  it  would  be  mandatory  for  DGS  in  Member 
States  to  calculate  bank  contributions  using  some  risk  indicators,  but  on  the  other  hand, 
Member  States  would  still  be  free  to  choose  their  own  indicators.  Therefore,  bank 
contributions  in  Member  States  would  still  be  incomparable  (even  within  the  same  cross-
border banking group). Options 4b and 4c would mean partial harmonisation. First, Member 
States  would  agree  a  set  of  indicators.  Then,  they  would  either  choose  relevant  indicators 
from the set (Option 4b) or divide the set into core and supplementary indicators – of which 
the former would be mandatory but the latter optional for DGS (Option 4c). These two sub-
options  would  contribute  to  greater  comparability  of  risk  measurement  in  Member  States. 
However, the greatest (full) comparability would be achieved by applying sub-option 4d as it 
would mean full harmonisation. All Member States would use the same indicators to calculate 
risk-based contributions. They would use all indicators included in the common set and would 
not be allowed to use any other indicators. 

It is obvious that the introduction of risk-based contributions in the EU would influence those 
Member States that do not apply such contributions (since they would need to introduce a new 
framework on which they have no experience). However, it could also have some impact on 
Member  States  already  applying  risk-based  contributions.  It  would  happen  if  the  set  of 
indicators  did  not  include  the  indicators  currently  used  by  those  Member  States.  In  this 
situation,  those  Member  States  would  have  to  change  their  risk  assessment  framework  that 
had been used for some years before. 

As  regards  the  harmonised  approach  to  the  contribution  requirements  for  banks  joining  or 
leaving a scheme, Option 5a would ensure that banks reorganising their operations in a way 
that branches turn into subsidiaries (in particular if they adopt the legal form of a European 
Company) are not hindered from doing so by being required to make initial down payments 
when joining a DGS. When a branch becomes a subsidiary, it may currently have to pay an 
initial contribution in addition to the annual one. Option 5b would concern the opposite case – 
if branches turn into subsidiaries, they would have to pay the last annual contribution for the 

129  

F. Campolongo, R. De Lisa, S. Zedda, M. Marchesi, Deposit insurance schemes: target fund and risk-
based  contributions  in  line  with  Basel  II  regulation,  JRC  Scientific  and  Technical  Reports,  2010 
(http://easu.jrc.ec.europa.eu/eas/downloads/pdf/JRC57325.pdf).  

EN 

62 

   EN 

                                                 
branch  twice  which  otherwise  could  then  be  used  as  contribution  for  the  subsidiary.  This 
would mean that DGS do not lose funds but the bank is imposed a double charge.  

As regards the public consultation conducted by the Commission last year, a large majority of 
respondents  (above  70 %)  were  in  favour  of  risk-based  contributions  to  DGS,  but  some  of 
them  (over  20 %)  were  against.  Proponents  emphasised  that  risk-based  contributions  would 
create  incentives  for  more  prudent  behaviour  of  banks  and  improve  their  risk  management, 
mitigate moral hazard and free riding problems (subsidising riskier banks by safer ones), etc. 
Opponents  were  afraid  that  such  contributions  may  result  in  pro-cyclical  effects  and  mean 
double penalisation for banks (since they may already be penalised by supervisors if do not 
comply with capital requirements). No single view emerged whether risk-based contributions 
should be harmonised or not, mandatory or optional, but there was agreement that they should 
be flexible enough to take into account specific situations in Member States. Moreover, some 
indicators  to  calculate  risk-based  contributions  were  suggested:  capital  adequacy/solvency, 
liquidity, profitability, high exposure, loan portfolio quality, etc. Some respondents stated that 
the  JRC  reports  on  risk-based  contributions  could  serve  as  a  starting  point  and  the  CEBS 
could provide some guidelines on this (bearing in mind the need to improve the convergence 
of supervisory and DGS practices).  

Conclusion: Retaining the current approach (Option 1) would be incoherent with the values of 
the  Internal  Market  and  ineffective  since  it  does  not  create  any  incentive  for  a  proper  risk 
management.  The  analysis  has  revealed  that  a  more  harmonised  approach  to  bank 
contributions,  which  in  principle  consists  of  both  non-risk-based  and  risk-based  elements 
(Options  2  and  3  respectively)  is  most  efficient.  As  to  the  former,  in  principle,  it  would  be 
more  effective  to  base  contributions  in  all  Member  States  on  covered  deposits  (Option  2b) 
since this better reflects the risk to which DGS are exposed130. As to the latter, it should be 
calculated on the basis of several indicators (Option 3b) and  not just on a single one which 
may miss some important information on banks' risk profiles. Taking into account differences 
between  banking  sectors  in  Member  States,  full  harmonisation  of  risk-based  contributions 
seems  to  be  neither  feasible  nor  needed  (at  least  at  this  stage)  and  some  flexibility  is 
necessary. Therefore, partial harmonisation (Option 4c) seems to be an appropriate solution at 
the moment. It should be noted that the introduction of risk-based contributions would have 
no impact on the overall level of contributions since the total amount of contributions would 
be determined by the target level for DGS funds and risk-based contributions would only be 
helpful  in  apportioning  it  among  individual  banks  according  to  their  risk  profiles.  Finally, 
Option 5a would be efficient (cost-neutral) and coherent with the Internal Market and some 
fundamental Treaty freedoms (freedom of the establishment, freedom of providing services). 

The preferred options are therefore Options 2a/2b, 3b, 4c/d as well as 5a. 

130  

In practice, however, keeping in mind that most DGS (22 in 17 Member States) use currently eligible 
deposits as their contribution bases, it would be easier to harmonise the contributions bases by the two-
step approach: first, using eligible deposits in all Member States as the contribution base, and then (after 
a  relevant  transition  period),  switching  to  covered  deposits  as  the  single  contribution  base  in  the  EU. 
The application of this approach would be merely a formal change, i.e. it would involve the change of 
the nominal target level for DGS funds in order to ensure that the overall amount of funds is unchanged. 
Therefore, it would have no impact on bank contributions and, in turn, on bank profits.  

EN 

63 

   EN 

                                                 
Operational 
objectives 

Policy options 

Comparison criteria  

Effectiveness 

Efficiency 

Coherence 

Providing for 
contributions 
to schemes, 
which 
adequately 
reflect the 
degree of 
risk incurred 
by banks 

1. No requirements or harmonisation on banks contributions to DGS (current approach) 

2a. Eligible deposits as the contribution base in all MS (temporary solution) 

2b. Covered deposits as the contribution base in all MS (final solution) 

3a. Calculation of RBC based on a single indicator 

3b. Calculation of RBC based on multiple indicators 

4a. Requiring MS to apply RBC and allowing MS to develop their own risk indicators 

4b. Developing a set of indicators and allowing MS to choose relevant indicators in order 
to calculate RBC 

4c. Developing a set of core indicators (mandatory for all MS) and another set of 
supplementary indicators (optional for MS) 

4d. Developing a common set of indicators to be used in all MS in order to calculate RBC 

5a. Requiring annual contributions without down payments if a bank joins the 
scheme and requiring DGS to reimburse the last annual contribution of a bank if it 
becomes a member of another DGS due to changes of its legal status 

5b. Allowing down payments and forbidding reimbursement of the last annual 
contribution 

o 

+ + 

+ 

– 

+ + 

+ 

+ 

+ + 

+ / – 

+ 

– 

o 

+ 

+ + 

– 

+ + 

+ 

+ 

+ + 

+ / – 

+ 

– 

o 

+ 

+ 

+ 

+ 

+ 

+ 

+ + 

+ + 

+ 

+ 

7.10.  Mandate of DGS 

The following policy options were taken into account (they are mutually exclusive): 

•  Option  1  (current  approach):  Mandate  of  DGS  left  to  the  discretion  of  Member  States 

(whether a DGS carries out any additional functions beyond payout). 

•  Option 2: Retaining the current approach and ensuring that the payout function cannot be 

impeded by expenses on early intervention or restructuring measures.  

•  Option  3:  All  DGS  must  provide  funding  for  early  intervention  or  bank  resolution131 
measures.  This  means  that  beyond  the  target  level  required  for  payout,  there  must  be 
additional  funds  available,  either  for  dealing  with  a  medium-sized  bank  (Option 3a)  or  a 
large bank (Option 3b) in difficulty. 

As  regards  Option  1,  if  DGS  are  not  required  to  participate  in  resolution  for  ailing  banks, 
there is a higher risk that taxpayers' money is used for resolutions while corresponding powers 
of  DGS  would  ensure  that  money  originating  from  banks  is  used.  The  lack  of  coherence 
between national DGS roles in this regard may also impede coordinated resolution actions on 
a cross border basis. If in one Member State a DGS can use its funds to resolve a bank but this 
is  not  permitted  in  another  Member  State,  it  may  render  bank  resolution  negotiations  more 

131 

According to COM(2009)561, the term 'bank resolution' covers 'measures taken by national resolution 
authorities to manage a crisis in a banking institution, to contain its impact on financial stability and, 
where appropriate, to facilitate an orderly winding up of the whole or parts of the institution'.  

EN 

64 

   EN 

 
                                                 
complex since private sector in one country may not be willing to participate if private sector 
does not contribute to a similar extent in the other country.  

Option  2  implies,  in  addition  to  the  impact  stemming  from  Option  1,  that  the  11  Member 
States where DGS have powers beyond the mere payout of depositors132 banks would have to 
ensure that DGS funds can in principle only be used for paying out depositors but can be used 
for bank resolution purposes if such use shall be limited to the amount that would have been 
necessary to pay out covered deposits. This would avoid a depletion of funds for the benefit of 
uninsured creditors of a bank, who also benefit from a resolution measure. 

This  option  would  affect  these  11  Member  States  in  so  far  as  they  would  have  to  get 
additional funding if a resolution measure is more expensive than a payout. However, there 
are no data available as to the probability of such an event and its likely impact.  

Even if the financial impact cannot be estimated, there are some other positive impacts: 

– 

– 

– 

Depositors are the weakest link among those concerned by a bank failure and their 
protection would not be put into perspective or endangered by resolution actions; 

One  bank  may  be  subject  to  DGS  support  while  another  one  might  just  be  failing 
without  support.  The  DGS  may  then  less  likely  be  empty  because  of  the  support 
granted and it may still be able to pay out depositors of the other bank;  

It  takes  into  account  that  a  bank  that  enjoyed  DGS  support  may  fail  later  (due  to 
unexpected  risks,  unforeseen  events,  etc.).  This  so-called  'double  whammy  effect' 
could quickly empty DGS funds. 

An effective and cost-efficient solution to ensure that DGS funds cannot be drained for bank 
resolution measures to the benefit of uninsured creditors is to require that DGS funds should 
principally be used for paying out depositors. However, in order not to deprive depositors of 
the benefits of bank resolution measures (i.e. the continuity of banking services as a result of 
the transfer of deposits of the failed bank to another credit institution133), it would be effective 
to allow the use of DGS funds for resolution, but limited to the amount that would have been 
necessary to pay out covered deposits. 

If DGS had  an  even broader mandate, i.e. including not only bank resolution but also early 
intervention measures (e.g. recapitalization, liquidity assistance, guarantees, etc.), they would 
need  to  be  adequately  funded.  It  means  that  additional  funds  would  need  to  be  collected 
beyond  the  target  level  because  bank  resolution  is  alternative  to  payout  while  early 
intervention  does  not  always  prevent  payout  later  on.  However,  in  order  to  avoid  situations 
where  DGS  funds  could  serve  as  an  important  contribution  to  an  otherwise  difficult  early 
intervention measure, they could be used for such purposes under some restrictions. 

132 

133  

See Annex D. RO, as the 12th Member State with DGS having a mandate beyond paybox, is not taken 
into account since its DGS has only liquidation powers which go beyond the paybox mandate but do not 
allow the support of banks. 
It seems that Member States could also allow DGS to use their financial means in order to avoid a bank 
failure without being restricted to financing the transfer of deposits to another institution, provided that 
financial means of that DGS exceed the target level before such measure and its financial means are not 
lower than a certain threshold (e.g. 1% of eligible deposits) after such measure. 

EN 

65 

   EN 

                                                 
Finally, as to Option 3, it would result in avoiding the negative impacts of Option 1. It means 
that additional funds would need to be collected beyond the target level – either for dealing 
with a medium-sized bank or a large bank in difficulty (see Table 7). The impact of Option 3a 
-ante funds) and for the impact of Option 3b 
would be €121 billion (of which €90 billion ex
would be €352 billion (of which €264 billion ex-a
nte funds). The cumulated impact ('paybox' 
and  resolution  as  described  under  Option  2)  would  amount  to  €302  billion  (of  which  €227 
billion  ex-ante  funds;  Option  3a)  and  €534  b illion  (of  which  €401  billion  ex-ante  funds; 
Option 3b). The impact on benefits such as depositor confidence and financial stability would 
be very positive but cannot be calculated. 

However,  Option  3  would  seem  inconsistent  with  ongoing  Commission  work  on  bank 
resolution  to  prescribe  a  mandatory  bank  resolution  mandate  for  all  DGS  since  it  would 
anticipate the outcome of this work. 

During the public consultation conducted by the Commission last year, a slight majority was 
in favour of maintaining DGS as mere 'payboxes' due to the need to avoid interference with 
other actors in the financial safety net and the risk of depleting DGS funds. The majority of 
respondents in favour of extending the mandate to bank resolution activities preferred to leave 
this decision at the discretion of Member States, since each Member State has a different set-
up of crisis management. However, it was widely acknowledged that competent authorities in 
all Member States must have bank resolution powers. 

Table 7: Scenarios based on government interventions (i.e. recapitalisations) 

Description of scenarios 

Big government 
intervention 

Maximum costs for banks’ individual recapitalisations operated by governments of EU 
Member States during the financial crisis 

Medium government 
intervention 

Average costs for banks’ individual recapitalisations operated by governments of EU 
Member States during the financial crisis 

Source: Joint Research Centre. 

Size of the failure  
(% of the total amount of 
eligible deposits) 

3.80% 

1.30% 

Conclusion:  Option  3  would  be  the  most  effective  one  as  regards  ensuring  that  bank 
resolution  is  financed  with  private  funds  (banks)  rather  than  with  taxpayers'  money  at  the 
same  time  ensuring  that  there  is  adequate  funding  in  order  to  payout  depositors  in  all  EU 
Member States (contrary to Option 2, only 11 Member States). However, as the costs of such 
solution  are  extremely  high  and  additional  benefits  as  to  depositor  confidence  and  financial 
stability compared to Option 2 remain unclear, doubts remain as to the efficiency of Option 3. 
Option 2 is effective to ensure that DGS funds are not drained for other purposes. All options 
seem consistent with the possible establishment of a pan-EU resolution fund mentioned in the 
Commission Communication on crisis management (insert reference). 

Operational objectives 

Policy options 

Comparison criteria  

Effectiveness 

Efficiency 

Coherence 

Enabling DGS to participate in bank resolution 

Ensuring adequate funding for DGS with 
additional tasks 

Ensuring that DGS with intervention powers 
remain sufficiently funded to fulfil their payout 
obligation if they are charged with additional tasks 

1. Other DGS functions than 'paybox' optional 
(current approach) 

2. Requiring DGS with a broad mandate to 
collect adequate funds 

3. Requiring all DGS to have a broad 
mandate and to collect appropriate funds 

o 

+ 

+ 

o 

+ 

– – 

o 

+ 

+ 

EN 

66 

   EN 

7.11.  Cross-border cooperation of DGS and a pan-EU DGS 

Fragmentation  of  DGS  across  the  EU  can  be  overcome  by  two  alternative  approaches:  an 
improvement of cooperation between existing DGS to a different extent or a pan-EU DGS. 

From this result three basic options. Only sub-option 3A is mutually exclusive as to the other 
options. Apart from this, the options can be combined: 

•  Option  1  (current  approach):  no  pan-EU  DGS,  depositors  paid  out  and  informed  by  the 

home country DGS (see Section 4.6). 

•  Option  2:  Host  country  DGS  acting  as  a  single  point  of  contact  (this  option  is  mutually 
exclusive only with Option 3a). Unless there is a single pan-EU DGS, Option 2 will always 
be  relevant  in  case  of  branches,  whether  there  is  topping  up  or  not.  The  following  sub-
options have been taking into account: 

(a) 

the  host  country  DGS  informs  depositors  at  branches  in  its  country  about  a 
bank failure in the home country; it also acts as a post box of the home scheme 
and provides information and advice in the host country’s language; 

(b) 

in  addition  to  Option  2a,  the  host  country  DGS  is  paying  agent  for  the  home 
country DGS and would be reimbursed by it. 

•  Option 3: Introducing a pan-EU DGS;  

As  regards  Option  3,  the  following  sub-options  were  taken  into  account  as  regards  the 
structure of a pan-EU DGS (sub-options 3b or 3c can be cumulated with Option 2): 

(a) 

a single entity acting as a pan-EU DGS replacing the existing schemes (if this 
option is chosen, Option 2 will become obsolete); 

(b) 

a '28th regime' supplementing and supporting the existing DGS; 

(c) 

a  network  of  DGS  ('EU  system  of  DGS'):  if  the  financial  capacity  of  one 
scheme becomes insufficient or depleted, the other schemes would have to lend 
it money which is to be recovered over time (see Annex 28)134. 

In  addition,  the  following  sub-options  of  Option  3  were  taken  into  account  as  regards  the 
membership of a pan-EU DGS (they can be combined with any of the structure-related sub-
options above): 

134 

This is applied in a similar way in AT, where under Article 93a of the Bankwesengesetz, the sectoral 
scheme must pay to the extent that its member banks have paid the maximum contribution of 0.93% of 
own  funds.  In  cases  where  the  responsible  scheme  in  question  is  unable  to  pay  out  the  guaranteed 
deposits in full, the other sectoral schemes are obliged to make proportionate contributions immediately 
in  order  to  cover  the  shortfall.  Those  protection  schemes  are  to  have  recourse  to  claims  against  the 
relevant  protection  scheme  in  the  amount of  the  contributions  made  and  demonstrable costs.  In  cases 
where  the  schemes  as  a  whole  are  unable  to  pay  out  guaranteed  deposits  in  full,  the  original  scheme 
concerned  must  issue  debt  securities  in order  to  meet  the  remaining  payment  obligations;  the Federal 
Minister  of  Finance  may  assume  liability  on  behalf  of  the  federal  government  according  to  a  special 
legal authorisation. 

EN 

67 

   EN 

                                                 
(d) 

all banks; 

(e) 

cross-border banks (i.e. those with branches in another Member State); 

(f) 

only large, systemically important cross-border banks. 

Option  3  presupposes  full  harmonisation  of  DGS  as  presented  in  this  report  and  could  only 
enter  into  force  after  the  target  level  for  DGS  (see  Section  7.7)  has  been  reached.  Both 
Options  2  and  3  would  entail  that  (i)  home  and  host  DGS  must  conclude  mutually  binding 
bilateral  or  multilateral  agreements  on  the  details  of  such  cooperation  and/or  (ii)  relevant 
provisions  in  this  respect  would  be  stipulated  in  the  Directive.  In  order  to  ensure  that  the 
arrangements work in practice, account should be taken of templates designed by EFDI135 and 
the European Banking Authority (EBA) could act as a mediator136. 

Option  2a  would  mainly  have  an  impact  on  DGS  facing  additional  administrative  costs  for 
cooperation  with  the  home  country  DGS  if  they  play  their  role  vis-à-vis  the  depositors.  In 
turn, this would lead to a simplification for depositors since they would only have to contact 
one DGS in their own language. 

In addition to this, for the host country DGS/banks, Option 2b would lead to interim financing 
costs until reimbursement. The amount paid by the host DGS needs to be reimbursed by the 
home DGS. However, payout should not depend on advance payments by the home scheme in 
order not to delay it. This issue could be left to arrangements between DGS for a transition 
period. Once the target fund size is reached, this will become less relevant.  

The introduction of a pan-EU DGS (Option 3) paying out depositors on the basis of a decision 
by the Member State in charge of banking supervision could be thought of as a single entity 
replacing all national schemes or could consist of a network between existing schemes ('EU 
system  of  DGS').  It  could  also take  the  form  of  a  so-called  '28th regime', i.e. supplementing 
existing DGS with a scheme providing financial support to DGS if necessary. 

The option requiring that there would be only one DGS in each Member State (i.e. merging 
their DGS on national level) was discarded at an early stage. Such a requirement would not be 
very effective since it would only resolve fragmentation at national but not EU level. 

A  single  entity  (Option  3a)  would  be  financed  directly  by  banks  whereby  Member  States 
could collect the contributions and transfer them to the pan-EU DGS; a '28th regime' (Option 
3b) would be financed by all DGS but indirectly by banks. The management of funds not used 
by the pan-EU DGS (whether a single entity or a '28th regime') could be performed by the EIB 
or  the ECB (against fee). This would save  the costs for asset managers at the pan-EU DGS 
and it could focus on collecting contributions and payout.  

Options 3b and 3c would be accompanied by the following safeguards: 

•  It is a precondition that each national DGS is sufficiently financed to participate in such a 
network. It is also crucial to determine term, interest and amount of a loan (as a percentage 

135 

136 

EN 

EFDI,  Report  on  the  development  of  a  non-binding  model  agreement  on  exchange  of  information 
between  DGS 
see 
http://www.efdi.net/documents.asp?Id=11&Cat=Efdi%20EU%20committee%20public%20documents.  
Article  11  of  the  Proposal  for  a  Regulation  establishing  a  European  Banking  Authority,  COM(2009) 
501. 

EFDI  Memorandum 

of  Understanding 

(topping 

up), 

and 

68 

   EN 

                                                 
of  deposits)  to  prevent  the  lending  DGS  from  endangering  their  financial  capability.  In 
order  to  avoid  that  Member  States  keep  their  DGS  funds  artificially  low,  transparency 
about the level, the use and the investment of funds and the collection of the contributions 
are  of  the  essence.  The  funds  designated  for  DGS  payout  function  should  be  subject  to 
strict low-risk investment rules in order to avoid DGS to lose funds from inappropriately 
risky investments. Such rules already exist for 87% of DGS (see Annex 26). 

•  To  avoid  moral  hazard,  the  funds  designated  for  DGS  payout  should  be  shielded  from 
unlimited use to avoid allocation to other areas. However, funds of DGS could continue to 
be used for bank resolution purposes but only under a strict and transparent application of 
the least cost principle, preventing a situation where other Member States would have to 
lend money to a DGS whose funds have been depleted for dubious bank resolution actions 
(moral hazard).  

•  In  order  to  ensure  that  the  function  of  the  network  is  not  impeded  by  different  views  in 

participating DGS, the EBA - as mentioned before - could act as a mediator.  

•  To reduce complexity, there should be only one DGS per Member State, which fulfils the 
obligation towards the other DGS in the network, irrespective of the number of DGS in a 
given country and which would function as a hub for the network of DGS. 

As regards the membership of a pan-EU DGS, a pan-EU DGS could comprise all banks in the 
EU. If it is argued that a pan-EU DGS should not deal with every bank failure but only with 
those a national DGS cannot deal with, a pan-EU scheme could be limited to banks that have 
branches  in  other  Member  States  ('cross-border  banks').  If  it  is  argued  that  smaller  failures 
could anyway be dealt with at national level, and only systemically important banks137 would 
need to be dealt with by a pan-EU DGS, membership could even be further limited to cross-
border banks above a certain size.  

As  regards  the  public  consultation  conducted  by  the  Commission  last  year,  there  were  very 
mixed  views  on  a  pan-EU  DGS.  Proponents  argued  that  a  pan-EU  scheme  would  be  more 
efficient  than  the  current  fragmented  framework,  ensure  harmonisation,  remove  competitive 
distortions,  enhance  consumer  confidence,  save  administrative  costs,  etc.  Opponents 
anticipated  breaching  the  principles  of  subsidiarity  and  proportionality  and  were  afraid  of 
moral hazard (i.e. weaknesses in the banking supervision of certain Member States would be 
paid for by banks from other Member States). Both proponents and opponents indicated that, 
at  first,  pan-EU  banking  supervision  would  have  to  be  established  and  clear  burden-sharing 
rules  set  between  Member  States.  A  majority  of  those  in  favour  of  introducing  a  pan-EU 
scheme  preferred  establishing  a  network  of  DGS.  Also,  most  respondents  suggested  that  all 
banks (rather than only cross-border ones) should be members of a pan-EU DGS. The impact 
of Option 3a-c can be summarized as follows: a single pan-EU scheme would have resources 
of about €230 billion and save about €40 milli on admin costs per year. Under Option 3b, if 
e.g. each year only 25% of contributions to national GDS were paid to the 28th regime over 10 
years, in eight Member States (BG, EE, LV, LT, MT, RO, SI and SK), all deposits could be 
repaid, over 10% of deposits could be repaid in 15 Member States, and only in four Member 
States (DE, FR, ES and UK), the 28th regime would encompass about 5% of deposits.  

137 

The  concept  of  Systematically  Important  Financial  Institutions  has  been  dealt  with  by  the  Financial 
Stability Board. According to a 2009 report to G-20 countries, three key criteria are size, substitutability 
and interconnectedness. Source: http://www.financialstabilityboard.org/publications/r_091107c.pdf.  

EN 

69 

   EN 

                                                 
Option  3c  would  entail  that  a  DGS  in  need  can  borrow  a  limited  amount  from  all  other 
schemes in proportion to their fund size (i.e. in proportion to the deposits in each DGS). These 
funds would quickly be available before the DGS would have to borrow from other sources. 
In order to allow an additional facility of 0.5% of eligible deposits for the borrowing scheme 
(i.e. the equivalent of ex-post-contributions referred to under Section 5.3 – ¼ of 2%), all DGS 
would only have to lend up to 0.08% (for UK as one of the countries with the highest amount 
of  deposits)  of  eligible  deposits,  i.e.  about  one  25th  of  their  funds  at  target  level.  This  is 
effective and efficient. Details about the contributions of each DGS (cumulated  by Member 
State) are referred to in Annex 29. 

Conclusion:  Option  1  is  ineffective  because  it  does  not  mitigate  fragmentation.  Among 
Options 2a and 2b, the latter is preferred because of its effectiveness with regard to depositor 
confidence.  As  to  Option  3,  it  would  be  more  effective  than  any  other  option  to  reduce 
fragmentation. As to the structure of a pan-EU scheme, Option 3a would save administrative 
costs of (estimated) €36 million. Option 3b would seem rather ineffective since it would add 
complexity. Option 3c would not require changes in the legal set-up of national DGS. Given 
the  fact  that  legal  questions  as  to  Option  3  a/b  still  have  to  be  assessed,  Options  3a  and  3c 
could  be  combined  by  establishing  a  network  first  and  by  aiming  at  a  pan-EU  DGS  after  a 
certain transition period. This would also allow to take into account the evolution in the field 
of  bank  resolution  (follow-up  to  COM(2009)561).  Since  Options  3e  and  3f,  due  to  their 
potentially distortive character are incoherent with the Internal Market, Option 3d would be 
preferred as to the membership in a pan-EU DGS. 

Operational objectives 

Policy options 

Comparison criteria 

Effectiveness 

Efficiency 

Coherence 

Ensuring that DGS are capable 
to deal with payout situations 

Enhancing funding of DGS 

Increasing convergence 
between DGS 

1. Member States required to have at least one DGS (current 
approach) 

2. Host country DGS acting as a single point of contact 

3a. Single (pan-EU) entity  

3b. ‘28th regime’ complementary to existing DGS 

3c. EU system/network of DGS 

3d. All banks 

3f. All cross-border banks 

S
G
D

U
E

-
n
a
P

e
r
u
t
c
u
r
t

S

s
r
e
b
m
e
M

3e. Large, systemically important cross-border banks  

o 

++ 

+ + 

+ 

+ 

+ + 

+ + 

+ + 

o 

+ 

+ + 

– 

+ 

+ + 

– 

– 

o 

+ 

++ 

– – 

+ 

+ + 

– – 

– – 

7.12.  Other issues 

7.12.1.  Topping up arrangements  

The Commission has been tasked to assess the harmonisation of level and scope of coverage 
and the eligibility of depositors. According to this assessment (see Sections 7.2, 7.3, 7.4), full 
harmonisation  is  proposed.  This  means  that  there  is  no  need  for  topping  up  arrangements 
anymore in order to deal with differences between DGS. However, for the sake of providing a 
complete impact assessment, a description and assessment of possible options whether or how 

EN 

70 

   EN 

 
 
 
 
to  continue  the  current  'topping  up'  approach  is  provided  in  Annex  F.  It  would  become 
relevant as soon as there is any national discretion on the level or scope  of coverage  or the 
eligibility of depositors. 

7.12.2.  Exemption of mutual and voluntary schemes from the DGS Directive 

Since  any  impact  would  be  limited  to  DE  and,  to  a  lesser  extent,  AT,  the  description  of 
options,  their  impact  and  assessment  is  referred  to  in  Annex  G.  The  preferred  option  is  to 
require  all  banks  to  be  a  member  of  a  statutory  DGS  so  that  depositors  are  protected  if  a 
mutual scheme fails and to apply the Directive to voluntary DGS. 

7.12.3.  Additional issues raised by stakeholders 

During  the  public  consultation  conducted  by  the  Commission  in  2009,  as  well  as  at  the 
meetings  of  the  Commission's  working  group  on  DGS  in  2009  and  2010  (see  Chapter  2), 
stakeholders indicated some additional issues that could or should be included in the current 
review of the DGS Directive. These issues are briefly presented in Annex H. 

8. 

OVERALL IMPACT OF THE PREFERRED POLICY OPTIONS  

The  approach  of  minimum  harmonisation  introduced  by  the  DGS  Directive  in  1994  has 
resulted  in  significant  differences  between  DGS  as  to  the  level  of  coverage,  the  scope  of 
covered  depositors  and  products,  payout  delay,  etc.  Other  important  areas,  such  as  funding 
mechanisms  and  levels,  bank  contributions  to  DGS  or  payout  modalities,  have  not  been 
harmonised at all but fully left to the discretion of Member States. This is not only costly and 
harmful for depositors, banks, and DGS, but may also be disruptive for financial stability and 
proper  functioning  of  the  Internal  Market.  The  analysis  presented  in  this  impact  assessment 
showed  that  adopting  maximum  harmonisation  is  more  effective  than  the  approach  of 
minimum harmonisation.  

