COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to Article 294(6) of the Treaty on the Functioning of the European Union concerning the Council’s position at first reading with a view to adopting a Directive of the European Parliament and of the Council on Deposit Guarantee Schemes [recast] 2010/0207 (COD)
Date: 2014-03-04
Institutions: European Commission
Subjects: bank deposit, credit guarantee, credit institution, management audit

EUROPEAN 
COMMISSION 

Brussels, 4.3.2014  
COM(2014) 140 final 

2010/0207 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to Article 294(6) of the Treaty on the Functioning of the European Union 

concerning the 

Council’s position at first reading with a view to adopting a Directive of the European 
Parliament and of the Council on Deposit Guarantee Schemes [recast] 
2010/0207 (COD) 

(Text with EEA relevance) 

EN 

   EN 

 
 
 
 
  
 
 
 
2010/0207 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to Article 294(6) of the Treaty on the Functioning of the European Union 

concerning the 

Council’s position at first reading with a view to adopting a Directive of the European 
Parliament and of the Council on Deposit Guarantee Schemes [recast] 
2010/0207 (COD) 

(Text with EEA relevance) 

1. 

BACKGROUND 

Date on which the proposal was sent to the European Parliament 
and to the Council 
(document COM(2010)368 final – 2010/0207 (COD): 

12/07/2010. 

Date of the opinion of the European Central Bank 

17/02/2011. 

Date of the opinion of the European Economic and Social 
Committee: 

---- 

Date of the position of the European Parliament, first reading: 

16/02/2012. 

Date on which the amended proposal was sent: 

Not applicable. 

Date of endorsement of the political agreement in COREPER: 

20 December 2013. 

Date of adoption of the Council’s position: 

3 March 2014. 

2. 

OBJECTIVE OF THE COMMISSION’S PROPOSAL 

Deposit  Guarantee  Schemes  (DGS)  currently  exist  in  all  Member  States  under  Directive 
94/19/EC (DGS Directive). DGSs must compensate depositors up to EUR 100 000 for bank 
deposits  which  are  unavailable.  DGSs  are  an  important  instrument  to  preserve  trust  in  the 
banking system and avoid bank runs. 

In  July  2010,  the  Commission  adopted  its  legislative  proposal  on  the  recast  of  the  DGS 
Directive. The proposal aimed to