The selected policy options138 relate in most cases to the current legislative proposal and are 
expected  to  be  implemented  in  the  short  and  medium  term  (sometimes  after  a  relevant 
transitional  period).  However,  the  options  which  are  not  reflected  in  the  current  legislative 
proposal  (e.g.  those  related  to  risk-based  contributions  and  to  a  single  pan-EU  DGS)  are 
expected to be implemented in a longer perspective. 

8.1.  Micro- and macroeconomic impacts of the preferred policy options  

The  choice  of  preferred  options  has  been  based  on  their  potential  impact  both  in  a  micro-
dimension (on depositors, banks and DGS) as well in a macro-scale (on financial stability and 
the  economy).  The  options  have  been  selected  because  of  their  expected  effectiveness  and 
efficiency  in  achieving  specific  and  operational  objectives  and  their  coherence  with  the 
overarching  objectives  of  EU  policy.  The  preferred  options  indicated  in  various  sections  of 
this impact assessment may be combined in order to measure the cumulative impact of all of 
them. This is relating to the following set of preferred options:   

(a)  Level of coverage: € 100 000 (see Section 7.1);  

138 

Annex J presents the set of preferred policy options indicated in this impact assessment. 

EN 

71 

   EN 

                                                 
(b) Scope  of  coverage:  inclusion  of  deposits  held  by  non-financial  enterprises,  exclusion  of 
deposits held by central/local authorities and financial sector enterprises (see Section 7.3);  

(c)  Payout  delay:  as  short  as  possible  (preferably  7  calendar  days)  –  which  requires  from 
banks, inter alia, tagging eligible depositors, data cleansing and creating single customer 
views (see Section 7.5); and early access to information by DGS. 

(d) Target level for total DGS funds: about 2% of the amount of eligible deposits (of which ¾ 
collected  ex-ante  and  ¼  available  ex-post  if  needed)  –  to  be  reached  in  10  years  (see 
Sections 7.8 and 7.9).  

The  above  options  represent  the  approach  of  maximum  harmonisation,  i.e.  they  should  be 
applied  in  all  Member  States  in  the  same  way.  Their  expected  cumulative  impact  on 
stakeholders (depositors, banks and DGS) – to be expected within 5 or 10 years139 – may be 
summarised as follows: 

•  DGS: DGS will be much better financed due to the target level of 2% of eligible deposits. 
It is expected that after 10 years, at EU level, DGS would have at their disposal about €150 
billion  as  ex-ante  funds  and  €50  billion  potentially  availabl e  as  ex-post  contributions  – 
compared to total ex-ante/ex-post funds of €23 billion in 2008 (see Annex 18). They will 
be capable to payout depositors of a medium-sized bank within one week due to improved 
cooperation within their country (ensuring the involvement of DGS at an early stage) and 
with other DGS. Stress tests will alert them of possible shortcomings that can be tackled. 
Due to the simplification of eligibility criteria they will also save administrative costs. 

•  Banks:  The  higher  the  protection  offered  by  DGS  the  higher  the  costs  needed  to  ensure 
such protection. The impact may be expected in terms of an increase in contributions to be 
paid by banks140 and, in turn, a decrease in their operating profits. Taking into account the 
above preferred options as to the level and scope of coverage and the harmonised approach 
to DGS financing, there would be an increase in bank contributions by 390% at EU level, 
i.e.  from  the  pre-crisis  level  of  €1.8  billi on  to  €9.4  billion  –  the  latter  to  be  collected 
annually within 10 years. In addition, taking into account the above preferred option as to 
the payout delay, banks may expect total one-off administrative costs at EU level of about 
€1.2  billion  annually  within  5  years  (the  costs  could  be  considerably  lower  if  eligibility 
criteria  were  radically  simplified).  The  cumulated  impact  on  banks  stemming  from  the 
costs stemming from all the above-listed policy options (the level and scope of coverage, 

139  

The cumulative impact on banks and depositors stems from two separate scenarios:  

(1) speeding up the payout process – which involves one-off administrative costs to be faced within 5 
years (see Section 7.5 and Annex 12d-f);  

(2) harmonising DGS funding and scope/level of coverage (harmonised scenario B) – which involves 
costs, i.e. higher contributions, to be faced 10 years (see Section 7.8 and Annexes 18-20).  

Given different time horizons of the above scenarios, the cumulative impact on banks and depositors in 
the 10-year period is expected to be different in the first 5 years and in the remaining 5 years. During 
the first 5 years, the impact is to be higher as stemming from both scenario (1) and (2), which includes 
all the above preferred options: (a), (b), (c) and (d). During the remaining 5 years, the impact is to be 
lower as stemming from the second scenario only, which includes only the above preferred options (a), 
(b)  and  (d).  The  cumulative  impact  in  the  first  5  years  has  been  presented  in  Annex  21  and  the 
cumulative impact in the remaining 5 years is the same as presented in Annexes 19 and 20. 

140  

It has been assumed that the increase in contributions is proportional to the increase in the in the amount 
of covered deposits. 

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the harmonised approach to DGS funding and a faster payout) would be the following: a 
decrease of about 4% in bank operating profits at EU level during the first 5 years, and a 
2.5% decrease in the remaining 5 years (see Annexes 19 and 21a respectively)141. On the 
other  hand,  banks  would  benefit  from  greater  stability  and  safety  of  the  banking  system 
thanks  to  well  capitalised  DGS.  Moreover,  banks  with  a  low-risk  business  model  will 
profit from lower contributions to DGS. Finally, the single customer view would also lead 
to benefits for  banks  since they  would better know their customers and could  offer them 
products they have not bought yet. 

•  Depositors:  In  particular,  substantially  higher  deposit  protection  offered  by  DGS  is 
expected as a result of the adoption of the coverage level of €100 000 in all Member States 
(an increase in the amount of covered deposits from 61% to 72% of eligible deposits and 
an increase in the number of fully covered deposits from 89% to 95% of eligible deposits). 
The  main  benefit  is  that  depositor  confidence  is  expected  to  be  critically  enhanced  with 
higher level of coverage and other provisions (e.g. a short payout delay and a sound target 
level for DGS funds) which will make depositors confident that their deposits are safe and 
that they will get them back up to €100 000 at any time,  even if a bank fails. This should 
prevent  them  from  bank  runs  in  times  of  financial  distress  and,  in  turn,  this  would 
contribute to financial stability. In terms of costs for depositors, the cumulative impact – 
being  a  result  of  applying  the  above-listed  policy  options  as  to  the  level  and  scope  of 
coverage,  DGS  financing  and  a  faster  payout  –  is  expected  to  be  moderate,  i.e.  lower 
interest rates of saving accounts by around 0.1% or higher bank fees on current accounts 
by about €7 per year per account (or €10 in a crisis situation) (see Annexes 20 and 21b). 
Depositors will also have a contact to a DGS in  their  own  language  which  means  that  if 
depositors are well informed and believe in the system, they will not run on banks. 

Moreover, the following overall impact in a macro-scale may be expected:  

•  Financial stability: The preferred policy options are expected to bring numerous benefits 
as to financial stability by preventing bank runs, eliminating the risk of shifts of deposits 
from  Member  States  with  a  lower  coverage  level  to  those  with  a  higher  one,  better 
monitoring of risks in the banking sector (risk-based contributions), ensuring that failures 
of  a  certain  size  (small  and  medium)  will  not  threaten  financial  stability  since  better 
capitalised DGS are able to cope with these failures, etc. 

•  Internal Market: The preferred policy options are also expected to bring some important 
benefits  for  the  EU  economy  and  the  Internal  Market:  creating  a  level  playing  field, 
eliminating  competitive  distortions,  avoiding  negative  consequences  for  the  economy 
stemming  from  instability  of  the  banking  sector,  etc.  Moreover,  there  should  be  a  lower 
need  to  use  the  taxpayer  money  in  case  of  bank  failures  (as  a  result  of  better  capitalised 
funds  of  DGS).  On  the  costs  side,  lower  lending  activity  (stricter  lending  conditions  or 
higher cost of credit) as a result of higher contributions could be expected, but it does not 
seem to have a big impact as it may be mitigated thanks to competition between banks. 

The overall impact on stakeholders (DGS, banks and depositors) and the impact in a macro 
scale (on financial stability and the economy) are summarized in Table 8.  

141  

This is the expected impact in normal times, i.e. when only ex-ante contributions are collected by DGS. 
In a crisis situation, when DGS may call for additional (ex-post) contributions as well – up to the ceiling 
of  ¼  of  the  total  target  fund  –  the  impact  would  be  stronger,  i.e.  a  7.5%  decrease  in  bank  operating 
profits during the first 5 years, and a 6% decrease in the remaining 5 years (see Annexes 19 and 21a). 

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Table 8: Overall impact of the preferred options on stakeholders, financial stability and the economy 

Preferred policy 
options 

Impact on stakeholders 

Macro-impact 

DGS 

Banks 

Depositors 

Financial stability 

 Economy 

Fixed coverage level of 
€100 000 

Substantially higher deposit protection 
offered by DGS: 

- increase in the amount of covered 
deposits from 61% to 72% of eligible 
deposits 

- increase in the number of fully covered 
deposits from 89% to 95% of eligible 
deposits 

Very limited impact (only in 2 Member 
States): abandoning – after a transition 
period – unlimited DGS protection for 
certain tax-privileged deposit savings 
accounts (in DK) and THDB for real 
estate transactions (in FI) 

No exemptions from the 
level of coverage 

Level and scope of coverage 

Increase in total annual 
contributions from €1.8 billion to 
€2.6 billion and decrease in 
operating profits of 4% 

Avoiding strains to bank liquidity in 
case of numerous deposit shifts 
from one Member State to another 

Lower interest rates on saving accounts 
by max 0.08% or higher current account 
fees by max €3.5 per year per account 

Discouraging depositors to shift deposits 
from one bank to another on the basis of 
the coverage level only, which may 
result in loosing interest rates, paying 
penalty fees, etc. 

Eliminating the risk of shifts of 
deposits from Member States with a 
lower coverage level to those with a 
higher one 

Avoiding strains to liquidity of the 
banking sector in case of sudden and 
substantial deposit shifts from one 
Member State to another 

Level playing field and no 
competitive distortions 

Lower cost of credit for 
enter-prises as a result of 
stronger competition 
between banks  

No additional costs for banks (no 
need for banks to tag deposits 
eligible for additional protection 
under THDB, social 
considerations, etc.) 

No change for depositors in most 
Member States 

Social costs in 2 Member States; 
eliminating protection of a popular type 
of deposits in one Member State  

No substantial impact expected 

Level playing field and no 
competitive distortions 

Inclusion of all 
enterprises in the scope 
of coverage 

Lower administrative costs and shorter 
payout since time-consuming verification 
of size classes obsolete 

Increase in contributions of 1.3% 
and decrease in operating profits 
of 0.7% 

Impact on medium and large enterprises 
in 13 Member States: all of them are 
covered 

Reducing the risk that enterprises, in 
particular small enterprises (about 20 
million in the EU) run on banks 

Exclusion of all (central 
/ local) authorities from 
the scope of coverage 

Rather limited impact on DGS and local 
authorities: 

- local authorities are currently included 
only in 7 Member States (CZ, DK, GR, 
LT, Pl, FI, SE)  

- central authorities are excluded in all 
Member States 

Decrease in contributions of 0.2% 
and negligible impact on operating 
profits (increase of 0.01%) 

Only 121 000 local authorities affected 
in contrast to more than 450 million 
depositors.  

No impact expected:  
- the level is not relevant for most of 
local authorities (73% of them have 
deposits above €100 000) 
- authorities are not expected to run on 
banks like individual depositors 

More dynamic economic 
activity of small 
enterprises if their 
deposits are safe 

Level playing field and no 
competitive distortions 

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Preferred policy 
options 

Inclusion of deposits in 
non-EU currencies in 
the scope of coverage 

Exclusion of debt 
certificates and 
structured products 
from the scope of 
coverage 

Impact on stakeholders 

Macro-impact 

DGS 

Banks 

Depositors 

Financial stability 

 Economy 

Rather limited impact on DGS:  

- deposits in non-EU currencies are not 
covered only in 6 Member States (BE, 
DE, LT, CY, MT, AT)  

- about €273 million of covered deposits 
in non-EU currencies (compared to €5.7 
trillion of all covered deposits in the EU) 

The impact on banks financing 
DGS under the chosen target level 
1.96% is estimated at maximum 
€5.3 million because of higher 
contributions to DGS 

Potentially higher (but rather 
moderate) inflow of deposits in 
non-EU currencies to EU banks 

Low impact: debt securities and 
liabilities arising out of promissory notes 
and own acceptances are included only 
in HU, LV and SE  

No preference for debt certificates 
issued by banks vis-à-vis other 
debt securities issued by non-
banks 

Low impact: structured products are 
covered only in HU 

Reducing incentives for banks to 
offer structured products 

Ensuring protection for depositors 
having non-EU currencies in those MS 
where such deposits are currently not 
covered 

Enhancing depositor confidence 

Simpler (and more understand-able for 
depositors) rules on covered and 
uncovered products 

Slightly less protection for depositors in 
a few Member States 

No substantial impact 

Level playing field and no 
competitive distortions 

No substantial impact 

Level playing field and no 
competitive distortions 

Reducing the payout 
delay to one week 

Much faster verification of claims as a 
result of receiving from banks proper 
(high-quality) data on deposits 

Payout delay and modalities 

One-off admin costs (tagging 
deposits, data cleansing, single 
customer view - SCV): €1.2 billion 
annually within 5 years.  

Marketing benefits: banks better 
know clients (SCV) and offer them 
products not bought by them yet 

Quick access to money 

Preventing bank runs 

Avoiding problems with day-to-day 
payments 

Enhancing depositor confidence 

Payout modalities 
(payout currency as 
deposits paid in, 
interests paid by DGS) 

DGS have to provide for foreign 
currencies and bear exchange rate risk 

No incentives for banks to limit 
deposits in foreign currencies 

Avoiding exchange rate risk 

Enhancing depositor confidence 

Preventing bank runs and competitive 
distortions 

Positive impact on banks out-side 
the euro area (otherwise they 
would be less attractive for euro-
area depositors) 

Avoiding negative 
consequences for the 
economy stemming from 
instability of the banking 
sector 

Avoiding negative 
consequences for the 
economy stemming from 
instability of the banking 
sector and competitive 
distortions 

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Preferred policy 
options 

Discontinuing set-off 
for depositors and 
limiting it in the 
insolvency procedure 

Requiring supervisors 
to inform DGS by 
default if a bank failure 
is likely 

Requiring DGS and 
banks to have a 
common interface 

Requiring DGS to 
regularly disclose 
relevant information 
(funds, stress testing, 
etc.) 

Impact on stakeholders 

Macro-impact 

DGS 

Banks 

Depositors 

Financial stability 

 Economy 

Avoiding the need to identify depositors' 
liabilities to match them against their 
deposits  

Avoiding the risk that eligible deposits 
will not be paid at all (or payout will be 
reduced) 

Enhancing depositor confidence 

Preventing bank runs 

More time for the preparation of claims 
verification 

Need to share all relevant 
information on deposits with DGS 
before failure 

No impact 

Possibility to prepare bank failure in an 
orderly manner (including quick 
payout) 

Ensuring quick exchange of information 
with member banks 

Need to adjust existing reporting 
obligations to requirements of DGS 

No impact 

Ensuring smooth information 
exchange in crisis situations 

Higher transparency and credibility of 
DGS 

Possibility to monitor on a regular 
basis information about actual 
DGS funding and potential 
expectations on future bank 
contributions 

Providing some depositors with 
additional information on DGS (limited to 
those seeking such information more 
actively) 

Possibility to assess whether DGS are 
capable to deal with bank failures and 
maintain financial stability 

Avoiding negative 
consequences for the 
economy stemming from 
instability of the banking 
sector 

Avoiding negative 
consequences for the 
economy stemming from 
unexpected bank failures 

No impact 

Avoiding negative 
consequences for the 
economy stemming from 
instability of the banking 
sector 

Harmonised approach 
to DGS funding (target 
level: 2% of eligible 
deposits, ex-ante/ ex-
post funds: 75%-25%, 
etc) to be achieved in 
10 years 

DGS would be much better capitalised 
that currently – after 10 years they 
would collect together the amount of ex-
ante funds of about €150 billion and €50 
billion available as ex-post contributions 
(compared to total ex-ante and ex-post 
funds of DGS of €23 billion in 2008) 

Covered deposits as 
the contribution base 

Better reflecting the actual risk to which 
DGS are exposed 

Need for member banks of ex-post 
DGS to switch to ex-ante system 
and pay adequate contributions to 
build the fund of a required size 

Increase in nominal contributions, 
but no impact on the actual 
amount of contributions paid to 
DGS 

Financing of DGS 

Increase in contributions of 393% 
and decrease in operating profits 
of about 2.5% 

Lower interest rates on saving accounts 
by about 0.1% or higher current account 
fees by about €7 per year per account 

Failures of a certain size (small and 
medium size) will not threaten financial 
stability since better capitalised DGS 
are able to cope with these failures 

Lower need to use the 
taxpayer money in case 
of bank failures (as a 
result of better capitalised 
funds of DGS) 

No impact 

Better monitoring of some risk 
exposures of DGS 

No impact 

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Preferred policy 
options 

Partially harmonised 
approach to  
risk-based 
contributions 
(mandatory and 
optional indicators) 

Impact on stakeholders 

Macro-impact 

DGS 

Banks 

Depositors 

Financial stability 

 Economy 

Need to monitor risk profiles of banks 
(via relevant indicators) on a regular 
basis 

Adjusting contributions to the 
actual risk incurred by banks 
(discouraging banks from taking 
excessive risk) 

Less risky products offered by banks to 
customers 

Better monitoring of risks in the 
banking sector 

Promoting more prudent and 
responsible behaviour in the banking 
sector 

Avoiding the problem of free riding 
(and de facto subsidizing riskier banks 
by safer ones) 

Avoiding negative 
consequences for the 
economy stemming from 
excessively risky and 
irresponsible behaviour of 
market participants 

Host DGS as a single 
point of contact for 
depositors at bank 
branches 

DGS in host Member State would have 
to involve its money in advance and 
then be repaid by DGS from home 
Member State 

No impact 

Ensuring better information to depositors 
and quicker payout 

Preventing bank runs 

Enhancing depositor confidence 

Other issues 

Require all banks to be 
a member of a DGS – 
integrate mutual and 
voluntary DGS into the 
Directive apart from 
coverage issues 

DGS have a broader financing basis if 
all banks contribute to them 

Increase in contributions for banks 
that are only members of mutual 
guarantee schemes but mitigated 
when risk-based contributions are 
introduced  

Source: Commission services. 

Depositors have a claim against all 
schemes protecting them 

Preservation of mutual schemes as a 
safeguard for financial stability 

Reducing distortions of 
competition 

Depositors maintain the indirect 
protection by mutual schemes 

It is ensured that all schemes are 
soundly financed 

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8.2. 

Social impact 

The Directive is expected to have a very positive social impact. It consists of the following 
aspects:  

•  a  high  level  of  financial  stability  –  confidence  of  about  95%  of  EU  depositors  will 
substantially increase as from the end of 2010 they will be fully covered by DGS and will, 
in case of a bank failure, be reimbursed by a DGS within 7 calendar days; 

•  an increase of protection of the wealth of depositors – 95% of EU depositors will be fully 

covered at the coverage level of €100 000;  

•  less  stress  for  social  welfare  systems  –  a  quick  payout  of  7  calendar  days  will  make  the 

intervention of social welfare systems because of a bank failure almost unnecessary. 

On the cost side, even if all costs stemming from the increase in banks contributions to DGS 
were to be passed on to depositors – which is rather unlikely in a competitive market – they 
will be very limited: a maximum 0.1% reduction in interest rates on savings or maximum €7 
more current account fees per year per account (in a crisis situation, the latter figure would be 
€10).  

With regards to the jobs linked to national DGS, there are about 500 permanent employees at 
DGS in the EU. If a pan-EU scheme were to be introduced, some of the current employees 
would  not  keep  their  positions.  Around  100  of  them  would  be  needed  to  run  a  pan-EU 
scheme.  It  can  be  assumed  that  due  to  their  expertise  in  the  banking  sector,  the  rest  of  the 
current employees would find another adequate job. 

8.3. 

Administrative burden 

The preferred options do not lead to any significant administrative burden142.  

Some elements of this proposal could be seen as implying administrative burden such as the 
information  obligations  of  banks  and  supervisory  authorities  to  DGS,  the  cross-border 
information  obligation  between  different  DGS  and  the  improvement  of  banks'  and  DGS' 
technical resources to reduce the payout delay or other indirect costs such as updating printed 
matters or web pages according to the new rules. 

However, none of these costs are caused by a regular obligation since they are incurred only 
in  case  of  a  bank  failure.  Regular  information  of  DGS  about  banks'  deposits  is  implicitly 
necessary but this has also been the case under current law. They are thus 'business as usual 
costs'. No regular reporting obligations would be introduced.  

The only figures that can be estimated are the costs for banks to tag eligible deposits, make 
data cleansing and provide a single customer view (about €6.2 bil lion over 5 years, i.e. around 
€1.2 billion annually within this period of time  – see Section 7.5). The current administrative 
costs per DGS are about €1 million per year with  huge differences between schemes (see also 
Section  7.10).  Apart  from  IT  costs  for  DGS,  which  cannot  be  estimated,  the  other  types  of 
costs mentioned above are considered insignificant. 

142 See Annex K for more detailed analysis. 

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8.4. 

Correlation with other impacts 

The impact of a revision of the Directive on Deposit Guarantee Schemes will be only one of 
the  impacts  caused  by  the  whole  range  of  ongoing  initiatives  to  enhance  financial  stability 
(e.g.  the  revisions  of  the  Capital  Requirements  Directive  2006/48/EC).  In  general,  each 
initiative  is  accompanied  by  its  own  impact  assessment.  It  is  not  the  purpose  to  provide  a 
cumulative assessment on the occasion of this revision. 

9. 

MONITORING AND EVALUATION 

Since bank failures are unpredictable and if possible avoided, the functioning of DGS cannot 
be  regularly  monitored  on  the  basis  of  how  real  bank  failures  are  handled.  However,  as 
proposed, there should be regular stress tests of DGS. This would show whether DGS are at 
least in an exercise scenario capable to comply with the legislative requirements. This should 
take  place  in  a  peer  review.  Such  review  could  be  performed  by  EFDI  and  EBA.  Results 
should  be  disclosed  to  Member  States  and  to  the  Commission,  the  EBA  and  the  ECB  but 
otherwise  details  may  be  kept  confidential  when  the  first  review  is  undertaken  in  order  to 
allow  improvements  without  public  pressure.  The  main  results  of  the  following  reviews 
should be disclosed to the public in detail. 

The  new  European  Banking  Authority  should  assess  the  resilience  of  DGS,  ensure  that 
national  legislation  is  not  applied  in  away  breaching  the  Directive,  conduct  peer  review 
analyses,  decide  whether  a  DGS  can  borrow  from  other  DGS  and  settle  disagreements 
between  DGS.  This  includes  vetting  if  the  ex-ante  fund  is  being  built  up  over  time  (see 
Section 7.8). The involvement of the EBA in general substantially reinforces the monitoring. 

The transposition of any new EU legislation on DGS will be monitored under the Treaty on 
the functioning of the EU. 

On a pan-EU scheme, there may be a further report long-term. 

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ANNEX  A:  COMPARISON  OF  THE  COMMISSION  PROPOSAL  WITH  THE  FINAL  TEXT 
OF DIRECTIVE 2009/14/EC 

 Commission proposal  
(submitted on 15 October 2008) 

Final text  
(agreed on 18 December 2008  
and adopted on 11 March 2009) 

Increase of the minimum coverage level to € 100 000 

Limiting the eligibility of depositors to private individuals and 
abandoning all depositor-related discretionary exclusions in 
Annex 1 (leaving the option to Member States to broaden this 
limited scope) 

Increase of the minimum coverage level to € 50 000 by the 
end of June 2009 and to a fixed level  
of € 100 000 by the end of 2010 unless the Commission 
considers this inappropriate 

The scope of coverage was not changed. 

Reduction of the deadline to decide whether a bank has failed 
from 21 to 3 days 

Reduction of the deadline to decide whether a bank has 
failed to 5 working days (i.e. 1 week) 

Reduction of the payout delay from 3 months (extendable to 9 
months) to 3 days 

Reduction of the payout delay to 20 working days with the 
possibility to extend it a further 10 working days (i.e. 4-6 
weeks) by the end of 2010. 

Abandon of co-insurance  
(i.e. a portion of losses to be borne by the depositor) 

Regular performance tests of DGS' systems 

Early information of DGS in case of problems in a credit 
institution 

Early information of DGS in case of problems in a credit 
institution if appropriate 

Requirement for DGS to mutually cooperate 

Source: Commission services.  

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ANNEX B: INCLUSIONS IN THE SCOPE OF COVERAGE APPLIED IN MEMBER STATES* 

BE 
BG 
CZ 
DK 
DE1 
DE2 
DE3,4 
EE 
IE 
GR 
ES1,2.3 
FR 
IT1 
IT2 
CY1 
CY2 
LV 
LT 
LU 
HU 
MT 
NL 
AT1-5 
PL 
PT1 
PT2 
RO 
SI 
SK 
FI 
SE 
UK 

1 

2 

3 

X 

X 

X 
X 

X 

X 

X 

4

X
X

X

X

X 

X

X

X
X

X 
X 

X 

Category of deposits 

5

6

7

8

X

X

X
X

X

X

X

X

X

X
X

X
X

9

X

X

X

X

X

X
X

X

X

X
X

X
X

X
X

10

11 

12 

13 

14

X

X

X

X

X 
X 

X 

X 

X 

X 

X 

X 

X 
X 
X 
X 

X
X
X

X

X
X
X
X
X
X
X
X
X

X

X
X

X
X

X 
X 
X 

X 
X 
X 
X 
X 
X 
X 
X 

X 

X 
X 

X 

X 
X 
X 
X 
X 
X 
X 
X 
X 

1. Deposits by financial institutions as defined in Article 1 (6) of Directive 89/646/EEC. 
2. Deposits by insurance undertakings. 
3. Deposit by government and central administrative authorities. 
4. Deposits by provincial, regional, local and municipal authorities. 
5. Deposits by collective investment undertakings. 
6. Deposits by pension and retirement funds. 
7. Deposit by a credit institution’s own directors, managers, members personally liable, holder of at least 5% of the credit institution’s 
capital, persons responsible for carrying out the statutory audits of the credit institution’s accounting documents and depositors of 
similar status in other companies in the same group. 

8. Deposits by close relatives and third parties acting on behalf of the depositors referred to in 7. 
9. Deposits by other companies in the same group. 
10. Non-nominative deposits. 
11. Deposits for which the depositor has, on an individual basis, obtained from the same credit institution rates and financial 

concessions which have helped to aggravate its financial situation. 

12. Debt securities issued by the same institution and liabilities arising out of own acceptances and promissory notes. 
13. Deposits in currencies other than those of the Member States. 
14. Deposits by companies which are of such a size that they are not permitted to draw up abridged balance sheets pursuant to Article 
11 of the Fourth Council Directive (78/660/EEC) of 25 July 1978 based on Article 54 (3) (g) of the Treaty on the annual accounts of 
certain types of companies. 

* 'X' labels Member States where inclusions are applied  

Source: Joint Research Centre. 

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ANNEX  C:  DIFFERENCES  BETWEEN  DGS  AND  OTHER  FINANCIAL  PROTECTION 
SCHEMES 

Even  though  they  are  treated  by  a  different  Impact  assessment,  it  seems  useful  to  briefly 
explain the functioning of other guarantee systems for financial services. 

IGS  provide  last-resort  protection  to  consumers  when  insurers  are  unable  to  fulfil  their 
contract  commitment,  offering  protection  against the  risk  that  claims  will  not  be  met  in  the 
event of a failure of an insurance undertaking. Unlike the banking and the securities sectors, 
there  is  no  European  legislation  on  guarantee  schemes  in  the  insurance  sector.  As  of  today 
only  12  Member  States  have  one  or  more  IGS,  showing  significant  differences  across 
Member States with regard to the various design features of the national IGS.  

The main objective of IGS is the protection of policyholders.  

Directive  97/9/EC  on  Investor-Compensation  Schemes  (ICS)  applies  to  investment  firms 
(including  credit  institutions)  who  provide  investment  services  under  Directive  2004/39/EC 
on  markets  in  financial  instruments.  It  provides  for  clients  of  investment  firms  to  be 
compensated  in  two  limited  situations.  Firstly,  if  a  firm  is  unable  to  repay  money  owed  or 
belonging to a client and held on the  client's behalf in  connection with  investment  services. 
Secondly, if a firm is unable to return to a client a financial instrument belonging to the client 
and held, administered or managed on the client's behalf. Such a claim will typically arise if a 
firm gone into default is unable to return clients' assets because of fraud or theft or an error or 
problem  with  a  firm's  systems  and  controls. However, it does not cover compensation for a 
decline in the value of an investment (e.g. if the value of the investment's underlying assets 
decline, the value of the market declines or if an issuer fails).  

The  main  purpose  of  ICS  is  to  remove  a  potential  obstacle  to  the  proper  functioning  of  a 
single  market  for  investment  services  (i.e.  diverse  national  compensation  schemes  being 
applied to such services).  

Source: Commission services.  

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ANNEX D: DGS MANDATES BROADER THAN 'PAYBOXES' IN MEMBER STATES 

Member 
State 

Mandate 

AT 

BE 

BG 

DE 

ES 

FR 

IT 

LT 

PL 

PT 

RO 

UK 

Receivership; moratorium; preventive intervention 

Preventive interventions (under strict conditions) 

Preventive interventions (increase of the capital of an ailing bank); administration of bankruptcy 
proceedings 

Mutual Guarantee Schemes covering certain banks, but no comparable powers for the scheme 
required for other banks  

Preventive interventions (financial aid, subsidies, guarantees, loans under favourable conditions); 
reorganisation of institutions 

Preventive interventions 

Transfer of assets and liabilities; support interventions 

DGS has the right to take over an insolvent bank 

Financial assistance: loans, guarantees, endorsements; acquisition of debts 

Co-operation actions intended to restore the solvency and liquidity conditions of member institutions; 
granting allowances or loans; providing guarantees in favour of the member institutions; acquiring 
credits or any other assets from its members  

Interim administration; special administration; judicial liquidation; administrative liquidation 

FSCS  can  contribute  to  the  costs  of  a  bank  failure  through  the  Special  Resolution  Regime  (SRR); 
insolvency practitioner: first objective is to work with the FSCS to ensure that each eligible depositor 
has the relevant account transferred to another institution and receives payment from (or on behalf of) 
the FSCS - FSCS can now borrow from the National Loans Fund 

Source: Joint Research Centre and Member States. 

EN 

83 

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ANNEX E: COMPARISON OF SELECTED PROVISIONS OF DIRECTIVES DGS (94/19/EC) 
AND CRD (2006/48/EC) 

Article 3(1)  
of Directive 94/19/EC 

Article 80(8) in conjunction with Article 80(7) (a), (d), (e)  
of Directive 2006/48/EC 

Description 

The credit institution belongs to a 
system which protects the credit 
institution itself and in particular 
ensures its liquidity and solvency, 
thus guaranteeing protection for 
depositors at least equivalent to 
that provided by a deposit-
guarantee scheme. 

Recognition 
and 
monitoring 

the system must be in existence 
and have been officially recognized 
when this Directive is adopted; 

conditions must be fulfilled in the 
opinion of the competent 
authorities 

the system must be designed to 
prevent deposits with credit 
institutions belonging to the system 
from becoming unavailable and 
have the resources necessary for 
that purpose at its disposal, 

Mechanism 

Risk 
management 

Disclosure 

the system must ensure that 
depositors are informed in 
accordance with the terms and 
conditions laid down in Article 9 

Reference to 
state aid 

the system must not consist of a 
guarantee granted to a credit 
institution by a Member State 

(8)(b) the credit institution and the counterparty have entered into a contractual 
or statutory liability arrangement which protects those institutions and in 
particular ensures their liquidity and solvency to avoid bankruptcy in case it 
becomes necessary (referred to below as an institutional protection scheme); 

(7)(a) the counterparty is an institution or a financial holding company, financial 
institution, asset management company or ancillary services undertaking 
subject to appropriate prudential requirements; 

(7)(d) the counterparty is established in the same Member State as the credit 
institution;  

(8)(i) the institutional protection scheme shall be based on a broad membership 
of credit institutions of a predominantly homogeneous business profile; 

(8)(g) members of the institutional protection scheme are obliged to give 
advance notice of at least 24 months if they wish to end the arrangements. 

(8)(j) the adequacy of the systems referred to in point (8)(d) is approved and 
monitored at regular intervals by the relevant competent authorities. 

(8)(c) the arrangements ensure that the institutional protection scheme will be 
able to grant support necessary under its commitment from funds readily 
available to it; 

(7)(e) there is no current or foreseen material practical or legal impediment to 
the prompt transfer of own funds or repayment of liabilities from the counterparty 
to the credit institution. 

(8)(d) the institutional protection scheme disposes of suitable and uniformly 
stipulated systems for the monitoring and classification of risk (which gives a 
complete overview of the risk situations of all the individual members and the 
institutional protection scheme as a whole) with corresponding possibilities to 
take influence …; 

(8)(e) the institutional protection scheme conducts its own risk review which is 
communicated to the individual members; 

(8)(h) the multiple use of elements eligible for the calculation of own funds 
("multiple gearing") as well as any inappropriate creation of own funds between 
the members of the institutional protection scheme shall be eliminated. 

(f) the institutional protection scheme draws up and publishes once in a year 
either, a consolidated report comprising the balance sheet, the profit-and-loss 
account, the situation report and the risk report, concerning the institutional 
protection scheme as a whole, or a report comprising the aggregated balance 
sheet, the aggregated profit-and-loss account, the situation report and the risk 
report, concerning the institutional protection scheme as a whole; 

EN 

84 

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ANNEX F: TOPPING UP  

The  sole  responsibility  to  reimburse  depositors  lies  with  the  DGS  of  the  country  where  the 
bank  has  its  registered  seat,  regardless  whether  it  the  bank  is  a  stand-alone  company  or  a 
subsidiary controlled by another company. This responsibility extends to all legally dependent 
parts of a bank, i.e. its branches, even if they are located in another Member State. 

There is an important exception to this principle. If, in case of branches, coverage in the host 
country  is  higher  or  more  comprehensive  than  in  the  home  country,  the  current  regime 
provides the option for the bank to join the host country DGS for the difference in coverage. 
This is called 'topping up arrangement' and means that two DGS (home and host country) are 
involved when depositors of such a branch are to be paid out. Topping up arrangements are 
very complex since the Directive has only harmonised DGS on a minimum level and frictions 
occur  if  DGS  operating  under  different  national  rules  must  cooperate.  Topping  up  can  also 
lead to delays in payout since two DGS are involved, which have to coordinate their actions. 

The current form of topping up arrangements gives a bank with a branch in another Member 
State the right to join the host country DGS for its branch and for the difference in coverage 
but this is dependent on whether and how the DGS of both countries can find an agreement. 
Important obstacles would remain such as different banking secrecy obligations (hindering the 
echange  of  depositor  information  between  DGS),  different  ranks  of  DGS  in  insolvency 
procedures  and  in  particular  different  legal  systems  in  Member  States.  The  involvement  of 
two  DGS  that  might  have  a  very  different  setup  inevitably  takes  more  time.  They  cause 
confusion for depositors who do not understand why they have to deal with two DGS for one 
account as is evident from complaints in the context of the failure of Icelandic banks. 

Policy options and their impact 

The options below are only relevant if neither a single pan-EU DGS is chosen nor level and 
scope of coverage and the eligibility of depositors will be fully harmonised, the latter being 
preferred according to this report. In this case, the following sub-options could be taken into 
consideration: 

•  Option 1: Discontinuation of topping up. 

•  Option 2: Mandatory topping up by the host country. 

•  Option 3: Mandatory topping up by the home country. 

Option 1 would have the positive impact that depositors would only be covered by one DGS. 
However, this would mean for banks that their branches could not compete with other banks 
if their home DGS has a lower protection than banks registered in the host country. It would 
also lead to depositors at banks operating in the same country being subject to different level 
or  scope  of  protection.  Costs  for  covering  the  difference  between  home  and  host  coverage 
would be shifted towards the home DGS. 

Option 2 would have a  very  low impact since  many  banks  concerned  by different coverage 
levels have already opted for topping up. Depositors may be better protected in total but the 
involvement of two DGS is prone to complications. Banks would have to contribute to two 
DGS  if  topping  up  applies.  Most  likely,  this  would  increase  the  overall  contributions. 
Depositors at banks operating in the same country would be protected equally. 

EN 

85 

   EN 

 
Option  3  would  simplify  deposit  protection  for  DGS,  banks  and  depositors  since  only  one 
DGS would be competent and overall contributions per bank would seem to be lower as under 
option  2  (economies  of  scale:  1  instead  of  2  DGS  must  be  contributed  to).  The  amount  of 
covered deposits protected by the home-country DGS would increase since they are assumed 
to provide protection to branches that were covered by the host country DGS. On average, this 
increase is negligible – between 0.3% and 0.7%. Option 3 would lead to an equal protection 
of  depositors  at  banks  operating  in  the  same  country  but  lead  to  a  different  protection  of 
depositors  at  the  same  bank  pending  on  the  location  of  its  branches  where  the  deposits  are 
kept. This may lead to pressure in the home country to align level or scope of coverage to the 
level and scope guaranteed in other Member States. 

Comparison of policy options 

Effectiveness 

Option 1 would be effective to mitigate fragmentation and to reduce payout delays. However, 
it  would  be  ineffective  as  to  creating  a  level  playing  field  if  no  full  harmonisation  can  be 
achieved.  

Option  2  would  not  be  effective  to  mitigate  fragmentation  and  to  reduce  the  payout  delay 
since  the  involvement  of  two  DGS  would  even  become  mandatory  in  case  of  divergent 
coverage. 

Option 3 would be effective to mitigate fragmentation since only one DGS is competent. It is 
also effective to increase depositor confidence and to reduce payout delays since the depositor 
does  not  have  to  deal  with  two  DGS.  Home  country  topping  up  as  such  would  not  solve 
unequal  treatment  between  depositors  but  be  much  more  effective  since  many  possible 
frictions  and  delays  caused  by  the  involvement  of  different  schemes  would  be  avoided. 
Option 3 would have an additional advantage: If home countries are forced to offer depositors 
in host countries more protection than depositors in the home country, there may be pressure 
of  the  public  to  align  coverage  with  the  one  in  the  host  country,  i.e.  to  also  apply  optional 
elements of scope and eligibility. 

Efficiency 

Option 1 saves admin costs for the host scheme and costs for the banks that do not have to pay 
contributions  to  the  host  DGS  anymore.  Option  2  incurs  admin  costs  for  the  host  DGS  and 
costs for banks that have to contribute to two schemes. Option 3 also incurs costs for banks 
that  have  to  pay  higher  contributions  (to  the  home  DGS)  but  there  are  no  additional  admin 
costs since only one DGS is involved. Given its effectiveness and relatively low costs, option 
3 is the most efficient option. 

Conclusion: Since Option 3 is the most effective and efficient option, it would be preferable 
over the other options. 

EN 

86 

   EN 

 
ANNEX G: MUTUAL AND VOLUNTARY GUARANTEE SCHEMES 

It  should  be  recalled  that  mutual  schemes  function  in  a  different  way  than  DGS  while 
voluntary DGS are DGS going beyond statutory DGS (see Section 4.7).  

Policy options and their impact: 

The following options have been taken into account: 

•  Option 1: Retain current approach (mutual schemes are exempt from the Directive if they 
meet certain requirements and voluntary schemes are not covered by the Directive143). 

•  Option 2: Banks being members of mutual guarantee schemes also have to be members of 
a DGS but pay half of the pre-determined contribution which is paid by the banks in the 
same risk category. The function of DGS could also be performed by the mutual scheme, 
which  would  then  fall  entirely  within  the  scope  of  the  Directive,  including  its  coverage 
level. The mutual scheme would have the choice either to become a statutory DGS with a 
bank resolution mandate (see above 7.10) or to remain a mutual scheme and contribute half 
of  the  risk-based  pre-determined  contribution  to  a  statutory  DGS.  Voluntary  schemes 
would be subject to all requirements of the Directive, in particular the level and scope of 
coverage, the financing requirements and the payout delay. 

•  Option 3: Prohibit mutual and voluntary schemes. 

Option  1  would  have  no  impact  on  voluntary  and  mutual  schemes.  As  described  in  Section 
4.7,  retaining  the  current  approach  leads  to  insufficient  information  and  inappropriate 
protection  of  depositors  because  they  have  no  claim  against  voluntary  and  most  mutual 
schemes and are not protected if the mutual or voluntary scheme fails. Competitive distortions 
resulting  from  offering  higher  coverage  (‘unlimited  protection’)  and  from  the  exemption  to 
pay contributions to the statutory DGS would remain 

Under Option 2, two variants have been considered the choice of which is up to the mutual 
schemes: (a) mutual guarantee schemes could also perform the role of a DGS and would then 
fall  entirely  within  the  scope  of  the  Directive,  including  its  coverage  level;  (b)  For  mutual 
guarantee  schemes  not  acknowledged  as  a  DGS  under  the  Directive  and  for  voluntary 
schemes,  this  option  would  entail  the  following  requirements  in  order  to  ensure  that  the 
problems described in Section 4.7 are avoided: 

•  Depositors  must  have  a  claim  for  reimbursement  on  voluntary  schemes  (or  on  mutual 
schemes  if  the  mutual  protection  has  failed)  and  have  to  be  informed  accordingly.  As  to 
mutual schemes, this level cannot be higher as for DGS under the Directive. If the claim 
against  the  mutual  or  voluntary  scheme  cannot  be  met,  the  DGS  has  to  pay  up  to  the 
coverage  limit  and  must  be  in  a  position  to  recover  the  payments  from  the  mutual  or 
voluntary scheme. 

•  The  fact  that  banks  are  members  of  a  mutual  scheme  is  taken  into  account  for  the 
calculation of risk-based contributions to the DGS of which they are a member. Their risk 
should be assessed by the DGS.  

143 

Article 3 of Directive 94/19/EC and Recital 8 of Directive 2009/14/EC.. 

EN 

87 

   EN 

 
                                                 
•  Members of mutual schemes can only enjoy this reduction if the mutual scheme fulfils the 
criteria of Article 80(8) of Directive 2006/48/EC144 and if it covers the same products and 
uses the same eligibility criteria for depositors as DGS under the Directive (since otherwise 
the risk for the statutory DGS would be higher if it has to step in, see below). 

•  On the one hand, no mutual or voluntary scheme has failed so far (which speaks for a low 
risk for statutory DGS concerning their members). On the other hand, a voluntary scheme 
needed billions of state guarantees to survive (see Section 4.4) and no information on their 
financial  soundness  is  disclosed  (which  speaks  against  their  solidity).  The  political 
declaration  of  unlimited  coverage  given  in  autumn  2008  could  be  interpreted  as  if  there 
was no sufficient depositor confidence into the German safety net. Considering the lack of 
detailed information, due to the mere fact that two safety mechanisms would apply to one 
bank (the DGS and the mutual scheme), contributions of members of a mutual scheme to 
statutory DGS would thus be half of the contribution for a bank with the same degree of 
risk as the mutual scheme as a whole. In other words, banks that are members of a mutual 
scheme would get a reduction of 50% for their contribution to DGS. 

•  Depositors  protected  mutual  schemes  are  clearly  informed  that  they  offer  an  additional 
layer  of protection  to  existing  DGS,  that they have a claim against mutual  and voluntary 
schemes and about how they function.  

•  Mutual and voluntary schemes are subject to the same financing requirements, disclosure 
requirements,  peer  review  and  stress  testing  as  DGS  but  are  free  to  impose  stricter 
conditions on their members.  

This option would improve depositor protection since depositors would have a claim against 
those  schemes  as  a  safety  net.  It  has  an  impact  on  statutory  DGS  that  must  be  prepared  to 
cover customers of banks belonging to a mutual scheme but in turn, it receives contributions 
from them. The strict criteria of Article 80(8) of Directive 2006/48/EC ensure that a mutual 
scheme significantly reduces the risk of its members to fail since if its conditions are fulfilled, 
the lending between members is regarded as risk-free for prudential purposes. It would also 
improve  depositor  information.  This  option  would  remove  competitive  distortions  since 
mutual schemes could not advertise with 'unlimited coverage' anymore but only explain that 
their scheme prevents failures. 

Members  of  German  mutual  schemes  would  consequently  have  to  pay  contributions  to  the 
statutory  DGS  in  addition  to  the  mutual  scheme  (with  a  reduction  of  50%).  This  does  not 
apply to Austrian banks since they must all be members of a DGS under the Directive. Since 
we requested but did not receive information on the amount of funds of and contributions to 
these  schemes,  the  impact  cannot  be  calculated145.  However,  on  the  basis  of  the  eligible 

144 

145 

See  Annex  E  for  a  comparison  of  Article  3  of  Directive  1994/19/EC  and  Article  80(8)  of  Directive 
2006/48/EC. 
Sometimes, there are ratings for the schemes or for central institutions of their members available. The 
central  institution  of  Austrian  Volksbanken  is  rated  Baa  (Moody's),  the  central  institution  of  the 
Austrian  Raiffeisenbanken  A1  (Moody's),  the  Erste  Bank  Group  comprising  most  Austrian  Savings 
Banks A (S&P). German Sparkassen have a corporate rating of Aa2 (Moody's)/A (DBRS), the German 
cooperative banks have a group rating of A+ (Fitch/S&P). 

EN 

88 

   EN 

 
                                                 
deposits held with banks under German mutual schemes (about € 1.6 trillion 146), the current 
contributions  to  be  paid  into  the  German  statutory  DGS147  –  under  the  assumption  that 
contributions  will  be  risk-based  in  future  (see  Section  7.9)  and  members  of  the  German 
mutual  schemes  fall  into  the  lowest  category  of  risk,  i.e.  75%  of  the  'standard'  contribution 
(even  though  this  cannot  be  verified  due  a  lack  of  information)  –  it  can  be  estimated  that 
German cooperative banks would have to contribute about €37 million and savings banks €67 
million to the German statutory DGS. Currently, the contributions to the German schemes are 
not risk-based. If the target fund sizes for DGS discussed in Section 7.8 are taken into account 
(0.6%,  1.3%  and  1.96%  of  eligible  deposits),  the  German  cooperative  banks  would  ceteris 
paribus  have  to  pay  €  137,  299  or  450  million  each  year  over  10  years.  For  the  German 
savings banks, this would respectively mean € 251, 544 or 821 million.  

If the German mutual schemes opted for becoming DGS acknowledged under the Directive, 
the costs for banks adhering to them would be considerably lower since existing funds would 
be  fully  taken  into  account.  However,  due  to  a  lack  of  information  about  their  current  fund 
size it can only be guessed that the impact would be lower. In 2008, the German Minister of 
Finance was quoted in the press with a statement that the German voluntary scheme had a size 
of € 4.8 billion 148. For cooperative banks, such a fund size would mean 0.84% of deposits and 
for the savings banks 0.44% of deposits. However, this impact has to be compared with the 
impact on other banks (see Annex 5 and 14) and is relatively low. 

As to the impact on bank interest rates and fees, no estimation is possible for Germany (due to 
the lack of data) but generally, the impact of rising contributions to DGS on depositors is low 
(0.09% lower interest rates in the EU and about  € 4 higher fees in  the EU (see Annex 6). 

Option 3 would force any bank into a DGS and the operations of other schemes would cease. 
No problems linked to the existence of these schemes such as inappropriate coverage and a 
lack of depositor information would exist. The fragmentation of DGS would also be reduced. 
The  impact  on  depositors  would  be  low  since  the  current  quasi  unlimited  coverage  of 
voluntary DGS does not seem to be credible. If such schemes had to apply the same rules as 
others,  they  would  likely  cease  their  operation.  The  funds  of  the  schemes  could  be 
redistributed to members who could finance contributions to DGS with it. 

Comparison of policy options 

Effectiveness 

Option 1 would not contribute to improving depositor information. The fact that depositors do 
not have a claim for reimbursement on mutual and voluntary schemes in case of failure, the 
coverage  of  depositors  would  not  be  effectively  ensured  with  negative  consequences  for 
financial stability. 

146 

147 
148 

This may include interbank deposits since they are also covered by the mutual schemes. The real impact 
(since  DGS  only  cover  retail  deposits)  would  in  this  case  be  much  lower.  No  clarification  could  be 
obtained. 
Currently, the contribution to the German DGS for private banks is set at 0.016% of eligible deposits. 
Handelsblatt  of  19  February  2009  (http://www.handelsblatt.com/finanzen/vorsorge/einlagensicherung-
das-grosse-versprechen;2162821).  

EN 

89 

   EN 

 
 
                                                 
Option 2 would be effective in ensuring appropriate coverage of depositors, in particular if a 
mutual  scheme  collapsed.  Depositor  information  would  be  improved.  It  would  also  be 
effective with regard to the objective to facilitate private sector solutions in crisis situations. 
This  option  would  not  effectively  reduce  fragmentation  since  mutual  schemes  continued  to 
coexist  alongside  statutory  DGS  but  due  to  the  obligation  for  DGS  to  cover  failures  if  a 
mutual scheme collapses, risk would be distributed to two schemes and therefore the negative 
effects of fragmentation would be mitigated. 

Option 3 would be less effective as to the general objective of financial stability since mutual 
schemes are an  additional  safeguard mechanism. This option  would  also be incoherent with 
the objective to facilitate private sector solutions in crisis situations. However, option 3 would 
be  very  effective  to  mitigate  fragmentation,  would  resolve  any  possible  competitive 
distortions and would not imply additional costs to schemes. Option 3 would not resolve but 
mitigate competitive distortions if mutual and voluntary schemes are treated like DGS or in 
case of mutual schemes if they have to pay contributions to the scheme and coverage in case 
of payout is limited. 

Efficiency 

Options 1 and 3 do not lead to direct financial costs. In an extreme case, mutual and voluntary 
schemes  could  even  refuse  payment  to  depositors149.  There  are  no  benefits  either  under 
Option  1.  However,  the  fact  that  depositors  have  no  claims  against  the  schemes  and  do  not 
know  how  many  funds  they  have  at  hand,  reduces  their  credibility  and  thus  consumer 
confidence. This could lead to high social costs in case of bank runs. Most likely, the taxpayer 
would bear these costs in the end.  

Option 3 would be less efficient than Option 1 since the costs to manage crises among their 
members  would  rise  if  the  mutual  schemes  had  to  cease  their  operations.  Options  1  and  2 
would leave this function intact and thus be more efficient. Option 2 would seem to lead to 
significant costs if mutual schemes do not want to turn into DGS under the Directive, which 
would not lead to any disadvantages for them since they could maintain their mutual support 
function  as  to  bank  resolution.  However,  even  if  they  have  to  pay  contributions  to  two 
schemes, the benefits for depositor confidence and financial stability cannot be calculated but 
are estimated to outweigh the costs. This seems to be proven by the Austrian example where 
members of a mutual scheme also have to pay into the DGS, even if ex-post only. 

Coherence 

Option 3 – as far as mutual schemes are concerned – would be inconsistent with Article 80(8) 
of  Directive  2006/48/EC  since  this  Directive  would  allow  what  is  prohibited  in  the  same 
context  of  financial  stability.  Option  1  would  also  be  inconsistent  with  this  Article  since 
stricter prudential conditions would be required for prudential purposes than for the protection 
of depositors. 

Conclusion:  Option  2  is  preferred.  It  would  allow  maintaining  depositor  confidence, 
mitigating fragmentation and mitigating competitive distortions. 

149 

Frankfurter  Allgemeine  Zeitung  of  10  November  2009,  p.  22  (on  a  lawsuit  concerning  interbank 
deposits not covered by DGS but under the German voluntary scheme, which refused repayment in a 
specific case). 

EN 

90 

   EN 

 
                                                 
ANNEX H: ADDITIONAL ISSUES RAISED BY STAKEHOLDERS  

Harmonisation of the statute of limitation 

Directive 94/19/EC (Article 3) allows a statute of  limitation – only one day  longer than the 
payout  delay.  With  Directive  2009/14/EC  that  has  slightly  reduced  the  payout  delay 
depositors  could  be  caught  out  with  their  claims  against  the  DGS  after  only  some  weeks, 
which  seems  too  short.  Without  stating  a  certain  timeframe,  the  statute  of  limitation  would 
better be linked to the registration deadline of claims in the insolvency procedure so that DGS 
would  not  have  to  payout  depositors  when  they  cannot  get  recovery  for  these  claims  in  the 
insolvency procedure anymore.  

Handling of deposits held on behalf of several depositors (e.g. trust accounts) 

Under  Article  8  of  Directive  94/19/EC,  Member  States  can  decide  whether  accounts 
belonging  to  several  persons  can  be  treated  as  one  single  account  or  whether  the  coverage 
level should be applied to every beneficiary of such account. Any attempt to harmonise this 
would be complicated since 27 different civil laws on associations, trusts, etc. would have to 
be  taken  into  account.  It  would  be  very  burdensome  for  the  DGS  if  it  was  required  to  look 
behind  every  trust  account.  Whether  this  is  possible  can  only  be  decided  by  the  Member 
States and should therefore remain as it is. However, if Member States wish to go beyond the 
trustee accountholder and to identify beneficiaries, this should be taken into account for the 
calculation of contributions and a longer payout delay should be allowed. 

Taxpayer’s contribution to DGS funding 

The recent crisis has shown that the use of taxpayers' money has led to budgetary deficits. The 
use of taxpayers' money should therefore be avoided as much as possible. 

Reintroduction of co-insurance 

Co-insurance has been abolished by Directive 2009/14/EC since it reduced the effectiveness 
of depositor protection and was unfair since depositors protected by the Directive are not in a 
position to judge the soundness of their bank. 

Excluding high-risk banks from DGS 

Excluding high-risk banks from DGS would be counterproductive because it would limit the 
protection of depositors. Supervisory measures should be taken and the introduction of risk-
based contributions should serve as sufficient incentive to deter banks from becoming 'high-
risk' banks. 

Including deposits of investment funds 

It is argued that such deposits (being subject to Annex I no. 5 of Directive 94/19/EC) should 
be  mandatorily  covered  by  DGS  since  these  deposits  belonged  in  the  end  to  unit  holders. 
However,  an  inclusion  of  investment  funds  would  be  incoherent  since  the  impact  of  bank 
failures  on  collective  investment  undertakings  is  already  taken  into  account  by  Article 
52(1)(b) of Directive 2009/65, which limits any investment (including deposits) to 20% of the 
fund's size. A further safeguard does therefore not seem necessary. This is probably why these 
deposits are only covered in 3 Member States (DK, FI and SE). 

EN 

91 

   EN 

 
ANNEX J: PREFERRED OPTIONS (SUMMARY) 

Problem 
driver 

Operational objective 

Policy options indicated as preferred in the Impact Assessment 

Level and scope of coverage 

Inappropriate 
coverage levels 

Determining appropriate 
coverage level 

Fully harmonised (fixed) coverage level of € 100 000 in all MS – to be applied 
from 31 December 2010 onwards 

Differences in 
coverage levels 

Reducing differences in 
coverage levels  

Providing alternative solutions 
to topping up 

Reducing differences in the 
scope of coverage 

Providing alternative solutions 
to current topping up regime 

Differences in 
the scope of 
coverage 
(eligibility of 
depositors) 

Differences in 
the scope of 
coverage 
(covered 
products) 

Full harmonisation of the coverage level makes topping up obsolete 

Application of the coverage level: per depositor per bank (no coverage per 
brand) 

No exemptions from the fixed coverage level (no indefinite grandfathering for 
social considerations, no additional coverage for temporary high deposit 
balances, etc.) 

Full harmonisation of scope and eligibility makes topping up obsolete. 

Including the following depositors into the scope of coverage: all enterprises 
(regardless of their size), depositors having a relationship with the failed bank 

Excluding the following depositors from the scope of coverage: enterprises in 
the financial sector, local and central authorities, depositors who opened their 
account anonymously 

Including the following products into the scope of coverage: deposits in non-EU 
currencies (currently optional) 

Excluding the following products from the scope of coverage: debt certificates 
issued by the same bank and debt securities and liabilities arising out of own 
acceptances and promissory notes (currently optional), structured products 
whose principal is not repayable in full 

Clarifying that if a claim on a credit institution is subject to both ICS and DGS, 
the claim should be dealt with by the DGS 

Payout delay and modalities 

Too long payout 
delay 

Requiring a fair payout delay 
(as short as possible, but 
feasible) 

Reducing the payout deadline to 7 calendar days (without extension) after a 
transition period of 3 years (requirements: tagging eligible deposits, single 
customer view, etc.) 

Providing alternative solutions 
to deposit payout 

Leaving alternative solutions to further work on bank resolution 
(COM(2009)561) 

Inadequate 
procedures for 
payout 

Ensuring clear and fair payout 
modalities 

Limiting set-off 

Inadequate 
procedures for 
payout 

Ensuring that DGS are capable 
to deal with payout situations 

Involving DGS at an early 
stage 

Improving information 
exchange between banks and 
schemes 

Payout of covered deposits in the same currency as the deposits were paid in 

Interest paid out according to the rate agreed with the bank until the date of 
failure if it can be determined 

Discontinuing set-off for depositors, but limiting set-off in the insolvency 
procedure (against the DGS that has subrogated into the depositors' claims 
against the bank) 

Requiring competent authorities to inform DGS by default if a bank failure 
becomes likely and requiring banks and DGS to exchange information on 
depositors domestically and cross-border unfettered by confidentiality 
requirements 

Requiring DGS and their member banks to have a common interface to quickly 
exchange information 

Requiring DGS to regularly disclose the amount of ex-ante funds, ex-post 
financing capacity, workforce and the result of regular stress testing exercises 
and of a regular peer review among DGS 

EN 

92 

   EN 

 
Financing of DGS 

Increasing convergence 
between DGS 

Harmonised  approach  to  funding  mechanisms  (i.e.  making  ex-ante  financing 
mandatory and supported by ex-post funding) and setting limits for both ex-ante 
and ex-post contributions (e.g. 75% and 25% of the total fund respectively) 

Different 
financing 
obligations on 
banks across 
MS  

Bank 
contributions to 
DGS are too low 

Enhancing DGS funding 

Harmonisation of the target level, the contribution base, the scope of coverage 
and limits for ex-ante/ex-post funds (to be achieved within a specified period of 
time, e.g. 10 years) 

Requiring annual contributions without down payments if a bank joins the 
scheme 

Requiring DGS to reimburse the last annual contribution of a bank if it becomes 
a member of another DGS due to changes of its legal status 

Setting a relevant target level for the DGS funds (both ex-ante and ex-post) in 
order to ensure that DGS would be capable to handle a bank failure of a 
specific size (e.g. 2% of the amount of eligible deposits, i.e. the maximum DGS 
payout for a failure occurred in the EU MS in 2008) – it would allow DGS to 
collect within 10 years about € 150 billion of ex-ante funds and € 50 billion 
available as ex-post contributions (if bank annual contributions were 4-5 times 
higher within those 10 years) 

Borrowing by DGS allowed but not necessarily harmonised 

Bank 
contributions to 
DGS are not 
based on risk 
exposures 

Providing for contributions to 
schemes, which adequately 
reflect the degree of risk 
incurred by banks 

Total amount of bank contributions depends on both the contribution base 
(covered deposits) and risk indicators 

Developing a set of core risk indicators (mandatory for all MS) and another set 
of supplementary indicators (optional for MS) 

Other issues 

Clarifying and elaborating 
existing information obligations 
of banks 

Developing a standardised template (annexed to the Directive) that includes 
relevant information on DGS and must be countersigned by depositors before 
entering into a contractual relationship with a bank 

Ensuring adequate funding for 
DGS with additional tasks 

Ensuring that DGS with 
intervention powers remain 
sufficiently funded to fulfil their 
payout obligation if they are 
charged with additional tasks 

Requiring a reference to DGS in advertisements and account statements if a 
product is covered by DGS 

Not requiring DGS to be in charge of bank resolution. However, if a DGS has a 
resolution mandate, permitting the use of DGS funds for bank resolution 
purposes, but limited to the amount that would have been necessary to pay out 
covered deposits. 

Requiring host country DGS to act as a single point of contact for depositors in 
case of a bank failure.  

A pan-EU DGS would be effective to overcome fragmentation of schemes. 
However, some legal aspects have to be examined in more detail. 

System of mutual borrowing between DGS  

Requiring that banks being members of mutual guarantee schemes also have 
to be members of a DGS (but pay half of the pre-determined contribution which 
is paid by the banks in the same risk category, if their mutual guarantee 
scheme is separate from the DGS where they are members). Applying the 
same conditions to all schemes, whether mutual, voluntary or statutory. 

Insufficient 
depositor 
information on 
functioning of 
DGS 

Limited mandate 
of DGS - lack of 
mechanisms for 
bank resolution 

Cross-border 
cooperation 

Pan-EU DGS 

Exemption of 
mutual and 
voluntary 
guarantee 
schemes from 
the Directive 

Source: Commission services. 

EN 

93 

   EN 

 
 
 
 
ANNEX K: COSTS ANALYSIS: IMPACT ON DGS AND MEMBER BANKS (SUMMARY) 

The  introduction  of  the  DGS  Directive  will  have  a  number  of  effects  for  DGS  and  their 
member  banks,  such  as  the  increase  of  the  level  of  coverage  or  the  reduction  of  the  payout 
period.  Some  of  these  effects  might  involve  a  cost  for  the  DGS  and/or  their  members.  This 
section is aimed at to analysing the administrative costs that could be imposed by introducing 
new  Regulations/Directive; 
the  Standard  Cost  Model  (SCM) 
methodology150.  The  SCM  is  a  method  for  determining  the  administrative  burdens  for 
businesses imposed by regulation; it is a quantitative methodology that can be applied in all 
countries and at different levels. It is developed by a network of countries (within and outside 
the  EU151)  which  committed  themselves  to  using  the  same  methodological  approach  when 
measuring and tackling administrative burdens.  

the  analysis  follows 

According  to  SCM  analysis,  the  costs  that  DGS  and  their  members  may  incur  can  be 
classified in different categories: (i) direct financial costs (e.g. cost for banks resulting from 
an increase in contributions);152 (ii) indirect financial costs (e.g. IT changes required for banks 
to comply with  the Directive,  such  as adding eligibility flags for account set-up); (iii) long-
term structural costs (e.g. if for example in order to comply with the Directive, banks or DGS 
have  to  hire  additional  people  on  a  permanent  basis);  (iv)  business  as  usual  administrative 
costs: information that would be collected and processed by businesses even in the absence of 
the legislation; and (v) administrative burden: part of the administrative costs that incurred in 
order to meet the information reporting obligations resulting from the Directive. 

The below table summarizes the effects of the Directive and its cost implications for DGS and 
its member banks. It lists for each one of the potential effects of the Directive, what are the 
different  categories  of  costs  that  will  be  incurred  by  banks  and  DGS.  If  we  take  aside  the 
direct  financial  costs,  the  effects  that  will  most  likely  have  the  biggest  cost  impact  on 
banks/DGS are the changes in the payout procedures (see last row of the Table), since costs 
related  to  all  the  other  potential  effects  of  the Directive  do  not  seem  to  be  as  substantial  as 
those for the changes in payout procedures. Direct Financial Costs have not been divided into 
costs  for  members  and  for  DGS,  because  the  estimated  costs  can  be  apportioned  among 
members or can be borne directly by the involved DGS. As an example, many MS increased 
their  level  of  coverage,  but  none  of  their  DGS  (but  GR)  has  raised  their  contributions 
correspondingly. 

The  table  shows  that  from  a  cost  category  point  of  view  (again  taking  aside  the  direct 
financial costs), the most important category is the indirect financial cost that mainly involves 
IT related changes. Administrative costs resulting from the Directive (administrative burden) 
also  exist,  but  they  should  not  be  substantial  compared  to  the  indirect  financial  costs. 
Concerning  administrative  burden  costs,  these  costs  are  not  substantial  comparable  to  the 
indirect financial cost. 

150 

151 
152 

The Standard Cost Model (SCM) is a method for determining the administrative burdens for businesses imposed by regulation. 
It  is  a  quantitative  methodology  that  can  be  applied  in  all  countries  and  at  different  levels.  It  is  developed  by  a  network  of 
countries  (within  and  outside  the  EU)  which  committed  themselves  to  using  the  same  methodological  approach  when 
measuring  and  tackling  administrative  burdens.  Following  the  SCM,  costs  can  be  classified  into:  direct  and  indirect  financial 
costs,  long  term  structural  costs,  business-as-usual  administrative  costs,  and  administrative  burden.  For  more  details: 
http://www.administrative-burdens.com/filesystem/2005/11/international_scm_manual_final_178.doc. 
The EU countries which are not members of this network are: BG, LU, HU, MT, and SK. 
This  cost  category  has  been  analysed  in  the  relevant  sections  of  the  IA  and  thereby  this  annex  focuses  on  the  remaining 
categories. 

EN 

94 

   EN 

 
                                                 
Direct Financial 
Costs 

Indirect Financial Costs 

Long Term 
Structural 
Costs 

Business As 
Usual 
Administrative 
Costs 

Administrative Burden 

Change in the 
level of coverage 

Banks 

DGS 

YES - In case of 
increase in the 
level of coverage 

YES, although NOT SUBSTANTIAL: 
Example: Marketing material to be 
discarded 

YES - One-off cost (most likely not 
Substantial) 

NO 

NO 

YES, although NOT SUBSTANTIAL. Updating documentation 
(to clients such as account opening forms, internal procedures) 

YES, although NOT SUBSTANTIAL. Updating Documentation 

Discontinuation 
of topping up 
procedures 

Banks 

DGS 

NO 

NO 

NO 

NO 

NO 

NO153 

NO 

Changes in the 
funding 
mechanism and 
in the scope of 
covered 
products and 
depositors 

Banks 

DGS 

YES - In case of 
increase in 
Members’ 
contributions or in 
case of additional 
products covered 

YES - IT related such as Changing 
Account Set up flags. 

NO 

NO 

YES - One-off cost156 (most likely not 
significant). 

YES, although NOT SUBSTANTIAL: 

1) potential IT changes154 resulting from new information 
obligations (e.g. amount of eligible/covered deposits or 
accounting data)155 

2) updating documentation (addressed to clients such as 
account opening forms or internal procedures) 

Assuming there are no new reporting obligations from DGS 
towards authorities (e.g. Supervisory Authority, Central Bank), 
NON SUBSTANTIAL costs are related to updated 
documentation. 

153 
154 
155 
156 

It could potentially be reduced in some MS if information would be collected only by the home-country scheme. 
IT changes related to information obligations should be included as part of the Administrative Burden (and not as Indirect Financial Costs). 
We are assuming that the new reporting obligations will not require additional time compared to current obligations. 
According to the SCM Report available at http://www.administrative-burdens.com/filesystem/2005/11/international_scm_manual_final_178.doc, one-off costs are costs that are only 
sustained once in connection with the businesses adapting to a new or amended legislation/regulation. 

EN 

95 

EN 

 
  
 
                                                 
Direct Financial 
Costs 

Indirect Financial Costs 

Long Term 
Structural 
Costs 

Business As 
Usual 
Administrative 
Costs 

Administrative Burden 

NO 

YES - e.g. IT changes: 1.- Changing 
Account Set up flags 2.- 
Harmonization of data requirements 
to be provided in case of default 

Difficult to asses given lack of info 
received from DGS. (Data received 
from Members would need to be 
harmonized. This would probably 
need IT changes). 

NO - As 
contributions do 
not typically take 
set-off into 
account 

NO 

NO 

NO 

NO157 

NO 

NO159 

NO158 

NO 

NO 

NO 

YES, in case of 
harmonization of 
funding or scope 
and coverage. 

YES, for instance harmonization of 
data requirements or IT changes. 

YES, for instance harmonization of 
data requirements or IT changes. 

YES, the 
establishme
nt of a new 
entity would 
require 
additional 
workforce. 

YES, the 
establishment of 
a new entity 
would require 
additional 
administrative 
workforce. 

YES, substantial or not, depending on the design of the Pan-
EU, for instance updating documentation or data requirements 
on a regular basis. 

YES, substantial or not, depending on the design of the Pan-
EU, for instance updating documentation or data requirements 
on a regular basis. 

Changes in 
payout 
procedures 

Discontinuation 
of set-off 
practices 

Establishment of 
Pan-EU 

Banks 

DGS 

Banks 

DGS 

Banks 

DGS 

Source: Joint Research Centre. 

157 
158 
159 

It could potentially be reduced in some MS if the collection of claims is eliminated in case of a bank failure and schemes pay out on their own initiative. 
We are assuming there are no new reporting obligations. The IT changes under Indirect financial costs are intended to cover the changes in the payout procedures. 
It could potentially be reduced in some MS if information on loans is not collected eliminated in case of bankruptcy. 

EN 

96 

EN 

 
  
 
                                                 
STATISTICAL ANNEXES: SOURCES, DEFINITIONS AND METHODOLOGIES 

Unless otherwise specified, all quantitative data from the Commission's Joint Research Centre (JRC) have been collected through a survey distributed across EU DGS (MS = Member States).  

Data 

# of 
Annex 

Definition 

Total deposits 

2, 10 

Any deposit as defined in Article 1(1) of Directive 94/19/EC, excluding 
those deposits left out form any repayment by virtue of Article 2. 

Source  
if not DGS 

Eurostat (ES, 
FR, LT, NL, 
UK); Central 
Bank (CY, LU) 

Methodology 

The estimated amount and the number of deposits under different levels of coverage are 
based on the distribution of deposits in Member States. These distributions have been 
obtained either by DGS (BG, EE, ES, IT, CY, LV,LT,HU, MT, NL, AT1, AT3, PT, RO, SI) or 
banking associations (BE, PT, FI, SE, UK). In case of missing data the distribution of 
deposits was obtained on the basis of distributions available for other Member States, 
looking at macroeconomic variables such as the savings rates or the GDP per inhabitant. A 
number of technical assumptions are behind these estimates. 

Eligible deposits 

2, 3, 10  Deposits repayable by the guarantee scheme under your national law, 

before the level of coverage is applied. 

Eurostat (IE, 
FR, NL); Central 
Bank (DK, CY) 

- 

Covered deposits 

2, 3, 9a  Deposits obtained from eligible deposits when applying the level of 

Fund 

Contributions 

13, 14, 
18 

4, 9b, 
11, 13, 
14, 18 

coverage provided for in every national legislation. 

Amount of money collected by the DGS in the previous years. 

Amount of money collected by the DGS among its members, in advance 
or in case of intervention, to cover its administrative expenses and its 
interventions. 

Level of coverage 

1, 4 

Level of protection granted under national law in the event of deposits 
being unavailable. 

- 

- 

- 

- 

Distribution of 
eligible deposits 

- 

Amount of eligible deposits held in the following buckets: [0-20 000]; [20 
000-50 000]; [50 000-100 000]; [100 000-150 000]; [150 000-200 000]; 
[200 000-500 000]. 

Banking Asso-
ciations (BE, 
PT, FI, UK). 

Distribution of 
covered deposits 

3, 4 

Amount of covered deposits held in the following buckets: [0-20 000]; [20 
000-50 000]; [50 000-100 000]; [100 000-150 000]; [150 000-200 000]; 
[200 000-500 000]. 

- 

Estimates from analogy with other MS (BE, DE, IE, FR, SK, UK), and from the dataset (CY, 
NL). 

- 

- 

Given the variation in banks’ contributions under different levels of coverage, it is assumed 
that additional fees impact only on a bank’s operating profit (see definition in the statistical 
annex). Thus the variation in the operating profit is computed. 

Estimated from analogy with other MS (CZ, DK, DE, IE, GR, FR, LU, PL, SK, SE) which 
provided for the distribution of eligible deposits. 

The amount of covered deposits in each bucket is estimated starting from the distribution of 
eligible deposits and taking into account the hypothesized level of coverage. 

Given the distribution of deposits, the increase in the amount of covered deposits under 
different levels of coverage can be estimated. It is assumed that DGS contributions are 
proportional to the increases in covered deposits. 

EN 

97 

EN 

 
  
Data 

Distribution of the 
number of eligible 
deposits 

# of 
Annex 

2, 3 

Definition 

Number of eligible deposits held in the following buckets: [0-20 000]; [20 
000-50 000]; [50 000-100 000]; [100 000-150 000]; [150 000-200 000]; 
[200 000-500 000]. 

Number of fully 
covered deposits 

2, 3 

Number of deposits which are fully covered under different level of 
coverage. 

Source  
if not DGS 

 - 

- 

Methodology 

The number of eligible deposits in each bucket is estimated as the average between the 
maximum and minimum number of deposits (BE, DK, DE, IE, GR, FR, LT, LU, MT, NL, PL, 
SK, FI, SE, UK). 

The number of deposits which are fully covered is estimated starting from the distribution of 
the number of eligible deposits and taking into account different level of coverage. 

Operating profit 

5, 9c, 
11c, 
12f, 
14d, 
19, 
21a, 22 

The operating profit is an accounting measure covering the bank’s 
normal/core business operations (i.e. excluding extraordinary/ exception 
amounts or other items such as taxes that are not directly related to 
banks’ core business). 

Bankscope 

Additional contributions for banks under different levels of coverage are assumed to be 
entirely passed onto consumers as decreases in the interest rates for their saving accounts 
or as an increase in their yearly account fees. The impacts have been estimated only for ex-
ante DGS. 

Number of house 
purchases 

8 

- 

European 
Mortgage 
Federation 

The impact on banks is estimated as a variation in bank operating profits (this variation is 
linked to the variation in contributions). The samples of banks in most MS are usually small. 
Moreover, some banks (with extremely high variation of the operating profit) have been 
excluded from the sample. 

MS with available number of house purchases time-series (BE, DK, DE, EE, ES, IE, FR, IT, 
LV, LU, HU, NL, PL, FI, SE, UK): the average number of house purchases has been 
estimated as the average of the number of house purchases over the period 1998-2007. 
MS with no data available: the number of house purchases has been estimated by applying 
to the number of households the EU average ratio number of house purchases/number of 
households. 

The increases in covered deposits are estimated from the distribution of temporary high 
deposits balances (THDB) by hypothesizing different levels of coverage. 

The distributions of temporary high deposits balances are estimated under a number of 
assumptions, since no data are available from any EU DGS. The money related to house 
purchases is assumed to stay on a bank account for a specified time horizon (e.g. 3, 6, 12 
months, etc.)  

In this analysis it is hypothesized that every DGS continues to apply its current funding 
mechanism (as of 01 January 2009). Only the amount of contribution base varies by 
including or excluding the various classes. Contributions’ changes are due to changes in 
each DGS contribution base. Data on the amount of deposits for each selected classes are 
mainly from Eurostat since few DGS could provided some information. 

Report “Fast 
payout study – 

Data on costs for data cleansing/tagging and SCV were obtained from the report available 
at http://www.fsa.gov.uk/pubs/other/fast_payout_report.pdf.  

98 

EN 

Impact of inclusion / 
exclusion of certain 
depositors 

11 

Impact on tagging / 
data cleansing / 

12d,e,f 

EN 

 
  
 
 
 
Data 

# of 
Annex 

single customer 
view (SCV) 

Definition 

Maximum amount of 
contributions 

13 

Maximum amount of money collected by the DGS among its members. 
Contributions are increased up to a maximum amount (specified in the 
DGS' statute) only under particular circumstances, specified in each DGS' 
statute. 

Total fund 

13, 14, 
18 

It is the sum of the Fund, contributions and additional contributions that 
DGS can levy. 

Borrowing limit 

24 

Estimate of the maximum amount of money that MS could borrow. 

Ex-ante MS 

14, 26 

MS whose funding mechanism collects contributions from member banks 
in advance on a regular basis. 

Ex-post MS 

14 

MS whose funding mechanism does not collect contributions from 
member banks in advance on a regular basis. 

Additional 
contributions 

16, 17 

Contributions (collected by ex-ante MS) which are not collected on a 
regular basis but only in case of need and they are clearly defined in the 
statutes as extraordinary contributions or maximum contributions. 

Borrowing 

23 

Source: Joint Research Centre. 

EN 

Source  
if not DGS 

Final report””, 
Ernst & Young, 
November 
2008,   

Methodology 

The costs estimated in this report are rescaled for the other EU MS based on the amount of 
deposits eligible for protection. The costs obtained for banks are measured as a variation in 
the operating profit (12f). Costs are assumed to be entirely passed onto consumers as 
decreases in interest rates or as an increase in yearly account fees (12e). The impacts 
have been estimated only for ex-ante DGS 

DGS' statute 

Estimated following the description reported in the DGS statute. 

- 

- 

- 

- 

- 

99 

Total Fund = Fund + Contributions + Extraordinary Contributions, or 

Total Fund = Fund + Maximum amount of Contributions 

Estimated as a percentage of the amount of covered deposits. The percentage is the ratio 
between the maximum amount of US borrowing resources and its amount of insured 
(covered) deposits. 

- 

- 

It is the difference between the maximum amount of contributions and contributions. 

For every DGS, a borrowing limit has been set as a percentage (1.75%) of the total amount 
of covered deposits. The percentage has been estimated according to the US data, i.e. the 
ratio between the borrowing limit and the total amount of deposit insured by the US-FDIC in 
2008. Contributions to pay the loan back within 10 years have been estimated. 

EN 

 
  
 
 
ANNEX  1:  COVERAGE  LEVELS  IN  EU  MEMBER  STATES  AND  EEA  COUNTRIES 
BEFORE  AND  AFTER  THE  AGGRAVATION  OF  THE  FINANCIAL  CRISIS  (AS  OF  1 
JANUARY 2010) * 

DK

SK

SI

IT

AT

NL

PT

IE

LT

BE

GR

ES

LU

MT

CY

FR

UK

BG

CZ

DE

EE

LV

HU

PL

RO

FI

SE

IS

NO

LI

Current

Crisis

Pre-crisis

0

50,000

100,000

150,000

200,000

250,000

* Note: Pre-crisis period – as of 15 September 2008; crisis – October-December 2008; current situation: as of 1January 2010. For non-
euro area countries, € equivalents have been calculated on the basis of relevant ECB exchange rates (see footnote 1 in the below table). 
For  scaling  purposes,  the  coverage  level  for  Member  States  with  unlimited  coverage  is  shown  as  €  250  000.  Political  declarations  on 
increasing coverage levels or unlimited deposit guarantees, which were not followed by any legislative actions in autumn 2008, as well as 
guarantees for selected banks only, have not been taken into account. 

** See comments in the below table.  

EN 

100 

   EN 

 
 
Coverage level (€) 1 

pre-crisis 

crisis 

current  

Developments related to the level of coverage  

BE 

20 000 

100 000 

100 000 

The  level  was  first  raised  to  €  50  000  (7  Oct  2008)  and  then  to 
€ 100 000 (17 Nov 2008). 

BG 

20 452 

51 129 

51 129 

On  18  Nov  2008, 
BGN 100 000 (equivalent of € 51 129). 

the 

level  was  raised 

from  BGN  40  000 

to 

CZ 

27 778 
(10% co-
insurance) 

50 000 

50 000 

The law of 15 Dec 2008 raised the level to € 50 000 and discontinued co-
insurance (with immediate effect). 

DK 

40 229 2 

40 306 2  
+ unlimited  

50 000  
+ unlimited 

[100 000] 3 

The law of 10 Oct 2008 gave unlimited state guarantees until 30 Sep 2010 – 
for the amounts not covered by the Danish DGS (i.e. above DKK 300 000). 
The law of 1 May 2009 raised the level to € 50 000 (from 30 Jun 2009) and 
then to € 100 000 (from 1 Oct 2010).  

DE 

EE 

IE 

22 222 
(10% co-
insurance) 

22 222 
(10% co-
insurance) 

22 222  
(10% co-
insurance) 

22 222 
(10% co-
insurance) 

50 000 

[100 000] 3 

The law of 14 May 2009 raised the level to € 50 000 and discontinued co-
insurance (from 30 Jun 2009) and then to € 100 000 (from 31 Dec 2010). 
Before,  on  5  Oct  2008,  the  govt  publicly  declared  that  all  private  savings 
were guaranteed by the German govt. 

50 000 

50 000 

The law of 14 Nov 2008 raised the level to € 50 000 and discontinued co-
insurance (retroactively from 9 Oct 2008). 

22 222  
(10% co-
insurance) 

100 000 

The  law  of  24  Jun  2009  gave  effect  to  Directive  2009/14/EC  and  the  Irish 
govt’s commitment in Sep 2008 to provide increased coverage of € 100 000 
(with no co-insurance). The effective date for that commitment was 20 Sep 
2008. The law of 30 Sep 2008 gave unlimited state guarantees for 7 banks 
until 29 September 2010 – for the amounts not covered by the DGS in IE or 
other jurisdiction. 

On  7  Nov  2008,  the  level  was  temporarily  increased  to  €  100  000  by  law 
(until 31 Dec 2011). Before, on 2 Oct 2008, temporary unlimited coverage 
was set for individuals by a government declaration. 

GR 

20 000 

100 000 

100 000 

ES 

FR 

20 000 

100 000 

100 000 

The law of 10 Oct 2008 raised the level to € 100 000 (from 11 Oct 2008). 

70 000 

70 000 

70 000 

The level was set on 9 Jul 1999 and unchanged since then. 

IT 

103 291 

103 291 

103 291 

The level was introduced on 17 Jan 1997 (ITL 200 million) and unchanged 
since then (converted to € on 1 Jan 1999). 

CY 

22 222 
(10% co-
insurance) 

22 222 
(10% co-
insurance) 

100 000 

On  8  Oct  2008,  the  govt  announced  its  intention  to  raise  the  level  to 
€  100  000.  The  law  of  24  Jul  2009  raised  the  level  to  €  100  000  and 
discontinued co-insurance. 

LV 

20 000 

50 000 

50 000 

The law of 17 Oct 2008 raised the level to € 50 000 (from 18 Oct 2008). 

LT 

22 000 
(10% co-
insurance) 

100 000 

100 000 

The law of 14 Oct 2008 temporarily raised the level to € 100 000 (for 1 year) 
and discontinued co-insurance (both effective from 1 Nov 2008). The law of 
21 Jul 2009 made the level of € 100 000 permanent (from 4 Aug 2009). 

LU 

20 000 

100 000 

100 000 

The law of 19 Dec 2008 raised the level to € 100 000 (from 1 Jan 2009). 

HU 

24 905 
(10% co-
insurance) 

49 430 

50 000 

On 8 Oct 2008, the level was raised from HUF 6 million to HUF 13 million 
(equivalent  of  €  49  430)  and  co-insurance  was  discontinued.  At  the  same 
time,  the  govt  declared  unlimited  deposit  guarantees.  The  law  of  29  May 
2009 raised the level to € 50 000 (from 30 Jun 2009). 

EN 

101 

   EN 

 
 
MT 

NL 

AT 

PL 

PT 

IS 

LI 

22 222 
(10% co-
insurance) 

40 000 
(10% co-
insurance) 

20 000 
(10% co-insu-
rance for non-
individuals) 

22 500 
(10% co-
insurance) 

22 222 
(10% co-
insurance) 

100 000 

On  8  Oct  2008,  the  govt  announced  its  intention  to  raise  the  level  to 
€  100  000.  The  law  of  7  Aug  2009  raised  the  level  to  €  100  000  and 
discontinued co-insurance. 

100 000 

100 000 

On 7 Oct 2008, the level was temporarily increased to € 100 000 (until Oct 
2009)  and  co-insurance  was  discontinued.  On  10  March  2009,  it  was 
announced that this arrangement was extended indefinitely, and  on 3 July 
2009 this was formalised in legislation. 

unlimited 

+ 50 000 
(10% co-insu-
rance for non-
individuals) 

100 000 
(individuals) 
+ 50 000  
[100 000] 3 
(non-individuals) 

On 1 Oct 2008, temporary unlimited coverage was set for individuals (until 
31  Dec  2009);  for  non-individuals  no  changes  except  raising  coverage  for 
SMEs to € 50 000. The law of 20 Oct 2008 set the level for individuals at € 
100 000 (from 1 Jan 2010). The law of 16 Jun 2009 raised the level for non-
individuals to €  100 000 (from 1 Jan 2011) and discontinued  co-insurance 
(from 1 Jul 2009). 

50 000 

50 000 

The law of 23 Oct 2008 raised the level to € 50 000 and discontinued co-
insurance (both effective from 28 Nov 2008). 

25 000 

100 000 

100 000 

RO 

20 000 

50 000 

50 000 

SI 

22 000 

unlimited 

unlimited 

The  law  of  3  Nov  2008  retroactively  (from  12  Oct  2008)  and  temporarily 
(until 31 Dec 2011) raised the level to € 100 000. 

On 15 Oct 2008, the level was raised to € 50 000 (for individuals only). The 
law of 24 Jun 2009 extended this coverage to microenterprises and SMEs 
(from 30 Jun 2009). 

On  20  Nov  2008,  temporary  unlimited  coverage  was  introduced  (until  31 
Dec 2010). 

SK 

22 222 
(10% co-
insurance) 

unlimited 

unlimited 

The law of 24 Oct 2008 introduced unlimited coverage and discontinued co-
insurance (both effective from 1 Nov 2008). 

FI 

25 000 

50 000 

50 000 

The law of 19 Dec 2008 raised the level to € 50 000 (retroactively from 8 Oct 
2008). 

SE 

26 173 

50 474 

50 000 

UK 

44 083 

64 329 2 

56 092 2 

On  31  Oct  2008, 
to 
level  was  raised 
SEK  500  000  (equivalent  of  €  50  474).  The  law  of  17  Jun  2009  set 
€ 50 000 as a minimum level (from 30 Jun 2009). 

from  SEK  250  000 

the 

The law of 2 Oct 2008 raised the level from £ 35 000 to £ 50 000 - effective 
from 7 Oct 2008 (equivalent of € 64 329 as of the date of entry into force). 
The  law  of  28  May  2009  set  the  level  at  £  50  000  or  €  50  000  if  greater 
(effective from 30 Jun 2009). 

20 887 

unlimited 
(domestic 
deposits) 

unlimited 
(domestic 
deposits) 

On 6 October 2008, the Icelandic government declared unlimited coverage 
for  deposits  in  domestic  banks  and  their  branches  in  Iceland  (but  not  in 
foreign branches of Icelandic banks. 

18 864 2 

19 751 2 

67 236 

NO 

244 409 2 

205 128 2 

243 043 2 

On  27  Mar  2009,  the  level  was  raised  from  CHF  30  000  to  CHF  100  000 
(equivalent of € 65 954 at that time) - effective from 1 Apr 2009. 

The pre-crisis level of NOK 2 million has not been changed as a result of the 
crisis. 

1 For non-euro area countries, € equivalents have been used – calculated on the following ECB exchange rates: as of 15 
September  2008  (pre-crisis  period);  as  of  the  date  of  increasing  the  coverage  level  in  a  given  Member  State  between 
October and December 2008, or - if no increase - as of 31 December 2008 (crisis period); as of 4 January 2010, i.e. the first 
working day in 2010 (current situation). 

2 The coverage level in the national currency unchanged – different figures for € equivalents due to exchange rate variations. 

3 Planned changes to the coverage level that have been envisaged in adopted national law. 

Source: Data from Member States; Commission services' calculations based on ECB exchange rates. 

EN 

102 

   EN 

 
ANNEX 2: DATA ON THE AMOUNT AND NUMBER OF DEPOSITS IN MEMBER STATES 
(AS OF 31 DECEMBER 2007) 

Member 
States 

Total amount of deposits (in € thousands) 

Number of deposits 

Total deposits 1 

Eligible deposits 

Covered deposits 

Eligible deposits 2 

Fully covered 
deposits 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

418 000 000 

20 011 078 

 81 530 720 

205 810 976 

234 000 000 

104 203 635 

16 453 260 

75 784 888 

194 986 000 

8 416 078 

36 014 721 

68 648 352 

3 244 528 000 

2 365 528 000 

1 952 842 121 

8 516 339 

confidential 

231 207 352 

1 257 005 863 

6 513 255 

203 329 118 

162 624 584 

815 509 600 

2 614 051 

90 545 441 

45 342 658 

360 085 300 

1 871 643 901 

1 765 519 727 

1 236 735 659 

2 106 736 038 

574 377 415 

402 347 830 

65 918 045  

14 624 816 

19 614 456 

59 113 956 

11 966 456 

confidential 

688 056 543 

103 969 600 

60 107 201 

32 783 800 

586 888 889 

 286 000 000 

confidential 

183 986 884 

58 230 615 

19 530 540 

35 070 000 

96 576 837 

44 421 235 

6 728 864 

445 595 855 

211 409 819 

confidential 

confidential 

26 937 557 

15 430 308 

18 030 000 

94 086 374 

378 647 461 

259 386 750 

20 445 000 

2 969 375 

confidential 

12 953 500 

23 331 888 

2 354 324 

343 853 038 

124 948 903 

confidential 

confidential 

14 548 146 

8 820 533 

8 497 904 

41 014 103 

61 219 086 

7 089 864 

10 503 424 

14 571 797 

3 179 673 

78 033 794 

2 037 365 

6 819 401 

5 767 108 

87 328 803 

58 240 783 

44 363 926 

963 103 

2 289 882 

640 491 

3 487 009 

4 749 621 

10 408 988 

14 312 163 

1 909 006 

68 457 592 

1 993 904 

4 965 379 

4 251 641 

79 904 289 

52 681 279 

43 165 796 

478 164 

1 670 463 

498 723 

2 497 053 

16 888 554 

16 637 824 

246 701 

14 258 125 

17 890 150 

3 677 195 

16 143 897 

19 929 855 

2 074 726 

730 127 

3 472 675 

3 369 674 

174 967 

11 144 607 

16 678 551 

3 155 439 

15 105 103 

19 737 553 

1 760 810 

622 372 

2 434 399 

1 408 534 

4 311 271 463 

1 319 754 071 

566 868 083 

24 442 582 

17 259 885 

16 797 827 066 

9 271 701 898 

5 661 966 190 

448 440 684 

398 064 106 

EU-15 

EU-12 

16 231 736 208 

8 888 681 327 

5 478 035 593 

373 887 465 

326 612 735 

566 090 858 

383 020 571 

183 930 598 

74 553 219 

71 451 371 

1 Interbank deposits not included. 

2 The number of eligible deposits = the number of covered deposits (every eligible deposit is covered at least to some extent) 

Source: Joint Research Centre. 

EN 

103 

   EN 

 
ANNEX  3:  POTENTIAL  IMPACT  OF  THE  HARMONISED  COVERAGE  LEVELS  IN 
TERMS OF DEPOSIT PROTECTION 

(a) Ratio of the amount of covered deposits to eligible deposits (€ thousands)  

As of  
end-2007 

Coverage level  
€ 50 000 

Coverage level  
€ 100 000 

Coverage level  
€ 150 000 

Coverage level  
€ 200 000 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

EU-15 

EU-12 

44.53% 

51.15% 

47.52% 

35.21% 

82.55% 

40.13% 

44.53% 

27.88% 

44.15% 

70.05% 

70.05% 

34.59% 

24.81% 

53.86% 

12.46% 

52.52% 

34.99% 

77.17% 

59.10% 

55.15% 

47.93% 

54.01% 

57.16% 

47.13% 

43.59% 

23.60% 

42.95% 

61.1 % 

61.6 % 

48.0 % 

57.0%

63.8%

58.5%

44.4%

61.4%

59.6%

60.0%

63.3%

70.0%

61.4%

57.2%

42.8%

38.0%

75.3%

60.0%

58.5%

68.7%

64.5%

53.6%

58.5%

55.1%

69.4%

71.9%

58.5%

69.2%

39.8%

47.4%

58.6 %

58.7 %

57.6 %

70.2%

86.1%

71.3%

63.3%

74.6%

66.7%

73.6%

77.4%

74.9%

74.6%

65.6%

62.7%

56.3%

83.3%

73.6%

71.3%

83.2%

77.6%

63.6%

71.3%

68.3%

75.1%

85.0%

71.3%

82.0%

59.9%

65.6%

71.8 %

71.8 %

71.4 %

79.4% 

100% 

81.0% 

76.0% 

83.1% 

70.5% 

82.4% 

85.0% 

84.7% 

83.1% 

72.0% 

76.1% 

71.8% 

88.9% 

82.4% 

81.0% 

89.3% 

85.3% 

71.6% 

81.0% 

78.0% 

82.3% 

90.3% 

81.0% 

88.7% 

73.6% 

77.5% 

81.0 % 

81.0 % 

81.6 % 

87.3%

100%

88.5%

85.5%

89.8%

77.4%

89.3%

90.9%

92.6%

89.8%

80.1%

85.5%

84.4%

93.3%

89.3%

88.5%

93.5%

91.1%

78.7%

88.5%

86.5%

88.3%

94.9%

88.5%

93.4%

84.0%

86.4%

88.4 %

88.4 %

89.4 %

* Ratio = Amount of covered deposits / Amount of eligible deposits 

EN 

104 

   EN 

 
 
 
(b) Ratio of the number of fully covered deposits to eligible deposits 

As of  
end-2007 

Coverage level  
€ 50 000 

Coverage level  
€ 100 000 

Coverage level  
€ 150 000 

Coverage level  
€ 200 000 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

EU-15 

EU-12 

66.99% 

99.10% 

98.22% 

60.04% 

87.73% 

97.87% 

72.81% 

73.72% 

91.50% 

90.45% 

97.30% 

49.65% 

72.95% 

77.87% 

71.61% 

98.52% 

70.92% 

78.16% 

93.23% 

85.81% 

93.57% 

99.04% 

84.87% 

85.24% 

70.10% 

41.80% 

70.61% 

88.8 % 

87.4 % 

95.8 % 

87.45%

99.34%

98.33%

67.85%

88.12%

99.29%

87.84%

86.14%

94.15%

88.12%

96.10%

68.99%

98.66%

96.24%

87.84%

99.16%

85.39%

87.18%

97.61%

92.07%

92.89%

99.67%

97.59%

92.07%

88.21%

57.89%

72.52%

91.0 %

89.6 %

98.2 %

93.25%

99.42%

98.83%

81.22%

93.96%

99.68%

93.85%

95.00%

98.58%

93.96%

97.26%

78.85%

98.81%

97.79%

93.85%

99.41%

95.47%

94.12%

99.05%

94.44%

92.89%

99.87%

99.21%

94.44%

95.52%

74.67%

84.29%

95.4 %

94.7 %

98.8 %

94.35% 

99.50% 

99.11% 

86.70% 

95.39% 

99.80% 

95.35% 

96.19% 

98.76% 

95.39% 

97.91% 

86.76% 

98.96% 

98.31% 

95.35% 

99.55% 

97.42% 

95.86% 

99.17% 

95.76% 

92.89% 

99.89% 

99.31% 

95.76% 

96.92% 

81.69% 

89.05% 

96.5 % 

96.0 % 

99.1 % 

95.11%

99.57%

99.30%

89.59%

96.39%

99.83%

96.29%

97.02%

98.93%

96.39%

98.36%

89.64%

99.10%

98.68%

96.29%

99.65%

97.94%

96.76%

99.29%

96.68%

92.89%

99.91%

99.41%

96.68%

97.90%

85.67%

91.43%

97.2 %

96.7 %

99.3 %

* Ratio = Number of fully covered deposits / Number of eligible deposits 

Source: Joint Research Centre; Commission services’ calculations. 

EN 

105 

   EN 

 
 
 
 
ANNEX 4: POTENTIAL IMPACT OF THE HARMONISED COVERAGE LEVELS ON BANK 
CONTRIBUTIONS TO DGS 

Member 
States 

Coverage 
level in 2007 
(€) 

Contributions in 
2008  
(€ thousands) 

New contributions (€ thousands) 

Coverage level 
€ 50 000 

Coverage level 
€ 100 000 

Coverage level 
€ 150 000 

Coverage level 
€ 200 000 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU* 

EU-15* 

EU-12* 

EU** 

EU-15** 

EU-12** 

20 000 

20 452 

25 000 

40 000 

22 222 

20 000 

22 222 

20 000 

20 000 

70 000 

103 291 

22 222 

15 000 

17 377 

20 000 

23 600 

22 222 

40 000 

20 000 

22 500 

25 000 

20 000 

22 000 

20 000 

25 000 

26 479 

47 700 

- 

- 

- 

- 

- 

- 

50 895 

69 893 

63 969 

0 

n.a. 

16 341 

143 300 

602 109 

412 500 

95 400 

0 

24 656 

24 334 

confidential 

0 

3 897 

713 

0 

0 

confidential 

47 877 

24 962 

0 

37 241 

39 668 

58 694 

0 

65 168 

87 200 

78 708 

0 

n.a. 

24 255 

192 943 

512 369 

564 198 

83 646 

0 

30 528 

37 275 

65 946 

0 

4 339 

1 400 

0 

0 

51 892 

55 000 

32 069 

0 

46 201 

62 979 

99 035 

0 

80 203 

117 579 

96 002 

0 

n.a. 

27 168 

236 939 

626 505 

699 799 

101 590 

0 

44 721 

55 234 

73 007 

0 

5 292 

1 694 

0 

0 

63 294 

68 181 

34 702 

0 

56 353 

74 599 

148 980 

0 

90 752 

141 980 

108 991 

0 

n.a. 

28 721 

265 284 

688 027 

791 322 

113 230 

0 

54 247 

70 391 

77 922 

0 

6 008 

1 820 

0 

0 

71 857 

77 963 

38 021 

0 

63 977 

80 717 

183 093 

0 

99 784 

160 090 

119 109 

0 

n.a. 

31 531 

287 484 

735 952 

865 068 

122 298 

0 

60 979 

82 748 

81 751 

0 

6 566 

1 905 

0 

0 

78 528 

86 369 

40 803 

0 

69 916 

84 952 

209 000 

0 

1 812 589 

2 185 150 

2 611 841 

2 954 323 

3 224 831 

1 450 443 

1 725 338 

2 036 795 

2 290 388 

2 490 906 

362 146 

95 399 

181 305 

32 922 

459 812 

115 008 

215 667 

41 801 

575 046 

137 465 

254 599 

52 277 

663 935 

155 491 

286 299 

60 358 

733 925 

169 728 

311 363 

66 720 

Note:  The  increases  in  contributions  are  proportional  to  the  increase  in  the  amount  of  covered  deposits,  thus  the  analysis  has  been 
performed only for ex-ante DGS. DE has been excluded because 2008 contributions were not available, DK has been excluded because it 
did not collect contributions in 2008. 

* Total contributions  ** Average of the non zero contributions  Source: Joint Research Centre.

EN 

106 

   EN 

 
ANNEX  5:  POTENTIAL  IMPACT  OF  THE  HARMONISED  COVERAGE  LEVELS  ON 
OPERATING PROFITS OF BANKS (AVERAGE PERCENTAGE VARIATION) * 

Member States 

Coverage level 

Coverage level 

Coverage level 

Coverage level 

€ 50 000 

€ 100 000 

€ 150 000 

€ 200 000 

BE 

BG 

CZ 

EE 

IE 

GR 

ES 

FR 

CY 

LV 

HU 

MT 

PT 

RO 

SK 

SE 

EU 

EU-15 

EU-12 

-1.01% 

-3.34% 

-1.55% 

-11.13% 

-3.43% 

3.19% 

-2.05% 

0.05% 

-0.68% 

-4.75% 

-0.04% 

-0.41% 

-0.29% 

-1.83% 

-2.22% 

-0.81% 

-1.89% 

-0.62% 

-2.88% 

-2.07% 

-9.21% 

-3.36% 

-15.23% 

-6.47% 

-0.87% 

-2.43% 

-0.03% 

-2.33% 

-2.81% 

-13.92% 

-4.72% 

-17.42% 

-8.43% 

-3.05% 

-3.21% 

-0.08% 

-3.43% 

-3.45% 

-17.42% 

-5.79% 

-21.37% 

-9.96% 

-4.76% 

-3.83% 

-0.11% 

-4.21% 

-11.35% 

-16.91% 

-21.45% 

-0.13% 

-0.58% 

-0.83% 

-2.51% 

-4.73% 

-1.82% 

-4.00% 

-2.07% 

-5.49% 

-0.19% 

-0.66% 

-1.24% 

-3.37% 

-6.62% 

-2.50% 

-5.53% 

-3.04% 

-7.47% 

-0.24% 

-0.71% 

-1.58% 

-4.08% 

-8.09% 

-3.02% 

-6.88% 

-3.82% 

-9.26% 

*  The  analysis  is  developed  for  ex-ante  funded  DGS  whose  contribution  base  is  defined  in  terms  of  the  amount  of  total, 
eligible or covered deposits. PL,  NL, UK have been excluded because their contribution base is different than  total, eligible 
or  covered;  DK  has  been  excluded  because  it  did  not  collect  2008  contributions;  IT,  LU,  AT,  and  SI  have  been  excluded 
because they are ex-post financed; DE has been excluded because 2008 contributions are not available; LT and FI have 
been excluded because the sample available from Bankscope was small. 

Source: Joint Research Centre, BankscopeTM database.

EN 

107 

   EN 

 
ANNEX  6:  POTENTIAL  IMPACT  OF  THE  HARMONISED  COVERAGE  LEVELS  ON 
DEPOSITORS 

Member 
States 

Decrease in the interest rates on savings 

Additional bank fees on current accounts 
(€ per year per account) 

Coverage 
level 

Coverage 
level 

Coverage 
level 

Coverage 
level 

Coverage 
level 

Coverage 
level 

Coverage 
level 

Coverage 
level 

€ 50 000 

€ 100 000 

€ 150 000 

€ 200 000 

€ 50 000 

€ 100 000 

€ 150 000 

€ 200 000 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV  

LT 

LU 

HU 

MT  

NL  

AT 

PL 

PT  

RO 

SI 

SK 

FI 

SE 

UK 

EU 

EU-15 

EU-12 

0.006% 

0.105% 

0.019% 

n.a. 

n.a. 

0.122% 

0.024% 

 n.a. 

0.013% 

0.290% 

0.042% 

n.a. 

n.a. 

0.166% 

0.046% 

 n.a. 

0.030% 

0.035% 

0.017% 

0.438% 

0.059% 

n.a. 

n.a. 

0.190% 

0.060% 

0.053% 

0.046% 

0.021% 

0.548% 

0.073% 

n.a. 

n.a. 

0.233% 

0.071% 

0.082% 

0.055% 

 n.a. 

 n.a. 

0.010% 

0.108% 

0.173% 

 n.a. 

0.001% 

0.010% 

 n.a. 

 n.a. 

0.003% 

0.005% 

0.026% 

 n.a. 

0.050% 

0.025% 

0.016% 

 n.a. 

0.043% 

0.018% 

0.057% 

0.000 % 

0.001 % 

0.002 % 

 n.a. 

0.034% 

0.258% 

0.238% 

 n.a. 

0.003% 

0.015% 

 n.a. 

 n.a. 

0.016% 

0.015% 

0.036% 

 n.a. 

0.106% 

0.037% 

0.035% 

 n.a. 

0.077% 

0.026% 

0.109% 

 n.a. 

0.050% 

0.385% 

0.284% 

 n.a. 

0.005% 

0.016% 

 n.a. 

 n.a. 

0.025% 

0.022% 

0.048% 

 n.a. 

0.148% 

0.044% 

0.048% 

 n.a. 

0.102% 

0.036% 

0.150% 

 n.a. 

0.061% 

0.488% 

0.319% 

 n.a. 

0.006% 

0.018% 

 n.a. 

 n.a. 

0.033% 

0.028% 

0.059% 

 n.a. 

0.181% 

0.048% 

0.058% 

 n.a. 

0.125% 

0.046% 

0.184% 

0.63 

1.65 

0.95 

 n.a. 

 n.a. 

3.88 

5.37 

 n.a. 

2.77 

n.a. 

 n.a. 

1.97 

5.65 

2.37 

 n.a. 

0.03 

0.79 

 n.a. 

 n.a. 

0.04 

0.31 

0.15 

 n.a. 

1.14 

2.06 

2.07 

 n.a. 

1.87 

2.20 

1.69 

1.29 

4.54 

2.06 

n.a. 

n.a. 

5.31 

1.76 

6.86 

2.90 

n.a. 

n.a. 

6.08 

2.16 

8.59 

3.55 

n.a. 

n.a. 

7.46 

10.13 

13.20 

15.60 

 n.a. 

3.29 

0.05 

 n.a. 

6.74 

3.59 

4.34 

0.13 

 n.a. 

9.94 

13.49 

20.11 

3.26 

 n.a. 

0.08 

1.12 

 n.a. 

 n.a. 

0.18 

0.89 

0.21 

 n.a. 

2.42 

3.09 

4.62 

 n.a. 

3.49 

3.34 

3.58 

3.88 

 n.a. 

0.12 

1.27 

 n.a. 

 n.a. 

0.28 

1.32 

0.28 

 n.a. 

3.39 

3.63 

6.37 

 n.a. 

4.71 

4.29 

5.01 

5.59 

5.18 

0.20 

 n.a. 

12.20 

25.51 

4.37 

 n.a. 

0.16 

1.36 

 n.a. 

 n.a. 

0.36 

1.69 

0.34 

 n.a. 

4.14 

4.00 

7.70 

 n.a. 

5.80 

5.27 

6.19 

Note: The methodology adopted to estimate the impact on depositors is twofold: (i) if all the additional contributions are assumed to be 
passed  by  banks  on  to  depositors  as  an  increase  in  maintenance  fees  for  current  accounts,  the  increase  in  fees  can  be  estimated  by 
dividing the increases in contributions by the number of accounts; (ii) if all the additional contributions are assumed to be passed on to 
depositors as a decrease in interest rates, the percentage decrease can be estimated by calculating the ratio between the increases in 
contributions and the total amount of eligible deposits. Additional contributions are proportional to the increase in the amount of covered 
deposits,  thus  the  analysis  has  been  performed  only  for  ex-ante  DGS.  DE  has  been  excluded  because  2008  contributions  were  not 
available, DK has been excluded because it did not collect contributions in 2008. Source: Joint Research Centre. 

EN 

108 

   EN 

 
ANNEX 7: AVERAGE DEPOSITS HELD BY HOUSEHOLDS IN MEMBER STATES (€) 

Member 
States 

2003 

2004 

2005 

2006 

2007 

BE 
BG 
CZ 
DK 
DE 
EE 
IE 
GR 
ES 
FR 
IT 
CY 
LV 
LT 
LU * 
HU 
MT 
NL 
AT 
PL 
PT 
RO 
SI 
SK 
FI 
SE 
UK 

EU** 

EU-15** 

EU-12* 

EU*** 

EU-15*** 

EU-12*** 

44 843 
1 236 
n.a. 
31 897 
33 892 
2 894 
37 085 
28 203 
30 743 
35 732 
32 848 
n.a. 
1 714 
2 153 
n.a. 
4 720 
n.a. 
37 157 
48 852 
3 799 
29 619 
759 
13 941 
5 474 
20 553 
17 948 
42 284 

22 102 

33 690 

4 077 

35 172 

35 911 

3 654 

49 825
1 599
n.a.
34 749
34 569
3 230
40 734
29 106
31 817
36 994
34 301
n.a.
2 300
2 579
n.a.
5 641
n.a.
38 858
48 711
4 312
29 677
1 031
14 864
5 788
21 660
18 393
45 987

23 336

35 384

4 594

36 884

37 729

4 028

50 024
2 088
n.a.
39 055
35 409
4 135
45 506
33 159
33 360
36 881
34 321
66 552
3 398
3 560
n.a.
6 059
n.a.
41 215
49 441
4 838
29 489
1 540
15 223
5 954
23 633
19 164
50 301

26 429

37 211

11 335

38 543

39 412

9 973

51 745 
2 599 
n.a. 
41 698 
35 434 
5 179 
50 313 
34 640 
37 002 
37 134 
36 505 
71 603 
4 550 
4 520 
n.a. 
6 427 
n.a. 
42 218 
50 860 
5 263 
30 554 
2 044 
16 065 
4 983 
24 274 
22 727 
55 254 

28 066 

39 311 

12 323 

40 630 

41 592 

10 522 

53 644
3 350
n.a.
44 805
37 123
6 144
52 235
37 978
39 531
37 763
37 533
80 003
5 356
5 411
n.a.
6 854
n.a.
44 288
53 971
6 117
33 035
2 777
17 722
6 260
26 821
26 180
54 467

29 974

41 384

13 999

41 784

42 559

14 643

* In the Eurostat database, there are no data on average household deposits in LU, but it may be fairly assumed that it is well above the 
EU average since LU is a Member State with the highest GDP per capita in the EU (according to Eurostat data as of end-2008, GDP per 
capita was € 75 780 in LU while € 24 254 in the EU-27, € 34 149 in the EU-15 and € 11 885 in the EU-12). 

** Simple average 

*** Weighted average [the weights are the amount of deposits by households] 

Source: Eurostat; Joint Research Centre; Commission services' calculations. 

EN 

109 

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ANNEX 8: SELECTED DATA ON HOUSE PRICES IN MEMBER STATES (€) 

Member States 

Number of house purchases 
(average 1998-2007) 

Estimated  
average house price * 

Average purchase price  
of a house ** 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU * 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU average 

EU-15 

EU-12 

115 209 

107 417 (e) 

161 409 (e) 

71 710 

502 200 

33 365 

91 157 

160 476 (e) 

885 506 

770 500 

741 511 

10 146 (e) 

46 375 

51 074 (e) 

4 829 

257 706 

5 143 (e) 

272 500 

133 849 (e) 

277 800 

145 063 (e) 

277 325 (e) 

27 628 (e) 

63 356 (e) 

76 925 

54 960 

1 552 690 

255 475 

371 939 

109 895 

136 305 

50 056 

85 435 

265 491 

110 018 

85 785 

254 222 

91 068 

302 261 

97 417 

177 113 

147 488 

85 435 

85 435 

147 488 

42 850 

168 821 

108 041 

116 025 

93 903 

112 119 

86 265 

85 435 

67 121 

119 409 

176 327 

147 721 

127 595 

157 402 

90 336 

235 000 

n.a. 

n.a. 

244 596 

276 600 

91 600 

260 786 

n.a. 

175 325 

220 000 

249 700 

n.a. 

80 000 

97 300 

n.a. 

n.a. 

n.a. 

n.a. 

n.a. 

91 670 

100 000 

n.a. 

n.a. 

n.a. 

n.a. 

250 000 

158 720 

180 807 *** 

– 

– 

* Average house price = Average mortgage loan / Loan-to-Value (LTV) ratio.  

** Data for DE, EE, LV, LT and PT refers to 2007 while data for BE, DK, ES, FR, IE, IT, PL, SE and UK refers to 2008.  

***  This  is  the  simple  average;  the  weighted  average,  calculated  by  using  the  size  of  national  mortgage  markets  as  weights,  would  be  
€ 210 713.  

(e) estimated value. 

Source: Joint Research Centre (columns 2 and 3); European Mortgage Federation (column 4) – EMF Study on the cost of 
housing in Europe, May 2010.  

EN 

110 

   EN 

 
ANNEX  9:  POTENTIAL  EXEMPTIONS  FROM  THE  FIXED  LEVEL  OF  COVERAGE  – 
TEMPORARY HIGH DEPOSIT BALANCES * 

(a) Additional covered deposits when protecting THDB (€ millions) 

Increased levels for THDB 

€ 200 000 

€ 300 000 

€ 500 000 

3 months 

6 months 

12 months 

3 months 

6 months 

12 months 

3 months 

6 months 

12 months 

1 387 

127 

781 

1 586 

4 351 

163 

1 926 

987 

19 649 

4 516 

12 182 

140 

224 

247 

68 

168 

83 

2 337 

1 156 

1 666 

1 378 

1 369 

134 

190 

690 

935 

2 774 

253 

1 563 

3 172 

8 702 

326 

3 852 

1 975 

39 297 

9 031 

24 364 

279 

449 

494 

137 

335 

167 

4 674 

2 313 

3 333 

2 756 

2 738 

267 

380 

1 381 

1 871 

5 548 

507 

3 125 

6 344 

17 404 

651 

7 703 

3 949 

78 595 

18 063 

48 729 

558 

898 

989 

273 

670 

334 

9 349 

4 625 

6 665 

5 512 

5 475 

535 

759 

2 762 

3 741 

21 612 

43 223 

86 446 

1 764 

127 

988 

2 668 

5 606 

206 

3 209 

1 312 

34 829 

5 548 

17 572 

187 

284 

313 

92 

168 

118 

3 033 

1 467 

2 195 

1 866 

1 741 

169 

190 

866 

1 339 

29 668 

3 528 

253 

1 976 

5 337 

11 213 

413 

6 418 

2 623 

69 658 

11 096 

35 144 

375 

568 

625 

185 

335 

237 

6 066 

2 934 

4 390 

3 732 

3 482 

338 

380 

1 732 

2 678 

7 056 

507 

3 952 

10 674 

22 426 

826 

12 836 

5 246 

139 315 

22 192 

70 288 

750 

1 135 

1 250 

369 

670 

473 

12 132 

5 868 

8 780 

7 465 

6 964 

676 

759 

3 463 

5 355 

59 336 

118 673 

2 091 

127 

988 

3 612 

5 771 

206 

4 232 

1 312 

51 305 

5 548 

20 925 

221 

284 

313 

106 

168 

144 

3 126 

1 467 

2 195 

2 444 

1 741 

169 

190 

866 

1 641 

36 595 

4 181 

253 

1 976 

7 225 

11 542 

413 

8 464 

2 623 

8 362 

507 

3 952 

14 450 

23 085 

826 

16 927 

5 246 

102 609 

205 218 

11 096 

41 850 

443 

568 

625 

212 

335 

289 

6 251 

2 934 

4 390 

4 888 

3 482 

338 

380 

1 732 

3 283 

22 192 

83 701 

885 

1 135 

1 250 

424 

670 

578 

12 503 

5 868 

8 780 

9 776 

6 964 

676 

759 

3 463 

6 566 

73 190 

146 379 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

Total EU 

EU-15 
average  
EU-12 
average  
EU  
% change 
EU-15  
% change 
EU-12  
% change 

80 053 

160 106 

320 212 

117 526 

235 051 

470 103 

147 786 

295 572 

591 144 

4 984 

9 968 

19 936 

7 389 

14 779 

29 557 

9 403 

18 805 

37 611 

470 

939 

1 878 

596 

1 193 

2 385 

602 

1 203 

2 407 

1.66% 

3.31% 

6.62% 

2.22% 

4.45% 

8.90% 

2.50% 

5.00% 

10.00% 

1.22% 

2.44% 

4.88% 

1.80% 

3.60% 

7.20% 

2.26% 

4.52% 

9.04% 

2.32% 

4.64% 

9.27% 

2.92% 

5.85% 

11.70% 

2.97% 

5.95% 

11.90% 

*  Temporary  high  deposits  balances  (THDB)  are  transactional  balances  that  a  consumer  may  have  for  a  limited  period  of  time,  e.g. 
between selling one property and buying another. The money related to house  purchases is assumed to stay on a bank account for  a 
specified time horizon (e.g. 3, 6, 12 months, etc.). 

EN 

111 

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(b) Estimated contributions for the scenarios on THDB (€ thousands) 

Estimated 
contribu-
tions for 
the fixed 
coverage 
level of  
€ 100 000 

Increased levels for THDB 

€ 200 000 

€ 300 000 

€ 500 000 

3 months 

6 months 

12 months 

3 months 

6 months 

12 months 

3 months 

6 months 

12 months 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 
Total 
EU 
EU-15 
average  
EU-12 
average  
EU  
% change 
EU-15 
% change 
EU-12 
% change 

80 203 

80 880 

81 558 

82 913 

81 064 

81 926 

83 649 

81 224 

82 245 

84 287 

117 579 

118 631 

119 684 

121 788 

118 631 

119 684 

121 788 

118 631 

119 684 

121 788 

96 002 

97 390 

98 778 

101 553 

97 757 

99 512 

103 022 

97 757 

99 512 

103 022 

0 

n.a. 

0 

n.a. 

0 

n.a. 

0 

n.a. 

0 

n.a. 

0 

n.a. 

0 

n.a. 

0 

n.a. 

0 

n.a. 

0 

n.a. 

27 168 

28 186 

29 204 

31 240 

28 459 

29 749 

32 330 

28 459 

29 749 

32 330 

236 939 

239 987 

626 505 

631 419 

243 035 

636 333 

249 130 

646 161 

242 018 

633 032 

247 096 

639 560 

257 253 

652 614 

243 637 

633 032 

250 334 

639 560 

263 729 

652 614 

699 799 

722 308 

744 817 

789 835 

739 698 

779 597 

859 394 

758 572 

817 345 

934 890 

101 590 

101 938 

102 286 

102 983 

102 018 

102 446 

103 302 

102 018 

102 446 

103 302 

0 

44 721 

55 234 

73 007 

0 

5 292 

1 694 

0 

0 

63 294 

68 181 

34 702 

0 

56 353 

74 599 

0 

44 890 

57 073 

75 006 

0 

5 320 

1 719 

0 

0 

64 923 

69 174 

37 051 

0 

57 185 

75 266 

0 

45 058 

58 913 

77 005 

0 

5 348 

1 745 

0 

0 

66 551 

70 167 

39 399 

0 

58 017 

75 934 

0 

45 394 

62 592 

81 003 

0 

5 404 

1 795 

0 

0 

69 808 

72 154 

44 097 

0 

59 681 

77 270 

0 

44 947 

57 560 

75 535 

0 

5 320 

1 730 

0 

0 

65 439 

69 526 

37 689 

0 

57 185 

75 436 

0 

45 173 

59 886 

78 063 

0 

5 348 

1 766 

0 

0 

67 585 

70 871 

40 676 

0 

58 017 

76 273 

0 

45 625 

64 539 

83 119 

0 

5 404 

1 837 

0 

0 

71 875 

73 561 

46 650 

0 

59 681 

77 948 

0 

44 988 

57 560 

75 535 

0 

5 320 

1 738 

0 

0 

65 439 

69 942 

37 689 

0 

57 185 

75 436 

0 

45 255 

59 886 

78 063 

0 

5 348 

1 782 

0 

0 

67 585 

71 704 

40 676 

0 

58 017 

76 273 

0 

45 789 

64 539 

83 119 

0 

5 404 

1 869 

0 

0 

71 875 

75 227 

46 650 

0 

59 681 

77 948 

148 980 

149 877 

150 773 

152 567 

150 263 

151 547 

154 114 

150 553 

152 127 

155 274 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

2 611 841 

2 658 223 

2 704 605 

2 797 368 

2 683 307 

2 754 774 

2 897 706 

2 704 715 

2 797 589 

2 983 337 

254 599 

258 856 

263 113 

271 627 

261 632 

268 664 

282 729 

264 302 

274 004 

293 409 

52 277 

53 398 

54 518 

56 760 

53 659 

55 042 

57 806 

53 664 

55 051 

57 824 

– 

– 

– 

1.83% 

3.66% 

7.33% 

2.43% 

4.85% 

9.71% 

2.69% 

5.37% 

10.75% 

1.18% 

2.36% 

4.71% 

1.79% 

3.58% 

7.17% 

2.34% 

4.68% 

9.36% 

2.31% 

4.61% 

9.23% 

2.89% 

5.78% 

11.55% 

2.94% 

5.88% 

11.76% 

Note: The starting point is the situation where the level of coverage is fixed at € 100 000. The increases in contributions are proportional to 
the  increase  in  the  amount  of  covered  deposits,  thus  the  analysis  has  been  performed  only  for  ex-ante  DGS.  DE  has  been  excluded 
because 2008 contributions were not available, DK has been excluded because it did not collect contributions in 2008. 

EN 

112 

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(c) Scenarios on THDB: impact on banks (variation of operating profits)  

€ 200 000 

€ 300 000 

€ 500 000 

3 months 

6 months 

12 months 

3 months 

6 months 

12 months 

3 months 

6 months 

12 months 

Total EU 

EU-15 
average  
EU-12 
average  

-0.58% 

-1.16% 

-2.33% 

-0.66% 

-1.33% 

-2.65% 

-0.68% 

-1.37% 

-2.74%

-0.10% 

-0.21% 

-0.41% 

-0.16% 

-0.32% 

-0.65% 

-0.21% 

-0.42% 

-0.83%

-0.95% 

-1.91% 

-3.82% 

-1.05% 

-2.11% 

-4.21% 

-1.05% 

-2.11% 

-4.22%

Note: The analysis is developed for ex-ante funded DGS whose contribution base is defined in terms of the amount of total, eligible or 
covered deposits. PL, NL and UK have been excluded because their contribution base is different than  total, eligible or covered; DK has 
been excluded because it did not collect 2008 contributions; IT, LU, AT, and SI have been excluded because they are ex-post financed; 
DE has been excluded because 2008 contributions are not available; LT and FI have been excluded because the sample available from 
Bankscope was small.  

(d) Scenarios on THDB: impact on depositors  

Range of variation of the estimated percentage decrease 
in interest rates on savings 

Range of variation of the estimated additional bank fees 
on current accounts (€ per year per account) 

€ 200 000 

€ 300 000 

€ 500 000 

€ 200 000 

€ 300 000 

€ 500 000 

Total EU 

0.004% - 0.017% 

0.005% - 0.022% 

0.006% - 0.023% 

0.16 - 0.63 

0.21 - 0.85 

0.24 - 0.94 

EU-15 
average  
EU-12 
average  

0.001% - 0.005% 

0.002% - 0.007% 

0.002% - 0.009% 

0.12 - 0.49 

0.19 - 0.76 

0.24 - 0.98 

0.007% - 0.027% 

0.008% - 0.033% 

0.008% - 0.033% 

0.18 - 0.73 

0.23 - 0.91 

0.23 - 0.92 

Source: Joint Research Centre. 

The increases in contributions are proportional to the increase in the amount of covered deposits, thus the analysis has been performed 
only for ex-ante DGS. DE has been excluded because 2008 contributions were not available, DK has been excluded because it did not 
collect contributions in 2008 

EN 

113 

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ANNEX  10:  SELECTED  DATA  ON  DEPOSITS  AND  DEPOSITORS  IN  THE  EU  (INCL. 
ENTERPRISES)  

(a) Definition of micro, small and medium-sized enterprises vs. the approach adopted in 

the DGS Directive  

Category 

Calculation 

Staff 

Annual turnover 

Balance sheet  
total 

Micro enterprise 

Limit for balance 
sheet total 

Small entreprise 

or  

< 10 

< 50 

< € 2 million 

< € 2 million 

< € 10 million 

< € 10 million 

Medium-sized enterprise 

annual turnover may 
be exceeded 

< 250 

< € 50 million 

< € 43 million 

Company with abridged 
balance sheets 

One of the limits may 
be exceeded 

< 50 

< € 8.8 million 

< € 4.4 million 

(b) Breakdown of total value of deposits in the EU by classes of depositors (2007) 

1,6%

4,3%

8,1%

11,3%

16,4%

58,3%

Households

Small and medium enterprises (SME)*

Large non-financial companies (LNFC)

Insurance and pension funds (IPF)

Local governments (LG)

Others

  Note: Total amount of deposits in the EU (as of end-2007): € 16.8 trillion (see Annex 2). 

  * SME include micro enterprises as well. 

EN 

114 

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(c) Number of enterprises in the EU (2006) 

6.9%

1.1%

0.2%

91.8%

Micro enterprises

Small enterprises

Medium enterprises

Large enterprises

  Note: Total number of SME: 20 million. Definition of SME: see Table A in this Annex. 

(d) Amount of eligible deposits held by enterprises in the EU (2006)  

42.9%

20.9%

18.4%

17.8%

Micro enterprises

Small enterprises

Medium enterprises

Large enterprises

  Note: Total amount of eligible deposits held by enterprises: € 4.05 trillion. 

(e) Amount of total deposits held by local authorities  

Member States 
CZ 
DK 
GR 
LT 
PL 
FI 
SE 
Total 

* EFDI; ** Eurostat. 

Total deposits held by local governments (€ thousands) 
163 061* 
3 161 796** 
1 439 070** 
 169 434* 
5 006 512 
1 858 847** 
2 753 800 
14 552 520 

Source:  Commission  services  based  on  Commission  Recommendation  2003/361/EC  of  6  May  2003  concerning  the 
definition  of  micro,  small  and  medium-sized  enterprises,  OJ  L  124  (Table  A);  Joint  Research  Centre  and  Eurostat  data 
(Graphs B-D); DGS, EFDI and Eurostat (Table E).  

EN 

115 

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ANNEX  11:  POTENTIAL  IMPACT  OF  THE  INCLUSION  OR  EXCLUSION  OF  SOME 
DEPOSITORS* INTO/FROM THE SCOPE OF COVERAGE 

(a) Impact on contributions at Member States' level (€ thousands) 

r
e
b
m
e
M

s
e
t
a
t
S

2008 
contributions 

Contributions  
if all classes 
(LNFC, LG, IPF) 
excluded 

Increase in contributions ** 

if LNFC 
included 

if LG  
included 

if IPF included 

Contributions 
if all classes 
(LNFC, LG, IPF) 
included 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

50 895 

69 893 

63 969 

0 

n.a. 

16 341 

143 300 

602 109 

412 500 

95 400 

0 

24 656 

24 334 

confidential 

0 

3 897 

713 

0 

0 

confidential 

47 877 

24 962 

0 

37 241 

39 668 

58 694 

0 

50 895 

53 472 

53 702 

n.a. 

n.a. 

16 341 

143 300 

549 679 

374 160 

89 269 

n.a. 

23 305 

21 087 

41 610 

n.a. 

2 943 

713 

n.a. 

n.a. 

n.a. 

43 373 

24 962 

n.a. 

37 241 

34 957 

39 738 

n.a. 

6 546 

16 421 

10 130 

n.a. 

n.a. 

2 848 

0 

42 640 

38 340 

6 131 

n.a. 

1 351 

3 248 

4 843 

n.a. 

954 

223 

n.a. 

n.a. 

n.a. 

4 503 

9 940 

n.a. 

18 472 

3 542 

17 015 

n.a. 

909 

1 700 

138 

n.a. 

n.a. 

286 

0 

5 328 

9 501 

1 872 

n.a. 

19 

946 

738 

n.a. 

168 

54 

n.a. 

n.a. 

n.a. 

472 

1 568 

n.a. 

1 678 

784 

623 

n.a. 

7 051 

1 700 

1 652 

n.a. 

n.a. 

74 

0 

8 923 

58 168 

706 

n.a. 

1 817 

880 

422 

n.a. 

53 

84 

n.a. 

n.a. 

n.a. 

1 680 

507 

n.a. 

2 898 

386 

2 636 

n.a. 

65 401 

73 292 

65 621 

n.a. 

n.a. 

19 550 

143 300 

606 570 

480 170 

97 978 

n.a. 

26 518 

26 160 

47 613 

n.a. 

4 119 

1 030 

n.a. 

n.a. 

n.a. 

50 029 

36 977 

n.a. 

60 288 

39 668 

60 012 

n.a. 

1 812 589 

1 600 747 

187 146 

26 768 

89 638 

1 904 299 

Note: Increases in contributions are proportional to the increases in the contribution base. The analysis has been performed only for ex-
ante  DGS.  DE  has  been  excluded  because  2008  contributions  were  not  available,  DK  has  been  excluded  because  it  did  not  collect 
contributions in 2008; PL has been excluded because its contribution base is different than  total, eligible or covered. 

* LNFC – large non-financial corporations; LG – local governments; IPF – insurance and pension funds. 

** Increase in the columns 4-6 with respect to the column 3 (Contributions if all classes excluded). 

EN 

116 

   EN 

 
 
 
(b) Impact on contributions at EU level 

Potential scenarios 

Aggregated EU contributions in 2008 
(€ thousands) 

Weighted average % change with 
respect to 2008 contributions 

Include all classes 

Exclude all classes 

Include LNFC 

Exclude LNFC 

Include LG 

Exclude LG 

Include IPF 

Exclude IPF 

1 904 299 

1 600 747 

1 801 669 

1 614 523 

1 782 799 

1 756 031 

1 847 113 

1 757 475 

+7.61 % 

-8.72 % 

+1.34 % 

-8.36 % 

+1.64 % 

-0.16 % 

+4.63 % 

-0.20 % 

(c) Impact on banks' operating profits 

Include all 
classes 

Include 
LNFC 

Include 
IPF 

Include 
LG 

Exclude 
all classes 

Exclude 
LNFC 

Exclude 
IPF 

Exclude 
LG 

EU 

EU-15 

EU-12 

-1.06% 

-0.73% 

-0.20% 

-0.13%

-0.21% 

-0.04% 

-0.15% 

-0.02%

-1.72% 

-1.27% 

-0.24% 

-0.21%

0.51% 

0.31% 

0.66% 

0.49% 

0.27% 

0.66% 

0.01% 

0.02% 

0.00% 

0.01% 

0.02% 

0.00% 

Note: The analysis is developed for ex-ante funded DGS whose contribution base is defined in terms of the amount of total, eligible or 
covered deposits. PL, NL, UK have been excluded because their contribution base is different than  total, eligible or covered; DK has been 
excluded because it did not collect 2008 contributions; IT, LU, AT, and SI have been excluded because they are ex-post financed; DE has 
been  excluded  because  2008  contributions  are  not  available;  LT  and  FI  have  been  excluded  because  the  sample  available  from 
Bankscope was small.  

(d) Impact on contributions if some classes of SME are covered or not 

Aggregated EU 
contributions  
in 2008  
(€ thousands) 

Variation in 
contributions with 
respect to the current 
situation (€ thousands) 

Weighted average % 
change with respect to 
the current situation * 

Potential scenarios 

Exclude all enterprises (both SME 
and large enterprises) 

Include micro enterprises only  

1 250 231 

1 393 272 

Include small and micro enterprises   

1 509 102 

Include medium, small and micro 
enterprises (=all SME)  

Include all enterprises (both SME and 
large enterprises) 

1 614 523 

1 801 669 

-513 410 

-370 369 

-254 539 

-149 118 

38 028 

-25.2% 

-18.9% 

-13.2% 

-8.4% 

1.3% 

* The current situation: DGS in most Member States cover deposits by larger enterprises, i.e. companies which are of such a size that they 
are not permitted to draw up abridged balance sheets (see Annex B). The analysis has been performed only for ex-ante DGS. DE has 
been excluded because 2008 contributions were not available, DK has been excluded because it did not collect contributions in 2008; PL 
has been excluded because its contribution base is different than total, eligible or covered. 

Source: Joint Research Centre (based on Eurostat data). 

EN 

117 

   EN 

 
 
ANNEX 12: SELECTED DATA RELATING TO THE PAYOUT PROCESS IN THE EU 

(a) Authorities responsible for the collection of data needed for the payout process 

5%

17%

42%

5%

10%

13%

8%

DGS

Liquidator

Defaulting bank

DGS & central bank

DGS & liquidator Other

N.A.

(b) Authorities responsible for 
reimbursement payout calculation 

(c) Authorities responsible for repaying 
depositors 

5%

13%

5%

13%

8%

5%

10%

5%

69%

67%

DGS

Liquidator

Defaulting bank

Other

N.A.

DGS
Another existing bank
N.A.

DGS + another existing bank
Other

EN 

118 

   EN 

 
 
 
 
(d)  Potential  total  costs  for  banks  stemming  from  tagging  deposits,  cleansing  data  and 
creating single customer views (SCV)* – to be faced within 5 years  

€ billions

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

Tagging eligible accounts Data cleansing

Single customer view

3.49

2.14

1.68

1.06

1.07

0.99

0.63

0.55

0.35

0.29

0.09 0.14

Large banks

Medium banks

Other

Total

Note: This analysis has been developed by using costs’ estimates from the Ernst & Young Report on fast payout for the UK (published by 
the UK FSA in November 2008) and by re-scaling those costs for the other EU MS taking into account their relative sizes (i.e. amounts of 
eligible deposits).  

* The categories are defined as follows:  

− Data cleansing: any IT and manual data cleansing undertaken (e.g. postcode, date of birth of accounts’ holders) to allow the unique 

identification of a customer.  

− Tagging (flagging) eligible accounts: any IT and manual effort to electronically flag all eligible customers for DGS compensation.  

− Creating a single customer view (SCV): a comprehensive identification of the complete position of each customer.  

(e) Potential impact of tagging/cleansing/SCV on depositors 

Variation in interest rates on savings 

Additional bank fees on current accounts  
(€ per year per account) 

Tagging 

Cleansing 

SCV 

Total 

Tagging 

Cleansing 

SCV 

Total 

EU 

EU-15 

EU-12 

0.003% 

0.005% 

0.011% 

0.019% 

0.003% 

0.004% 

0.009% 

0.015% 

0.004% 

0.006% 

0.014% 

0.023% 

0.27 

0.34 

0.18 

0.42 

0.54 

0.29 

0.94 

1.18 

0.64 

1.63 

2.05 

1.11 

EN 

119 

   EN 

 
 
 
 
 
(f) Potential impact of tagging/cleansing/SCV on bank profits  

Member 
States 

Decrease in bank operating profits as a result of: 

tagging deposits * 

data cleansing * 

creating SCV * 

Total impact * 
(tagging + cleansing + SCV) 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

EU-15 

EU-12 

-0.72% 

-0.07% 

-0.32% 

-0.09% 

n.a. 

-0.10% 

-0.74% 

-0.26% 

-0.29% 

-0.34% 

-0.20% 

-0.28% 

-0.05% 

n.a. 

n.a. 

-0.04% 

-0.04% 

n.a. 

-0.24% 

n.a. 

-0.26% 

-0.24% 

-0.17% 

-0.05% 

n.a. 

-0.06% 

n.a. 

-0.23% 

-0.32% 

-0.14% 

-1.14% 

-0.10% 

-0.50% 

-0.14% 

n.a. 

-0.16% 

-1.17% 

-0.41% 

-0.46% 

-0.54% 

-0.32% 

-0.44% 

-0.07% 

n.a. 

n.a. 

-0.07% 

-0.07% 

n.a. 

-0.38% 

n.a. 

-0.41% 

-0.38% 

-0.27% 

-0.08% 

n.a. 

-0.09% 

n.a. 

-0.36% 

-0.50% 

-0.21% 

-2.56% 

-0.23% 

-1.13% 

-0.31% 

n.a. 

-0.35% 

-2.63% 

-0.92% 

-1.03% 

-1.21% 

-0.71% 

-1.00% 

-0.17% 

n.a. 

n.a. 

-0.15% 

-0.15% 

n.a. 

-0.86% 

n.a. 

-0.93% 

-0.85% 

-0.62% 

-0.17% 

n.a. 

-0.20% 

n.a. 

-0.81% 

-1.14% 

-0.48% 

-4.42% 

-0.40% 

-1.96% 

-0.53% 

n.a. 

-0.60% 

-4.55% 

-1.59% 

-1.78% 

-2.08% 

-1.23% 

-1.73% 

-0.29% 

n.a. 

n.a. 

-0.26% 

-0.26% 

n.a. 

-1.48% 

n.a. 

-1.60% 

-1.47% 

-1.06% 

-0.29% 

n.a. 

-0.34% 

n.a. 

-1.40% 

-1.96% 

-0.83% 

* The average variation in the operating profit for each MS is the weighted average (the weights are the eligible deposits) of the variation in 
the operating profit for every bank in the sample, while the figure at EU level is the simple average of all the previous figures. PL,  NL, UK 
have  been  excluded  because  their  contribution  base  is  different  than    total,  eligible  or  covered;  DE  has  been  excluded  because  2008 
contributions are not available; LT and FI have been excluded because the sample available from Bankscope was small; LU has been 
excluded because data available from Bankscope are not consistent with the data collected through the JRC survey. 

Source: Joint Research Centre based on Ernst & Young Report on fast payout (2008); Commission services' calculations. 

EN 

120 

   EN 

 
ANNEX 13: DGS FUNDS AND CONTRIBUTIONS TO DGS 

(a) Maximum amount of funds available to DGS in Member States (€ thousands) 

Member 
States 

A 
2007  
fund size 

B 
2008 
contributions 

C 
Maximum 
contributions 

D 

Total funds * 

E 
Extraordinary 
ratio * 

F 

Available resources 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

765 000 

50 895 

101 790 

866 790 

265 768 
304 492 
489 410 
n.a. 
116 043 
526 100 
942 181 
6 502 717 
1 624 000 
0 
8 392 
95 599 
confidential 
0 
248 690 
6 861 
0 
0 
confidential 

69 893 
63 969 
0 
n.a. 
16 341 
143 300 
602 109 
412 500 
95 400 
0 
24 656 
24 334 
confidential 
0 
3 897 
713 
0 
0 
confidential 

246 799 
127 939 
411 622 
n.a. 
32 566 
143 300 
1 806 327 
1 631 019 
n.a. 
0 
177 342 
24 334 
confidential 
0 
88 842 
20 187 
0 
0 
n.a. 

512 567 
432 430 
901 032 
n.a. 
148 610 
669 400 
2 748 508 
8 133 736 
1 719 400 
0 
185 733 
119 934 
298 659 
0 
337 532 
27 048 
0 
0 
780 199 

5.87 % 

34.51 % 
14.79 % 
45.68 % 

fund + ordinary and extraordinary 
contributions  
fund + maximum contributions 
fund + extraordinary contributions 
fund + maximum contributions 

n.a  n.a. 

10.92 % 
0 
43.81 % 
14.98 % 
n.a. 

fund + maximum contributions 
fund + ordinary contributions 
fund + maximum contributions 
fund + maximum contributions 
fund + ordinary contributions 

not defined  ex-post virtual fund ** 

82.21 % 
0 
0 

fund + maximum contributions 
fund + ordinary contributions 
fund + ordinary contributions 

not defined  ex-post fund 

25.17 % 
72.00 % 

fund + maximum contributions 
fund + maximum contributions 

not defined  ex-post fund 
not defined  ex-post fund ** 

n.a. 

fund + ordinary contributions 
fund + maximum and extraordinary 
contributions 
fund + maximum and extraordinary 
contributions 

1 377 232 

47 877 

566 331 

1 943 563 

26.68% 

219 495 

24 962 

269 376 

488 870 

50.00% 

0 

-22 544 

549 000 
1 821 744 
0 

0 

37 241 

39 668 
58 694 
0 

0 

0 

not defined  ex-post fund ** 

315 525 

292 981 

39 668 
85 707 
0 

588 668 
1 907 451 
0 

n.a. 

0 
1.42 % 

fund + maximum and extraordinary 
contributions 
fund + ordinary contributions 
fund + maximum contributions 

not defined  ex-post fund 

Total 

16 822 900 

1 812 589 

9 100 154 

23 103 113 

–  – 

EU simple 
average 
EU weighted 
average 

– 

– 

– 

– 

– 

– 

– 

– 

21.06 % ***  – 

18.98 % ***  – 

* Figures in the column D have been calculated as follows: D=A+C, if C is available, otherwise D=A+B. The extraordinary ratio is the ratio 
between extraordinary contributions and total funds (i.e. the fund + current contributions + extraordinary contributions). 

** The following rules have been set for ex-post MS: IT – the maximum amount for the virtual fund is set as 0.8% of the contribution base. 
AT – the maximum amount is set as 0.93% of the assessment basis for the solvency ratio; the figure cannot be estimated and it has not 
been considered in the analysis. SI – according to the Regulation on the DGS, member banks must invest assets in the amount of at least 
2.5% of their covered deposits; this amount is equal to € 220 534 000 and it has not been taken into account in the analysis since it is the 
minimum amount that members must undertake to make available in case of intervention.  

*** Ratios for CY and MT are much higher than the indicators of other MS because of the peculiar funding mechanisms of those two DGS. 
The EU simple average excluding these two DGS is 21.06% and it would be 32.93% if they were included. As to the EU weighted average 
(according to the amount of eligible deposits), it is 18.98% when excluding CY and MT, and it would be 21.19% when including them.  

EN 

121 

   EN 

 
(b) Description of the contribution base, definition of the annual contribution, maximum 

amount of annual contribution, and extraordinary contributions 

Base 

Annual contribution 

Maximum amount of 
annual contribution 

Extraordinary / additional 
contributions 

BE 

eligible 

0.0175% of the contribution base 

NO 

Up to 200% of the regular annual 
premium per year 

BG 

eligible 

0.5% of the contribution base 

1.5% of the contribution 
base 

NO 

CZ 

eligible 

0.1% of the contribution base 

NO 

When the DGS has been granted a loan, 
or another form of repayable financial 
assistance, the contributions shall be 
doubled until the debt is repaid 

DK 

covered  Only in case the fund is below the 

minimum level: in case, apportioned 
among members on the basis of their 
contribution base 

0.2% of the total amount 
of deposits 

Extraordinary contributions can be 
raised, but they cannot exceed the max 
amount of contributions 

eligible 

0.016% of the contribution base 

0.6% of own fund 

DE
160 

Up to five times the annual contributions 
or entry fee, after three consecutive 
years limited to the double annual 
contribution or entry fee (individual 
exemption on request if bank in jeopardy 
because of extraordinary contributions) 

EE 

eligible 

Quarterly contributions, each 0,07% of 
the contribution base in 2005, 0,09% in 
2006 

0.0008% of the 
contribution base 
(quarterly payments) 

NO 

IE 

total 

0.2% of its relevant deposits subject to a 
minimum of  
€ 25 400 

NO 

Banks are allowed to pay additional 
contributions; these additional payments 
are limited in any one year to the amount 
a bank is at that time normally required to 
hold with the scheme. The amount is 
recouped in subsequent years as 
appropriate. 

GR 

eligible 

Different classes according to their 
contribution base. A different percentage 
is applied to different classes, ranging in 
2008 from 0.0125% to 0.625% 

Max contributions can be 
levied up to a max of three 
times the regular 
contributions 

NO 

ES 

eligible 

0.04%, 0.06%, 0.08% of the contribution 
base 

The percentages (0.04%, 
0.06%, 0.08%) can be 
raised to 0.2% 

When the fund size is negative, 
extraordinary contributions can be raised 
in order to make the deficit disappear 

FR 

eligible 

Risk-based 

NO 

Fixed by the regulator without a max as 
long as the stability of the banking sector 
is not endangered 

160 Information refers to EdB - Federal Compensation Fund of Private Banks, and to EdÖ - Federal Compensation Fund of Public Banks         

EN 

122 

   EN 

 
 
                                                 
 
Base 

Annual contribution 

Maximum amount of 
annual contribution 

Extraordinary / additional 
contributions 

IT 

covered  Ex-post 

0.8% of the contribution 
base 

Not appropriate  

CY 

eligible 

Initial and special contributions, set by 
DGS 

0.3% of the contribution 
base  

Supplementary contributions may be 
levied if the DGS amount falls below a 
basic level of capital. Special 
contributions may be levied if it appears 
that payments may exhaust the 
resources of the DGS 

LV 

eligible 

Quarterly contributions, each 0.05% of 
the contribution base 

LT 

eligible 

0.45% of the contribution base 
(commercial banks and branches of 
foreign banks) and 0.2% of the 
contribution base (credit unions) 

LU 

eligible 

Ex-post 

NO 

NO 

NO 

NO 

NO 

Not appropriate  

HU 

eligible 

Quarterly depending on the size of the 
contributions base, ranging in 2005 from 
0.005% to 0.05% 

The percentages can be 
raised to a max of 0.2% 

Extraordinary contributions can be raised 
in case the level of the fund is not 
sufficient 

MT 

eligible 

From 2007, members must maintain 
0.1% of their contribution base in the 
fund 

0.3% of the contribution 
base. 

NO 

NL 

other 

Ex-post 

NO 

AT 

covered  Ex-post 

Max contributions can be 
levied up to 0.93% of the 
assessment basis for the 
solvency ratio 

Not appropriate  

Not appropriate  

PL 

other 

Amount equalling 12.5-times the sum 
total of capital requirements 

0.3%*12.5*capital 
requirement. 

NO 

PT 

eligible 

PT1: 0.0375% of the contribution base, 
weighed by the solvency indicator 

PT2: the annual rate is between 0.2% 
and 0.27% of the contribution base. This 
rate is then adjusted taking into account 
its solvency indicator 

Max annual rate is 0.2% 
for PT1 and 0.27% for 
PT2. The annual rate is 
adjusted with the solvency 
ratio (capital adequacy 
ratio). The adjustment 
varies from 0.8 to 1.2. 

When the Fund’s resources are 
insufficient, additional contributions may 
be levied, but the overall value of these 
contributions shall not exceed, in each 
fiscal year of the Fund's activity, the 
value of its annual contribution 

RO 

eligible 

Ex-ante part: 0.1% of the contribution 
base 

0.5% of the contribution 
base 

Extraordinary contributions can be 
raised, but they cannot exceed annual 
contributions 

SI 

covered  Ex-post 

NO 

Not appropriate  

SK 

eligible 

Between 0.1% - 0.75% of the contribution 
base 

0.75% of the amount of 
the contribution base 

Extraordinary contributions can be levied 
for supplementing the fund, or for 
repayment of a loan. This contributions 

EN 

123 

   EN 

 
 
 
 
Base 

Annual contribution 

Maximum amount of 
annual contribution 

Extraordinary / additional 
contributions 

range between 0.1% and 1% of the 
contribution base 

NO 

NO 

FI 

covered 

0.175 % of the amount obtained by 
dividing the minimum amount of 
consolidated own funds required to cover 
risks by the actual amount of 
consolidated own funds, and then 
multiplying the sum by the amount of 
covered deposits 

SE 

covered 

0.1% of the contribution base, adjusted 
by taking into account the capital 
adequacy ratio 

0.14% of the contribution 
base 

NO 

UK 

other 

Ex-post 

NO 

Not appropriate  

Source: Joint Research Centre.  

EN 

124 

   EN 

 
 
 
ANNEX 14: POTENTIAL TOTAL COSTS OF SETTING A TARGET LEVEL FOR DGS UNDER VARIOUS SCENARIOS (€

 THOUSANDS) 

(a) Potential total costs in normal times (i.e. if only ex-ante contributions are collected) 

Member States 

BE 
BG 
CZ 
DK 
DE 
EE 
IE 
GR 
ES 
FR 
IT 
CY 
LV 
LT 
LU 
HU 
MT 
NL 
AT 
PL 
PT 
RO 
SI 
SK 
FI 
SE 
UK 
Total EU 
Total MS with ex-ante DGS 
Total MS with ex-post DGS 

EN 

2007  
fund size 

2008 
contributions 

Total funds 
in 2008 

Scenarios based on banks’ size 

Scenarios based on DGS payout 

Big failure 

Small failure 

Big payout 

Medium payout 

765 000 
265 768 
304 492 
489 410 
n.a. 
116 043 
526 100 
942 181 
6 502 717 
1 624 000 
0 
8 392 
95 599 
confidential 
0 
248 690 
6 861 
0 
0 
confidential 
1 377 232 
219 495 
0 
-22 544 
549 000 
1 821 744 
0 
16 822 900 
16 822 900 
- 

50 895 
69 893 
63 969 
0 
n.a. 
16 341 
143 300 
602 109 
412 500 
95 400 
0 
24 656 
24 334 
confidential
0 
3 897 
713 
0 
0 
confidential
47 877 
24 962 
0 
37 241 
39 668 
58 694 
0 
1 812 589 
1 812 589 
- 

866 790 
512 567 
432 430 
901 032 
n.a. 
148 610 
669 400 
2 748 508 
8 133 736 
1 719 400 
0 
185 733 
119 934 
298 659 
0 
604 059 
27 048 
0 
0 
780 199 
1 943 563 
488 870 
0 
292 981 
588 668 
1 907 451 
0 
23 103 113 
23 103 113 
- 

12 723 750  
        894 646 
4 120 803  
10 602 364  
128 625 585  
354 158  
11 056 021  
8 842 712  
44 343 335  
96 000 135  
31 231 772  
3 214 321  
650 676  
589 152  
5 653 347  
2 415 405  
365 882  
24 229 275  
11 495 409  
4 937 566  
7 536 615  
1 464 730  
839 023  
980 381  
5 115 947  
14 104 155  
71 761 628  
504 148 791  
358 938 338  
145 210 453  

125 

631 800 
44 424 
204 619 
526 462 
6 386 926 
17 586 
548 989 
439 086 
2 201 876 
4 766 903 
1 550 819 
159 608 
32 309 
29 254 
280 718 
119 937 
18 168 
1 203 109 
570 807 
245 176 
374 232 
72 731 
41 662 
48 681 
254 033 
700 344 
3 563 336 
25 033 595 
17 823 145 
7 210 450 

 3 439 800 
241 863 
1 114 038 
2 866 294 
34 773 262 
95 745 
2 988 938 
2 390 581 
11 987 991 
25 953 140 
8 443 348 
868 975 
175 907 
159 274 
1 528 353 
652 992 
             98 914 
6 550 259 
3 107 724 
1 334 845 
2 037 485 
395 982 
226 826 
265 041 
1 383 070 
        3 812 985 
19 400 385 
136 294 018 
97 037 123 
39 256 895 

         1 053 000  
74 040  
            341 032  
            877 437  
        10 644 876  
              29 310  
            914 981  
            731 811  
         3 669 793  
         7 944 839  
         2 584 698  
            266 013  
              53 849  
              48 757  
            467 863  
            199 896  
              30 280  
         2 005 181  
            951 344  
            408 626  
            623 720  
            121 219  
              69 436  
              81 135  
            423 389  
         1 167 240  
         5 938 893  
          41 722 659  
29 705 242  
 12 017 417  

EN 

 
  
(b) Potential total costs in a crisis situation (i.e. if both ex-ante and ex-post contributions are collected) 

Member States 

BE 
BG 
CZ 
DK 
DE 
EE 
IE 
GR 
ES 
FR 
IT 
CY 
LV 
LT 
LU 
HU 
MT 
NL 
AT 
PL 
PT 
RO 
SI 
SK 
FI 
SE 
UK 
Total EU 
Total MS with ex-ante DGS 
Total MS with ex-post DGS 

EN 

2007  
fund size 

2008 
contributions 

Total funds 
in 2008 

Scenarios based on banks’ size 

Scenarios based on DGS payout 

Big failure 

Small failure 

Big payout 

Medium payout 

765 000 
265 768 
304 492 
489 410 
n.a. 
116 043 
526 100 
942 181 
6 502 717 
1 624 000 
0 
8 392 
95 599 
confidential 
0 
248 690 
6 861 
0 
0 
confidential 
1 377 232 
219 495 
0 
-22 544 
549 000 
1 821 744 
0 
16 822 900 
16 822 900 
- 

50 895 
69 893 
63 969 
0 
n.a. 
16 341 
143 300 
602 109 
412 500 
95 400 
0 
24 656 
24 334 
confidential
0 
3 897 
713 
0 
0 
confidential
47 877 
24 962 
0 
37 241 
39 668 
58 694 
0 
1 812 589 
1 812 589 
- 

866 790 
512 567 
432 430 
901 032 
n.a. 
148 610 
669 400 
2 748 508 
8 133 736 
1 719 400 
0 
185 733 
119 934 
298 659 
0 
604 059 
27 048 
0 
0 
780 199 
1 943 563 
488 870 
0 
292 981 
588 668 
1 907 451 
0 
23 103 113 
23 103 113 
- 

16 965 000 
1 192 861 
5 494 404 
14 136 485 
171 500 780 
472 211 
14 741 361 
11 790 282 
59 124 446 
128 000 180 
41 642 363 
4 285 762 
867 568 
785 536 
7 537 796 
3 220 540 
487 843 
32 305 699 
15 327 212 
6 583 422 
10 048 820 
1 952 973 
1 118 697 
1 307 175 
6 821 262 
18 805 539 
95 682 170 
672 198 388 
478 584 450 
193 613 937 

126 

842 400 
59 232 
272 826 
701 950 
8 515 901 
23 448 
731 985 
585 449 
2 935 835 
6 355 871 
2 067 759 
212 810 
43 079 
39 006 
374 291 
159 916 
24 224 
1 604 145 
761 075 
326 901 
498 976 
96 975 
55 549 
64 908 
338 711 
933 792 
4 751 115 
33 378 127 
23 764 193 
9 613 933 

4 586 400 
322 484 
1 485 384 
3 821 726 
46 364 349 
127 660 
3 985 251 
3 187 442 
15 983 988 
34 604 187 
11 257 797 
1 158 634 
234 543 
212 366 
2 037 804 
870 656 
131 886 
8 733 679 
4 143 632 
1 779 794 
2 716 647 
527 976 
302 434 
353 388 
1 844 093 
5 083 980 
25 867 180 
181 725 357 
129 382 831 
52 342 527 

1 404 000 
98 720 
454 709 
1 169 916 
14 193 168 
39 080 
1 219 975 
975 748 
4 893 058 
10 593 118 
3 446 264 
354 684 
71 799 
65 010 
623 818 
266 527 
40 373 
2 673 575 
1 268 459 
544 835 
831 626 
161 625 
92 582 
108 180 
564 518 
1 556 320 
7 918 524 
55 630 211 
39 606 989 
16 023 222 

EN 

 
  
 
(c) Potential total costs for DGS involved in bank resolution under scenarios based on government intervention 

Member States 

2007  
fund size 

2008 
contributions 

Total funds in 
2008 

BE 
BG 
CZ 
DK 
DE 
EE 
IE 
GR 
ES 
FR 
IT 
CY 
LV 
LT 
LU 
HU 
MT 
NL 
AT 
PL 
PT 
RO 
SI 
SK 
FI 
SE 
UK 
Total EU 
Total MS with ex-ante DGS 
Total MS with ex-post DGS 

765 000 
265 768 
304 492 
489 410 
n.a. 
116 043 
526 100 
942 181 
6 502 717 
1 624 000 
0 
8 392 
95 599 
confidential 
0 
248 690 
6 861 
0 
0 
confidential 
1 377 232 
219 495 
0 
-22 544 
549 000 
1 821 744 
0 
16 822 900 
16 822 900 
- 

50 895 
69 893 
63 969 
0 
n.a. 
16 341 
143 300 
602 109 
412 500 
95 400 
0 
24 656 
24 334 
confidential
0 
3 897 
713 
0 
0 
confidential
47 877 
24 962 
0 
37 241 
39 668 
58 694 
0 
1 812 589 
1 812 589 
- 

866 790 
512 567 
432 430 
901 032 
n.a. 
148 610 
669 400 
2 748 508 
8 133 736 
1 719 400 
0 
185 733 
119 934 
298 659 
0 
604 059 
27 048 
0 
0 
780 199 
1 943 563 
488 870 
0 
292 981 
588 668 
1 907 451 
0 
23 103 113 
23 103 113 
- 

EN 

Total costs in normal times  
(only ex-ante contributions are collected) 

Total costs in a crisis situation  
(both ex-ante and ex-post contributions are collected) 

Medium intervention 
2 281 500 
160 419 
738 903 
1 901 114 
23 063 898 
63 504 
1 982 459 
1 585 590 
7 951 219 
17 213 817 
5 600 180 
576 361 
116 673 
105 641 
1 013 704 
433 107 
65 606 
4 344 560 
2 061 246 
885 357 
1 351 393 
262 641 
150 446 
175 793 
917 342 
2 529 021 
12 867 602 
90 399 094 
64 361 357 
26 037 736 

Big intervention 

6 669 000  
468 918 
2 159 869  
5 557 101  
67 417 548  
185 628  
5 794 880  
4 634 801  
23 242 024  
50 317 312  
16 369 756  
1 684 748  
341 044  
308 797  
2 963 134  
1 266 005  
191 773  
12 699 482  
6 025 180  
2 587 966  
3 950 226  
767 720  
439 764  
513 855  
2 681 462  
7 392 522  
37 612 991  
  264 243 504  
 188 133 198  
76 110 306  

127 

Big intervention 

Medium intervention 

8 892 000 
625 224 
2 879 826 
7 409 468 
89 890 064 
247 504 
7 726 506 
6 179 734 
30 989 365 
67 089 750 
21 826 342 
2 246 330 
454 725 
411 729 
3 950 845 
1 688 007 
255 697 
16 932 642 
8 033 573 
3 450 621 
5 266 968 
1 023 627 
586 352 
685 140 
3 575 282 
9 856 696 
50 150 655 
352 324 672 
250 844 264 
101 480 409 

3 042 000 
213 892 
985 204 
2 534 818 
30 751864 
84 672 
2 643 279 
2 114 120 
10 601 625 
22 951 756 
7 466 906 
768 481 
155 564 
140 855 
1 351 605 
577 476 
87 475 
5 792 746 
2 748 328 
1 180 476 
1 801 857 
350 188 
200 594 
234 390 
1 223 123 
3 372 028 
17 156 803 
120 532 125 
85 815 143 
34 716 982 

EN 

 
  
(d) Potential impact on banks: variation in operating profits * 

Big bank failure 

Small bank failure 

Big DGS payout 

Medium DGS payout 

Big gov't intervention 

Normal times 

Crisis situation 

Normal times 

Crisis situation 

Normal times 

Crisis situation 

Normal times 

Crisis situation

Normal times 

Crisis situation 

Medium gov't intervention 
Crisis situation 
Normal times 

EU 
EU-15 
EU-12 

-29.20% 
-38.56% 
-19.84% 

-41.76% 
-53.65% 
-29.88% 

-4.81% 
-5.85% 
-3.77% 

-7.35% 
-9.09% 
-5.61% 

-4.66% 
-6.84% 
-2.48% 

-7.34% 
-10.68% 
-4.00% 

-11.02% 
-14.59% 
-7.45% 

-17.61%
-23.66%
-11.55%

-12.56% 
-17.64% 
-7.47% 

-18.35% 
-25.08% 
-11.63% 

-5.75% 
-8.32% 
-3.18% 

-9.20% 
-13.08% 
-5.32% 

(e) Potential impact on consumers: interest rates * 

Big bank failure 

Small bank failure 

Big DGS payout 

Medium DGS payout 

Big gov't intervention 

Normal times 

Crisis situation 

Normal times 

Crisis situation 

Normal times 

Crisis situation 

Normal times 

Crisis situation

Normal times 

Crisis situation 

Medium gov't intervention 
Crisis situation 
Normal times 

EU 
EU-15 
EU-12 

0.354% 
0.412% 
0.311% 

0.526% 
0.594% 
0.478% 

0.039% 
0.022% 
0.051% 

0.060% 
0.038% 
0.075% 

0.040% 
0.051% 
0.032% 

0.072% 
0.094% 
0.056% 

0.088% 
0.072% 
0.100% 

0.143%
0.128%
0.154%

0.138% 
0.172% 
0.113% 

0.213% 
0.255% 
0.182% 

0.045% 
0.052% 
0.039% 

0.086% 
0.103% 
0.073% 

(f) Potential impact on consumers: bank fees (€)  * 

Big bank failure 

Small bank failure 

Big DGS payout 

Medium DGS payout 

Big gov't intervention 

Normal times 

Crisis situation 

Normal times 

Crisis situation 

Normal times 

Crisis situation 

Normal times 

Crisis situation

Normal times 

Crisis situation 

Medium gov't intervention 
Crisis situation 
Normal times 

EU 
EU-15 
EU-12 

31.08 
48.24 
18.60 

44.26 
68.43 
26.68 

4.28 
2.80 
5.36 

6.73 
5.26 
7.80 

4.48 
6.41 
3.07 

7.54 
11.46 
4.69 

10.29 
10.36 
10.24 

16.56
18.85
14.89

13.23 
20.62 
7.86 

19.56 
30.40 
11.68 

5.41 
7.08 
4.20 

9.34 
13.30 
6.46 

* Normal times: only ex-ante contributions are collected; crisis situation: both ex-ante and ex-post contributions are collected (ex-ante and ex-post contributions are 75% and 25% of the DGS funds respectively). Impact on 
banks: PL, NL and UK have been excluded because their contribution base is different than total, eligible or covered; DE has been excluded because 2008 contributions are not available; LT and FI have been excluded 
because the sample available from Bankscope was small; LU has been excluded because data available from Bankscope are not consistent with the data collected through the JRC survey. Impact on consumers has been 
performed only for ex-ante DGS. DE has been excluded because 2008 contributions were not available, DK has been excluded because it did not collect contributions in 2008. 

General note: The analysis aims at investigating the DGS’ capability of handling a failure of a certain size. The below table summarizes all the developed scenarios.  

Scenarios 

Size of the failure (% of the total amount of eligible deposits) 

Big bank failure 
Small bank failure 
Big DGS payout 
Medium DGS payout 
Big government intervention 
Medium government intervention 

Failure of a big member bank (average of top-10 member banks)  
Failure of a small member bank (average of other than top-10 banks) 
Maximum costs to DGS for a failure occurred in the EU MS in 2008 
Average costs to DGS for a failure occurred in the EU MS in 2008 
Maximum costs for banks’ individual recapitalizations operated by governments of EU MS during the financial crisis 
Average costs for banks’ individual recapitalizations operated by governments of EU MS during the financial crisis 

7.25% 
0.36% 
1.96% 
0.60% 
3.80% 
1.30% 

Source: Joint Research Centre. 

EN 

128 

EN 

 
  
 
 
 
 
 
 
ANNEX  15:  NUMBER  OF  MEMBER  STATES  ABLE  TO  HANDLE  THE  COSTS  UNDER 
VARIOUS SCENARIOS ON A TARGET LEVEL FOR DGS 

Scenario  
(target level - to be 
achieved after x years) 

Number of MS able to handle the 
intervention with cumulated funds plus 
ordinary contributions  
within the time limit 

Number of MS able to handle the 
intervention with cumulated funds plus 
extraordinary contributions  
within the time limit  

Normal times * 

Crisis situation * 

Big bank failure 
(7.25% of eligible deposits -  
10 years) 

Small bank failure  
(0.36% of eligible deposits -  
1 year) 

Big DGS payout  
(1.96% of eligible deposits -  
10 years) 

Medium DGS payout  
(0.60% of eligible deposits -  
1 year) 

Big government 
intervention  
(3.80% of eligible deposits -  
10 years) 

Medium government 
intervention  
(1.30% of eligible deposits -  
5 years) 

2 

BG, LT 

15 

4 

BG, GR,  
RO, SK 

17 

BE, BG, CZ, EE, IE, GR, ES, LV, LT, HU, PL, PT, RO, 
FI, SE 

BE, BG, CZ, DK, EE, GR, ES, LV, LT, HU, MT, PL, 
PT, RO, SK, FI, SE, 

7 

14 

BG, EE, GR, LV, LT, RO, SK 

BG, CZ, DK, EE, GR, ES, CY, LV, LT, HU, MT, PT, 
RO, SK 

13 

13 

BG, CZ, EE, GR, ES, LV, LT, HU, PL, PT, RO, FI, SE 

BG, EE, GR, ES, LV, LT, HU, PL, PT, RO, SK, FI, SE 

4 

7 

BG, EE, GR, LT 

BG, EE, GR, LT, PT, RO, SK 

9 

13 

BG, EE, GR, ES, LV, LT, PL, PT, RO 

BG, DK, EE, GR, ES, CY, LV, LT, HU, MT, PT, RO, 
SK 

 * Normal times: only ex-ante contributions are collected; Crisis situation: both ex-ante and ex-post contributions are collected (up to max 
limits). 

Source: Joint Research Centre.  

EN 

129 

   EN 

 
ANNEX  16:  CURRENT  CAPABILITY  OF  DGS  TO  COPE  WITH  A  BANK  FAILURE  OF  A 
CERTAIN  SIZE  (USING  EX-ANTE  FUNDS,  CONTRIBUTIONS  AND  ADDITIONAL 
CONTRIBUTIONS AVAILABLE UNDER THE CURRENT REGIME) 

(a) Actual coverage ratios* vs. potential target levels (2007)  

0.36%

1.96%

1.30%

0.60%

2,5%

2,0%

o
i
t
a
r
e
g
a
r
e
v
o
C

1,5%

1,0%

0,5%

0,0%

CY FR MT DK IE BE CZ SE HU GR FI ES LV PL RO PT BG EE LT

(b) Maximum coverage ratios* vs. potential target levels (2007)  

o

i
t

a
r
e
g
a
r
e
v
o
c
m
u
m
x
a
M

i

0.36%

1.96%

1.30%

0.60%

3,5%

3,0%

2,5%

2,0%

1,5%

1,0%

0,5%

0,0%

FR CY IE BE MT DK CZ FI SE HU PL ES LV PT SK GR RO EE LT BG

*  Coverage  ratio  =  ex-ante  fund  /  eligible  deposits;  Maximum  coverage  ratio  =  total  funds  (ex-ante  fund  plus  additional  contributions)  / 
eligible deposits.  

EN 

130 

   EN 

 
 
 
 
 
 
 
 
(c) Target levels and coverage ratios at DGS having a target level for funds  

Member 
States 

Target level for DGS funds  
(brief description) 

Target level for DGS funds  
(as % of 2007 eligible deposits) 

Coverage ratio 
(as of 2007) 

BG 

DK 

EE 

ES 

FR 

IT 

LT 

HU 

MT 

RO 

5% of the total amount of eligible deposits 

€ 429 500 000 

2% of the total amount of eligible deposits 

1% of the total amount of eligible deposits 

€ 1 500 000 000 

0.8% of the total amount of covered deposits (virtual fund) 

4% of the total amount of eligible deposits 

confidential 

€ 7 000 000 

€ 399 000 000 

(d) Coverage ratios in the EU and Norway (2007) 

5.00 % 

0.22 % 

2.00 % 

1.00 % 

0.08 % 

0.56 % 

4.00 % 

confidential 

0.10 % 

1.48 % 

1.62 % 

0.25 % 

1.78 % 

0.80 % 

0.09 % 

0.00 % 

2.32 % 

0.56 % 

0.10 % 

0.81 % 

Source: Joint Research Centre. 

EN 

131 

   EN 

 
 
 
ANNEX  17:  CURRENT  CAPABILITY  OF  DGS  TO  COPE  WITH  A  BANK  FAILURE  OF  A 
CERTAIN  SIZE  (USING  EX-ANTE  AND  ADDITIONAL  CONTRIBUTIONS  AVAILABLE 
UNDER THE CURRENT REGIME)  

(a) Resources potentially available to DGS after 5 years  

s
t
i
s
o
p
e
d
e
b
g

l

i

i
l

e
f
o
%

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

-1%

1.30%

FR BE IE FI SE PL CZ DK CY HU MT ES LV PT EE LT RO GR SK BG

(b) Resources potentially available to DGS after 10 years 

1.96%
3.80%
7.25%

18%

17%
16%

15%

14%
13%

12%
11%

10%

9%
8%

7%

6%
5%

4%
3%

2%

1%
0%

s
t
i
s
o
p
e
d
e
b
g

i

l

i
l

e
f
o
%

-1%

FR BE IE FI SE PL CZ DK HU ES LV CY MT PT LT EE RO GR BG SK

Note: Dark blue bars – ex-ante funds; pale blue bars – ex-post funds. 

Source: Joint Research Centre. 

EN 

132 

   EN 

 
 
 
 
 
 
 
 
 
ANNEX  18:  HARMONIZED  SCENARIOS  ON  DGS  FUNDING*:  POTENTIAL  IMPACT  ON 
TOTAL DGS FUNDS AND BANK CONTRIBUTIONS 

(a) Total ex-ante and ex-post funds to be collected within 10 years (€ thousands) 

Member 
States 

2007  
size of 
funds  

2008  
total funds 

Harmonised scenario A 
(Target level 1.96% - 
Exclude all – 10 years) 

Harmonised scenario B 
(Target level 1.96% - Include 
SME and large enterprises – 
10 years) 

Harmonised scenario C 
(Target level 1.96% -  
Include all – 10 years) 

Ex-ante 

Ex-post 

Ex-ante 

Ex-post 

Ex-ante 

Ex-post 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

765 000 

866 790 

3 439 800 

1 146 600 

     3 882 211 

   1 294 070  

4 420 267 

1 473 422 

265 768 

512 567 

185 039 

61 680 

        241 863 

        80 621  

253 629 

84 543 

304 492 

432 430 

935 232 

311 744 

     1 111 641 

      370 547  

1 142 802 

380 934 

489 410 

901 032 

2 514 465 

838 155 

     2 750 410 

      916 803 

2 866 294 

955 431 

n.a. 

n.a. 

34 773 262  11 591 087 

   38 630 767 

 12 876 922  

49 225 548 

16 408 516 

116 043 

148 610 

95 745 

31 915 

        112 430 

        37 477  

114 544 

38 181 

526 100 

669 400 

2 988 938 

996 313 

     3 784 456 

   1 261 485  

4 435 895 

1 478 632 

942 181 

2 748 508 

2 182 417 

727 472 

     2 351 713 

      783 904  

2 408 295 

802 765 

6 502 717 

8 133 736 

10 873 755 

3 624 585 

   11 987 991 

   3 995 997  

13 954 605 

4 651 535 

1 624 000 

1 719 400 

24 285 156 

8 095 052 

   25 953 140 

   8 651 047  

26 654 536 

8 884 845 

0 

0 

6 882 665 

2 294 222 

     8 443 348 

   2 814 449  

10 812 940 

3 604 313 

8 392 

185 733 

821 353 

273 784 

        868 975 

      289 658  

934 597 

311 532 

95 599 

119 934 

152 431 

50 810 

        175 907 

        58 636  

confidential 

298 659 

140 438 

46 813 

156 783 

52 261 

189 107 

160 697 

63 036 

53 566 

0 

0 

1 528 353 

509 451 

     2 379 216 

      793 072  

3 011 845 

1 003 948 

248 690 

337 532 

493 135 

164 378 

        652 992 

      217 664  

690 059 

230 020 

6 861 

27 048 

98 914 

32 971 

        129 879 

        43 293  

143 038 

47 679 

0 

0 

0 

0 

6 550 259 

2 183 420 

     7 624 374 

   2 541 458  

8 470 489 

2 823 496 

3 107 724 

1 035 908 

     3 418 953 

   1 139 651  

3 514 481 

1 171 494 

confidential 

780 199 

1 261 250 

420 417 

     1 574 351 

      524 784  

1 692 092 

564 031 

1 377 232 

1 943 563 

1 845 839 

615 280 

     2 037 485 

      679 162  

2 129 080 

709 693 

219 495 

488 870 

395 982 

131 994 

        553 660 

      184 553  

586 574 

195 525 

0 

0 

226 826 

75 609 

        248 697 

        82 899  

262 026 

87 342 

-22 544 

292 981 

265 041 

88 347 

        396 501 

      132 167  

429 061 

143 020 

549 000 

588 668 

1 218 783 

406 261 

     1 342 277 

      447 425  

1 383 070 

461 023 

1 821 744 

1 907 451 

2 581 530 

860 510 

     3 686 872 

   1 228 957  

3 898 618 

1 299 539 

0 

0 

18 093 971 

6 031 324 

   24 518 359 

   8 172 786  

27 772 405 

9 257 468 

16 822 900 

23 103 113 

127 938 303  42 646 101 

149 015 250 

49 671 750 

171 556 596 

57 185 532 

* This scenario assumes harmonising some key elements of DGS funding in all Member States: the target level for total funds of 1.96% of eligible 
deposits;  proportions  of  total  funds:  75%  ex-ante  /  25%  ex-post  (to  be  achieved  within  10  years).  It  also  assumes  harmonising  the  scope  of 
coverage: including/excluding non-financial enterprises, financial sector enterprises and authorities. The adoption of a given harmonised level of 
coverage has no impact on the results as the above assumptions on DGS funding are based on eligible (and not on covered) deposits. 

EN 

133 

   EN 

 
(b) Bank contributions to be collected annually within 10 years (€ thousands) 

Member 
States 

2008 
contri-
butions  

Harmonised scenario A  
(Target level 1.96% - Exclude All -  
10 years) 

Harmonised scenario B  
(Target level 1.96% - Include SME and 
large enterprises - 10 years) 

Harmonised scenario C  
(Target level 1.96% - Include All -  
10 years) 

Ex-ante 
contributions 

% change in 
contributions 

Ex-ante 
contributions 

% change in 
contributions 

Ex-ante 
contributions 

% change in 
contributions 

 BE  

 BG  

 CZ  

 DK  

 DE  

 EE  

 IE  

 GR  

 ES  

 FR 

 IT  

 CY  

 LV  

 LT  

 LU  

 HU  

 MT  

 NL  

 AT  

 PL  

 PT  

 RO  

 SI  

 SK  

 FI  

 SE  

 UK  

50 895 

69 893 

63 969 

0 

n.a. 

16 341 

143 300 

602 109 

412 500 

 267 480  

 (*)n.a.  

 63 074  

 202 506  

 n.a.  

 (*)n.a.  

246 284  

 124 024  

 437 104  

426%

(*)n.a.

-1%

n.a. 

n.a. 

(*)n.a.

72%

-79%

6%

311 721 

 (*)n.a. 

80 715 

226 100 

n.a. 

 (*)n.a. 

325 836 

140 953 

548 527 

512% 

(*)n.a. 

26% 

n.a. 

n.a. 

(*)n.a. 

127% 

-77% 

33% 

 365 527  

(*)n.a.  

 83 831  

 237 688  

 n.a.  

(*)n.a.  

390 980  

 146 611  

 745 189  

618% 

(*)n.a. 

31% 

n.a. 

n.a. 

(*)n.a. 

173% 

-76% 

81% 

95 400 

 2 266 116  

2275%

2 432 914 

2450% 

 2 503 054  

2 524% 

0 

24 656 

24 334 

confidential 

688 266 

 81 296  

 5 683  

 (*)n.a.  

0 

 152 835  

3 897 

713 

0 

0 

 24 444  

 9 205  

 655 026  

 310 772  

n.a. 

230%

-77%

(*)n.a.

n.a. 

527%

1 192%

n.a. 

n.a. 

844 335 

86 058 

8 031 

n.a. 

237 922 

40 430 

12 302 

762 437 

341 895 

n.a. 

1 081 294 

249% 

-67% 

n.a. 

n.a. 

937% 

1626% 

n.a.

n.a.

 92 621  

 9 351  

(*)n.a.  

 301 185  

 44 137  

 13 618  

 847 049  

 351 448  

n.a. 

276% 

-62% 

(*)n.a. 

n.a. 

1 032% 

1 811% 

n.a. 

n.a. 

confidential 

 53 000  

confidential

84 310 

confidential 

 96 084  

confidential 

47 877 

24 962 

0 

37 241 

39 668 

58 694 

 46 861  

 17 649  

 22 683  

 28 759  

 66 978  

 75 979  

0 

 1 809 397  

-2%

-29%

n.a. 

-23%

69%

29%

n.a. 

– 

66 025 

33 416 

24 870 

41 905 

79 328 

186 513 

2 451 836 

9 368 379

38% 

34% 

n.a. 

13% 

100% 

218% 

 75 185  

 36 708  

 26 203  

 45 161  

 83 407  

 207 687  

n.a. 

 2 777 241  

– 

10 561 256 

57% 

47% 

n.a. 

21% 

110% 

254% 

n.a. 

– 

Total EU 

1 812 589  

7 655 420  

EU average 

– 

– 

289 % 

– 

393 % 

– 

437 % 

Note: There would be a particularly high impact in FR. This is because the amount of eligible deposits is very high in FR (see Annex 2), while the 
funds at DGS disposal and annual bank contributions are not proportionally high (see both tables in this annex).  

* It means that 2007 funds cover completely the ex-ante component and thus additional contributions do not have to be called to reach the target 
level. 

EN 

134 

   EN 

 
(c) Total ex-ante funds and additional contributions to be collected within 10 years  

n
o

i
l
l
i

b
R
U
E

240

220

200

180

160

140

120

100

80

60

40

20

0

Ex-ante

Ex-post

49.7

42.6

127.9

149.0

57.2

171.6

4.5

18.6

Total funds in 2008 

Harmonised
scenario A

Harmonised
scenario B

Harmonised
scenario C

(d) Total amount of ex-ante contributions to be collected annually within 10 years  

n
o

i
l
l
i

b
R
U
E

11
10
9

8
7

6
5

4
3

2
1
0

9.4

10.6

7.7

1.8

Ex-ante
contributions in
2008

Harmonised
scenario A

Harmonised
scenario B

Harmonised
scenario C

Source: Joint Research Centre. 

EN 

135 

   EN 

 
 
 
 
 
ANNEX 19: HARMONIZED SCENARIOS ON DGS FUNDING: POTENTIAL IMPACT ON BANKS 
– VARIATION IN BANK OPERATING PROFITS 

Member 
States 

Harmonised scenario A  
(Target level 1.96% - Exclude all - 10 years) 

Harmonised scenario B  
(Target level 1.96% - Include SME and large 
enterprises - 10 years) 

Harmonised scenario C  
(Target level 1.96% - Include all - 10 years) 

Normal times * 

Crisis situation * 

Normal times * 

Crisis situation * 

Normal times * 

Crisis situation * 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

EU-15 

EU-12 

-15.28% 

13.50% 

0.22% 

-6.11% 

n.a. 

22.99% 

-9.39% 

16.89% 

-0.21% 

-8.95% 

-8.50% 

-6.55% 

6.85% 

n.a. 

n.a. 

-1.99% 

-5.05% 

n.a. 

-23.37% 

13.50% 

-2.99% 

-8.64% 

n.a. 

21.36% 

-17.19% 

14.24% 

-3.28% 

-12.29% 

-11.33% 

-9.72% 

4.99% 

n.a. 

n.a. 

-3.57% 

-7.02% 

n.a. 

-17.58% 

13.50% 

-1.76% 

-6.86% 

n.a. 

22.99% 

-14.98% 

16.37% 

-1.15% 

-9.92% 

-9.01% 

-7.12% 

5.99% 

n.a. 

n.a. 

-3.30% 

-5.55% 

n.a. 

-26.37% 

12.40% 

-5.64% 

-9.64% 

n.a. 

18.25% 

-24.62% 

13.57% 

-4.54% 

-13.59% 

-12.02% 

-10.47% 

3.83% 

n.a. 

n.a. 

-5.26% 

-7.66% 

n.a. 

-20.33% 

13.50% 

-2.11% 

-7.22% 

n.a. 

22.99% 

-19.54% 

16.20% 

-2.81% 

-10.33% 

-9.79% 

-7.89% 

5.50% 

n.a. 

n.a. 

-3.59% 

-5.75% 

n.a. 

-29.97% 

12.10% 

-6.11% 

-10.13% 

n.a. 

17.86% 

-30.67% 

13.35% 

-6.74% 

-14.14% 

-13.05% 

-11.51% 

3.19% 

n.a. 

n.a. 

-5.65% 

-7.92% 

n.a. 

-14.98% 

-19.97% 

-16.26% 

-21.68% 

-16.65% 

-22.20% 

n.a. 

0.01% 

1.89% 

-7.56% 

2.66% 

n.a. 

-0.56% 

n.a. 

-1.01% 

-4.71% 

2.69% 

n.a. 

-2.56% 

-1.52% 

-10.08% 

0.47% 

n.a. 

-2.53% 

n.a. 

-4.08% 

-8.69% 

0.54% 

n.a. 

-0.75% 

-1.57% 

-8.29% 

-1.33% 

n.a. 

-2.61% 

n.a. 

-2.46% 

-6.27% 

1.36% 

n.a. 

-3.54% 

-5.99% 

-11.05% 

-4.84% 

n.a. 

-5.10% 

n.a. 

-6.20% 

-10.75% 

-1.64% 

n.a. 

-1.10% 

-2.26% 

-8.73% 

-2.31% 

n.a. 

-2.97% 

n.a. 

-3.26% 

-7.45% 

0.93% 

n.a. 

-4.00% 

-6.89% 

-11.64% 

-6.16% 

n.a. 

-5.57% 

n.a. 

-7.29% 

-12.31% 

-2.27% 

* Normal times: only ex-ante contributions are collected; Crisis situation: both ex-ante and ex-post contributions are collected (up to max limits). PL,  
NL,  UK  have  been  excluded  because  their  contribution  base  is  different  than    total,  eligible  or  covered;  DE  has  been  excluded 
because 2008 contributions are not available; LT and FI have been excluded because the sample available from Bankscope was 
small; LU has been excluded because data available from Bankscope are not consistent with the data collected through the JRC 
survey. Source: Joint Research Centre.  

EN 

136 

   EN 

 
ANNEX  20:  HARMONIZED  SCENARIOS  ON  DGS  FUNDING:  POTENTIAL  IMPACT  ON 
DEPOSITORS 

(a) Potential decrease of interest rates on savings 

Member 
States 

Harmonised scenario A  
(Target level 1.96% - Exclude all - 10 years) 

Harmonised scenario B  
(Target level 1.96% - Include SME and large 
enterprises - 10 years) 

Harmonised scenario C  
(Target level 1.96% - Include all - 10 years) 

Normal times * 

Crisis situation * 

Normal times * 

Crisis situation * 

Normal times * 

Crisis situation * 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

EU-15 

EU-12 

0.093% 

n.a.** 

0.000%. 

n.a. 

n.a. 

n.a.** 

0.051% 

0.000% 

0.003% 

0.123% 

n.a. 

0.096% 

0.000% 

n.a.** 

n.a. 

0.046% 

0.126% 

n.a. 

n.a. 

0.004% 

0.000% 

0.000% 

n.a. 

0.000% 

0.029% 

0.007% 

n.a. 

0.058% 

0.051% 

0.068% 

0.142% 

n.a.** 

0.040% 

n.a. 

n.a. 

0.000% 

0.100% 

0.000% 

0.047% 

0.169% 

n.a. 

0.142% 

0.000% 

n.a.** 

n.a. 

0.083% 

0.175% 

n.a. 

n.a. 

0.051% 

0.044% 

0.022% 

n.a. 

0.002% 

0.072% 

0.040% 

n.a. 

0.081% 

0.088% 

0.074% 

0.111% 

n.a.** 

0.022% 

n.a. 

n.a. 

(*)n.a 

0.090% 

0.000% 

0.017% 

0.132% 

n.a. 

0.104% 

0.000% 

n.a.** 

n.a. 

0.082% 

0.172% 

n.a. 

n.a. 

0.039% 

0.013% 

0.031% 

n.a. 

0.026% 

0.042% 

0.049% 

n.a. 

0.067% 

0.065% 

0.086% 

0.167% 

0.000% 

0.071% 

n.a. 

n.a. 

0.000% 

0.152% 

0.000% 

0.066% 

0.181% 

n.a. 

0.153% 

0.000% 

n.a.** 

n.a. 

0.131% 

0.237% 

n.a. 

n.a. 

0.097% 

0.062% 

0.100% 

n.a. 

0.099% 

0.090% 

0.097% 

n.a. 

0.122% 

0.116% 

0.143% 

0.134% 

n.a.** 

0.026% 

n.a. 

n.a. 

(*)n.a 

0.122% 

0.000% 

0.041% 

0.136% 

n.a. 

0.115% 

0.000% 

n.a.** 

n.a. 

0.091% 

0.192% 

n.a. 

n.a. 

0.052% 

0.020% 

0.044% 

n.a. 

0.044% 

0.046% 

0.057% 

n.a. 

0.080% 

0.080% 

0.080% 

0.197% 

0.000%. 

0.076% 

n.a. 

n.a. 

0.000% 

0.195% 

0.000% 

0.098% 

0.187% 

n.a. 

0.168% 

0.000% 

n.a.** 

n.a. 

0.142% 

0.263% 

n.a. 

n.a. 

0.114% 

0.071% 

0.116% 

n.a. 

0.123% 

0.095% 

0.108% 

n.a. 

0.140% 

0.136% 

0.143% 

Note:  It  is  assumed  that  ex-ante  and  ex-post  contributions  are  75%  and  25%  of  the  DGS  funds  respectively.  Impact  on  consumers  have  been 
performed only for ex-ante DGS. DE has been excluded because 2008 contributions were not available, DK has been excluded because it did not 
collect contributions in 2008. 

* Normal times: only ex-ante contributions are collected; Crisis situation: both ex-ante and ex-post contributions are collected (up to max limits).  
** It means that 2007 funds cover completely the ex-ante component and thus additional contributions do not have to be called to reach the target 
level.. 

EN 

137 

   EN 

 
(b) Potential increase of bank fees on current account (€)  

Member 
States 

Harmonised scenario A  
(Target level 1.96% - Exclude all - 10 years) 

Harmonised scenario B  
(Target level 1.96% - Include SME and large 
enterprises - 10 years) 

Harmonised scenario C  
(Target level 1.96% - Include all - 10 years) 

Normal times * 

Crisis situation * 

Normal times * 

Crisis situation * 

Normal times * 

Crisis situation * 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

EU-15 

Eu-12 

9.55 

n.a.** 

0.00 

n.a. 

n.a. 

n.a.** 

11.14 

0.00 

0.28 

15.98 

n.a. 

19.03 

0.00 

n.a.** 

n.a. 

1.20 

9.72 

n.a. 

n.a. 

0.05 
0.00 
0.00 

n.a. 

0.00 

2.41 

0.89 

n.a. 

7.02 

6.71 

7.50 

14.60 

n.a.** 

1.95 

n.a. 

n.a. 

0.00 

21.92 

0.00 

4.43 

21.94 

n.a. 

28.23 

0.00 

n.a.** 

n.a. 

2.16 

13.49 

n.a. 

n.a. 

0.56 

2.66 

0.13 

n.a. 

0.04 

6.01 

5.29 

n.a. 

8.82 

10.98 

6.65 

11.50 

n.a.** 

1.08 

n.a. 

n.a.

n.a.** 

19.75 

0.00 

1.56 

17.21 

n.a. 

20.63 

0.00 

n.a.** 

n.a. 

2.14 

13.26 

n.a.

n.a.

0.43 

0.80 

0.18 

n.a. 

0.59 

3.51 

6.54 

n.a. 

7.08 

8.69 

7.33 

17.20 

0.00 

3.47 

n.a.

n.a.

0.00 

33.40 

0.00 

6.13 

23.57 

n.a. 

30.36 

0.00 

n.a.** 

n.a. 

3.41 

18.21 

n.a.

n.a.

1.08 

3.79 

0.58 

n.a. 

2.27 

7.46 

12.84 

n.a. 

11.70 

14.91 

10.73 

13.87 

n.a.** 

1.28 

n.a. 

n.a. 

n.a.** 

26.80 

0.00 

3.81 

17.72 

n.a. 

22.83 

0.00 

n.a.** 

n.a. 

2.35 

14.77 

n.a. 

n.a. 

0.58 

1.20 

0.25 

n.a. 

1.00 

3.87 

7.63 

n.a. 

8.43 

10.70 

6.15 

20.37 

0.00 

3.73 

n.a. 

n.a. 

0.00 

42.80 

0.00 

9.14 

24.26 

n.a. 

33.30 

0.00 

n.a.** 

n.a. 

3.70 

20.22 

n.a. 

n.a. 

1.27 

4.33 

0.68 

n.a. 

2.82 

7.94 

14.28 

n.a. 

13.49 

17.59 

9.39 

Note:  It  is  assumed  that  ex-ante  and  ex-post  contributions  are  75%  and  25%  of  the  DGS  funds  respectively.  Impact  on  consumers  have  been 
performed only for ex-ante DGS. DE has been excluded because 2008 contributions were not available, DK has been excluded because it did not 
collect contributions in 2008. 
* Normal times: only ex-ante contributions are collected; Crisis situation: both ex-ante and ex-post contributions are collected (up to max limits).  
** It means that 2007 funds cover completely the ex-ante component.  

Source: Joint Research Centre. 

EN 

138 

   EN 

 
ANNEX 21: POTENTIAL CUMULATIVE IMPACT ON BANKS AND DEPOSITORS DURING THE 
FIRST  5  YEARS:  HARMONIZED  SCENARIO  ON  PAYOUT,  FUNDING  AND  SCOPE/LEVEL  OF 
COVERAGE *  

(a) Potential impact on operating profits of banks  

Member 
States 

Variation in operating profits 

Normal times ** 

Crisis situation ** 

BE 
BG 
CZ 
DK 
DE 
EE 
IE 
GR 
ES 
FR 
IT 
CY 
LV 
LT 
LU 
HU 
MT 
NL 
AT 
PL 
PT 
RO 
SI 
SK 
FI 
SE 
UK 

EU 
EU-15 
EU-12 

-22.00% 
13.10% 
-3.71% 
-7.38% 
n.a. 
22.39% 
-19.53% 
14.78% 
-2.93% 
-12.00% 
-10.24% 
-8.84% 
5.70% 
n.a. 
n.a. 
-3.56% 
-5.82% 
n.a. 
-17.74% 
n.a. 
-2.35% 
-3.04% 
-9.35% 
-1.62% 
n.a. 
-2.95% 
n.a. 

-3.86% 
-8.24% 
0.52% 

-30.79% 
12.00% 
-7.60% 
-10.16% 
n.a. 
17.65% 
-29.16% 
11.98% 
-6.31% 
-15.67% 
-13.25% 
-12.20% 
3.54% 
n.a. 
n.a. 
-5.53% 
-7.92% 
n.a. 
-23.16% 
n.a. 
-5.14% 
-7.46% 
-12.11% 
-5.14% 
n.a. 
-5.45% 
n.a. 

-7.59% 
-12.71% 
-2.48% 

PL,  NL, UK have been excluded because their contribution base is different than  total, eligible or covered; DE has been excluded because 2008 
contributions are not available; LT and FI have been excluded because the sample available from Bankscope was small; LU has been excluded 
because data available from Bankscope are not consistent with the data collected through the JRC survey. 
* This harmonised scenario presents the cumulative impact on banks and depositors stemming from two separate scenarios:  

(1) speeding up the payout process – which involves one-off administrative costs for banks related to tagging eligible deposits, data cleansing 
and creating single customer views – to be faced within 5 years (see Annex 12d-f);  
(2) harmonising DGS funding and scope/level of coverage (harmonised scenario B) – which assumes the target level for total funds of 1.96% of 
eligible  deposits;  proportions  of  total  funds:  75%  ex-ante  /  25%  ex-post;  coverage:  including  all  non-financial  enterprises,  excluding  financial 
sector enterprises and all levels' authorities; time horizon: to be achieved within 10 years (see Annexes 18-20).  
Given different time horizons  of the above scenarios, the cumulative  impact presented  in this annex is relating to the first  5  years. As to  the 
remaining 5 years, the impact on banks and depositors is the same as presented in Annexes 19 and 20.  

** Normal times: only ex-ante contributions are collected; Crisis situation: both ex-ante and ex-post contributions are collected (up to max limits).  

EN 

139 

   EN 

 
 
(b) Potential impact on consumers: decrease of interest rates on savings and increase of bank 

fees on current account  

Member 
States 

Decrease of interest rates on savings 

Increase of bank fees on current account (€) 

Normal times * 

Crisis situation * 

Normal times * 

Crisis situation * 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

EU 

EU-15 

EU-12 

0.126% 

0.019% 

0.050% 

n.a. 

n.a. 

0.026% 

0.104% 

0.024% 

0.036% 

0.147% 

n.a. 

0.127% 

0.020% 

0.022% 

n.a. 

0.110% 

0.198% 

n.a. 

n.a. 

0.061% 

0.035% 

0.056% 

n.a. 

0.051% 

0.056% 

0.063% 

n.a. 

0.070% 

0.074% 

0.067% 

0.182% 

0.019% 

0.099% 

n.a. 

n.a. 

0.026% 

0.166% 

0.024% 

0.085% 

0.196% 

n.a. 

0.176% 

0.020% 

0.022% 

n.a. 

0.159% 

0.262% 

n.a. 

n.a. 

0.119% 

0.084% 

0.125% 

n.a. 

0.124% 

0.103% 

0.111% 

n.a. 

0.111% 

0.119% 

0.105% 

13.03 

0.30 

2.45 

n.a. 

n.a. 

0.82 

22.90 

1.61 

3.37 

19.07 

n.a. 

25.13 

1.02 

0.30 

n.a. 

2.85 

15.23 

n.a. 

n.a. 

0.68 

2.13 

0.33 

n.a. 

1.17 

4.63 

8.43 

n.a. 

6.60 

9.40 

4.57 

18.73 

0.30 

4.84 

n.a. 

n.a. 

0.82 

36.55 

1.61 

7.94 

25.44 

n.a. 

34.86 

1.02 

0.30 

n.a. 

4.13 

20.19 

n.a. 

n.a. 

1.32 

5.12 

0.73 

n.a. 

2.85 

8.59 

14.72 

n.a. 

10.00 

14.84 

6.49 

* Normal times: only ex-ante contributions are collected; Crisis situation: both ex-ante and ex-post contributions are collected (up to max limits). 

Source: Joint Research Centre. 

EN 

140 

   EN 

 
 
ANNEX  22:  POTENTIAL  CUMULATIVE  IMPACT  OF  VARIOUS  HARMONISED 
SCENARIOS ON BANKS 

(a) Decrease in bank operating profits at EU level 

Harmonised
scenario A

Harmonised
scenario B

Harmonised
scenario C

 Cumulative 
scenario

0%

-1%

-2%

-3%

-4%

-5%

-6%

-7%

-8%

-9%

-10%

-1.0%

-4.1%

-2.5%

-6.2%

-3.3%

-3.9%

Normal times Crisis situation

-7.3%

-7.6%

(b) Variation in bank operating profits in EU-15 and EU-12  

Harmonised
scenario A

Harmonised
scenario B

Harmonised
scenario C

 Cumulative 
scenario

2.7%

0.5%

1.4%

0.9%

0.5%

-1.6%

-2.3%

-2.5%

-4.7%

-8.7%

-6.3%

-10.8%

-7.5%

-8.2%

-12.3%

-12.7%

4%

2%

0%

-2%

-4%

-6%

-8%

-10%

-12%

-14%

EU-15 Normal times

EU-15 Crisis situation

EU-12 Normal times

EU-12 Crisis situation

Note: Harmonised scenarios A, B and C are presented in Annexes 18-20. Cumulative scenario is presented in Annex 21. 

Source: Joint Research Centre. 

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ANNEX 23: RESULTS FOR THE HARMONIZED SCENARIO ON BORROWING BY DGS 

Borrowing limit  
(€ thousands) 

Annual contributions 
to refund the loan  
(€ thousands) 

Percentage change  
in 2008 contributions 

Number of 2008 
contributions to be 
collected annually to 
repay the loan within 
the time limit  
(10 years) 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR * 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

Total EU 

EU average 

1 822 151 

147 167 

629 770 

1 200 416 

34 148 269 

45 710 

1 583 318 

792 882 

6 296 612 

21 626 112 

7 035 634 

357 510 

51 924 

182 215 

14 716 

62 977 

120 041 

3 414 827 

4 571 

158 332 

79 288 

629 661 

2 162 611 

703 563 

35 751 

5 192 

confidential 

confidential 

226 511 

407 992 

41 169 

6 012 768 

2 184 912 

confidential 

confidential 

254 395 

154 240 

148 598 

717 191 

1 070 504 

9 912 508 

99 007 669 

– 

22 651 

40 799 

4 117 

601 277 

218 491 

confidential 

confidential 

25 440 

15 424 

14 860 

71 719 

107 050 

991 251 

9 900 767 

– 

258 % 

-79 % 

-2 % 

n.a. 

n.a. 

-72 % 

10% 

-87 % 

53 % 

2 167 % 

n.a. 

45 % 

-79 % 

-78 % 

n.a. 

947 % 

478 % 

n.a. 

n.a. 

79 % 

143 % 

2 % 

n.a. 

-60 % 

81 % 

82 % 

n.a. 

– 

205 %  

5 

1 

1 

n.a.

n.a.

1 

3 

1 

3 

23 

n.a. 

3 

1 

1 

n.a. 

11 

7 

n.a.

n.a.

3 

3 

3 

n.a. 

1 

3 

3 

n.a. 

– 

4 

* FR figures are very high; this is due to the fact that FR covered deposits are considerably higher than all the other MS’ covered deposits. 

Source: Joint Research Centre. 

EN 

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ANNEX  24:  ESTIMATED  ADMINISTRATIVE  COSTS  IF  THE  DE-MINIMIS  RULE  IS 
APPLIED 

Percentage of deposits potentially affected  
by the 'de-minimis' rule 

1% 

3% 

5% 

7% 

64 

193 

321 

449 

6 355 

6 227 

6 098 

5 970 

128 

385 

642 

899 

12 710 

12 453 

12 196 

11 940 

321 

963 

1 605 

2 247 

31 775 

11 875 

11 234 

10 592 

642 

1 926 

3 210 

4 493 

63 550 

62 266 

60 982 

59 698 

50 000 
deposits 
involved 

100 000 
deposits 
involved 

250 000 
deposits 
involved 

500 000 
deposits 
involved 

Amount saved if the 'de minimis' 
is applied (€ thousands) 

New administrative costs if the 'de 
minimis' is applied (€ thousands) 

Amount saved if the 'de minimis' 
is applied (€ thousands) 

New administrative costs if the 'de 
minimis' is applied (€ thousands) 

Amount saved if the 'de minimis' 
is applied (€ thousands) 

New administrative costs if the 'de 
minimis' is applied (€ thousands) 

Amount saved if the 'de minimis' 
is applied (€ thousands) 

New administrative costs if the 'de 
minimis' is applied (€ thousands) 

Source: Joint Research Centre. 

EN 

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ANNEX 25: POTENTIAL MODELS FOR CALCULATING RISK-BASED CONTRIBUTIONS  

(a) Single Indicator Model (SIM) – the most common risk-based approach 

ci – contribution of the i-th member bank 

c αβ=
x
i
i

i

α – common percentage for all member banks, reflecting the overall conditions in the banking system in a given country 

βi – individual percentage proportional to the risk attitude of the i-th member bank 

xi – contribution base (usually the total amount of eligible or covered deposits)  

(b) Multiple Indicators Model (MIM) – the calculation procedure 

The Composite Score (the variable ρi) is defined as the average of four scores, each covering  a different aspect of DGS 
member banks’ behaviour:  

Each ρi(j) (with j = 1, 2, 3, 4) is a score built to indicate the risk of the DGS members: the higher the score, the higher the 
risk. More specifically, ρi(1) is a capital adequacy score, ρi(2) is an asset quality score, ρi(3) is a profitability score, and ρi(4) 
is  a  liquidity  score.  For  all  classes,  scores  range  from  a  minimum  score  of  1  describing  a  ‘very  low  risk’  situation,  to  a 
maximum score of 5 to indicate a ‘very high risk’ situation (see the below table). Both the scores and the risk categories are 
examples only and may be changed if necessary. Moreover, scores within the same risk category but for different classes 
may differ. 

EN 

144 

   EN 

 
 
 
 
 
Capital adequacy 

Asset quality 

Profitability 

Liquidity 

Very low risk 

Low risk 

Medium risk 

High risk 

Very high risk 

1 

2 

3 

4 

5 

1 

2 

3 

4 

5 

1 

2 

3 

4 

5 

1 

2 

3 

4 

5 

(c) Risk indicators to be applied in the proposed models (SIM and MIM) 

Class 

Name of indicator 

Formula 

Capital adequacy 

Tier 1 capital ratio 

Total capital ratio 

Capital

 I Tier
 weighted

assets

Risk

Capital

Total
 weighted

assets

Risk

Non-performing loan (NPL) ratio 

Non

Performing
Gross

Loans

Loans

Asset quality 

Profitability 

Liquidity 

Loan loss provision 

Cost to income ratio 

Return on average assets (ROA) 

Liquid assets to deposits ratio 

Loan
Net 

Loss
Interest 

Provision
Revenue

Operating

Operating

Expenses
income

Net 
Average

Income
Total

 Assets

Liquid
& 

 Assets
Term

Short 

Customer

Funding

Funding

Loan to deposit ratio 

Customer

Source: Joint Research Centre (Report on risk-based contributions, 2009). 

Loans

Net 
& 

Short 

Term

EN 

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ANNEX 26: FUNDS INVESTED BY EX-ANTE DGS 

Among ex-ante schemes,  in most  cases (nearly 90% of the ex-ante DGS) funds are directly 
managed  by  the  DGS.  Only  in  very  few  cases  funds  are  given  by  ring-fenced  reserves  or 
partially earmarked by members. Regarding the way ex-ante DGS manage their resources, in 
all  but  one  case  funds  are  invested,  as  detailed  in  the  below  Figure.  For  the  great  majority, 
funds are invested in national and/or EU bonds or similar government securities and there are 
significant  cases  where  schemes  resort  to  short-term  deposits.  Whenever  more  risky 
instruments are allowed, strict limitations are set in the statutes/by-laws in order to limit the 
risk in the DGS portfolio, for example a minimum rating for the instrument is required. 

10%

3%

3%

3%

17%

34%

7%

3%

10%

7%

Government securities

Short-term deposits

Government securities, short-term deposits

Government securities, short-term deposits, limited amount of other financial instruments

Government securities, limited amount of other financial instruments

Government securities, high-rated low-risk instruments

High-rated low-risk instruments

Bonds and equities

Not allowed

N.A.

Source: Joint Research Centre (Report on DGS efficiency, 2008). 

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146 

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ANNEX 27: PERMANENT, TEMPORARY AND ADDITIONAL WORKFORCE OF DGS 

Permanent 
workforce 

Temporary 
staff 

Additional workforce 

BE 
BG 
CZ 
DK 

5 
24 
4 
1.5 

DE 

77 

EE 

IE 

GR 
ES 
FR 

IT 

CY 
LV 
LT 
LU 

HU 

MT 
NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

3 

0 

10 
16 
4 

22 

0 
2 
10 
2 

7 

0 
0 

10 

65 

9 

30 

0 

5 

1.5 

3 

168 

0 
n.a. 
1 
0 

3 

0 

0 

0 
0 
0 

0 

0.5 
0 
n.a. 
n.a. 

2 

0 
0 

6 

0 

0 

0 

0 

0 

0 

0 

0 

From central bank, the amount will depend on size of the failure 
NO 
NO 
From the central bank. At the last case in 1999 3 persons. 
DE1: From labour market and their commercial unit. DE2: from the German Auditing 
Association (PV) and from the Banking Association itself. DE3: in a first step use the other 
workforce of the BVR (app. 120) and then ask in a second step the Regional Cooperative 
Auditing Association with their workforce of in total app. 2,000 over all. DE4: Ordering lawyers, 
accountants and additional staff within the association 
In case of need the Fund can outsource administrative and other services to reinforce of its 
staff and activities in the event of paying compensations. 

The DGS is inside the Central Bank (CB). In case of necessity the DGS would source from 
staff in Financial Regulator, CB and from external firm. 
NO 
YES 
YES, no limit 
IT1: NO. IT2: around 20 employees from the Local Federations, which are territorial links to 
the Fund. Their DGS endorsed an agreement with each Local Federation 
CY1: from CB 
From the Financial and Capital Market Commission 
NO 
Subcontracting agreement with an international Accounting firm  
Financial Supervisor - communication and PR (2); Private sector firms - IT (4+) and 
operational services (2+) 
YES, if necessary. 
The DGS is inside the CB. Concerning additional resources, numbers are case-specific 
AT1-2: staff can be rented from member banks. AT3: They have access to additional 
workforce at any time and without restraint when needed. . AT4: all the necessary staff may be 
rented from member banks or ÖGV. AT5: additional workforce can be required to the bank in 
question as well as from their data centre. 
NO 
PT1: depending on the size of the credit institution, the management committee can get 
workforce from financial supervisor (CB).. PT2: NO 
YES, if necessary. They do not foresee a high demand of additional workforce because all the 
information needed is provided by the liquidator of the defaulting institution. 
The number is not defined. It is expected to get the staff from Banking Supervision 
Department or other departments of the Bank of Slovenia  
NO 
They employ the staff of the Federation of the Finnish Financial Services, the staff of the 
Finnish Financial Ombudsman Bureau and lawyers and assistants from a law firm. In an event 
of compensation to depositors, they would partly rely on the staff of the insolvent bank.) 

10 employees from other departments within SNDO and if necessary form external consultant 

YES, external companies 

EU average: 18 

Source: Joint Research Centre. 

EN 

147 

   EN 

 
 
ANNEX 28: POTENTIAL STRUCTURE OF A PAN-EU DGS 

Source: Commission services. 

EN 

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ANNEX 29: MUTUAL BORROWING OF DGS – MAXIMUM AMOUNT TO BE LENT BY 
DGS TO FACE POTENTIAL FAILURES 

UK failure 

ES failure 

PL failure 

Member 
States 

Amount to be 
lent per MS  
(€ thousands) 

As a % of 
eligible 
deposits 

Amount to be 
lent per MS  
(€ thousands) 

As a % of 
eligible 
deposits 

Amount to be 
lent per MS  
(€ thousands) 

As a % of 
eligible 
deposits 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

GR 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

UK 

Total  

192 727 

10 367 

52 400 

140 882 

1 948 293 

5 364 

167 466 

122 278 

609 240 

1 360 661 

385 625 

46 019 

8 541 

7 869 

85 631 

27 630 

5 542 

367 001 

174 121 

70 666 

103 420 

22 186 

12 709 

14 850 

68 287 

144 639 

- 

6 154 412 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

0.08% 

108 678 

5 846 

29 548 

79 442 

1 098 632 

3 025 

94 433 

68 952 

 - 

767 269 

217 452 

25 950 

4 816 

4 437 

48 287 

15 580 

3 125 

206 950 

98 186 

39 848 

58 318 

12 511 

7 166 

8 374 

38 506 

81 561 

- 

571 664 

3 698 556 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

0.05% 

11 649 

627 

3 167 

8 515 

117 761 

324 

10 122 

7 391 

36 824 

82 243 

23 308 

2 782 

516 

476 

5 176 

1 670 

335 

22 183 

10 524 

 - 

6 251 

1 341 

768 

898 

4 127 

8 742 

61 276 

428 997 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

0.005% 

Note:  In  order  to  ensure  comprehensibility,  a  failure  in  one  of  three  Member  States  (ES,  UK,  PL)  has  been  chosen  as  possible 
scenario. 

Source: Joint Research Centre. 

EN 

149 

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ANNEX 30: HISTORICAL DGS INTERVENTIONS 

In the period preceding the financial crisis (from 1994 to 2006) EU DGS handled a number of 
payouts of depositors or other types of interventions, such as interventions to prevent a bank 
failure. In that period a total of 67 interventions occurred, of which 37 were in the EU-15 and 
30  in  the  EU-12.  Among  the  EU-15  MS,  22  cases  took  place  in  the  UK.  However,  these 
mainly  concerned  small  credit  unions.  A  broad  peak  in  the  number  of  annual  interventions 
took place in 2003, with a total of 13 payouts.  

The  range  of  costs  for  payouts  of  depositors  was  quite  broad,  ranging  from  a  minimum  of 
around €6000 (payout in RO in 2003) to a maximu m of € 470 million (payout in CZ in 2003). 
The average cost of historical payouts to depositors in the whole EU was around €57 million, 
with  higher  values  in  the  EU-12  (on  average  €75  million)  than  in  the  EU-15  (€24  million 
when  excluding  UK).  For  other  types  of  interventions  the  range  of  costs  was  again  quite 
broad,  varying  from  €100  000  (sup port  intervention  in  IT  in  2004)  to  a  huge  restructuring 
intervention occurring in ES in 1994, whose costs reached €1.6 billion. On average, the costs 
of an intervention not classified as payout were around €90 million.  

If  we  express  the  figures  on  payouts  as  a  percentage  of  eligible  deposits,  the  minimum  and 
maximum costs of those interventions are respectively 0.00005% (payout in RO in 2003) and 
3.24% (payout in  CZ  in  2001)  of  the total amount of eligible deposits of the  corresponding 
systems,  with  an  average  percentage  of  0.27%  of  eligible  deposits.  These  figures  can  be 
compared  with  more  recent  data  on  failures  occurred  in  2008:  the  minimum  and  maximum 
costs are respectively 0.05% and 1.96% of 2007 eligible deposits, with an average figure of 
0.6%.  

If we compare these amounts with the MS coverage ratios (i.e. the ratio between the size of 
the DGS fund and the amount of deposits eligible for protection by the same DGS), the EU 
average  2007  coverage  ratio  is  around  0.73%  (obtained  excluding  Slovakia’s  negative 
coverage ratio and the nil coverage ratios of ex-post financed DGS) and it is in line with the 
2005 one (about 0.70%).  

Source: Joint Research Centre.  

EN 

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   EN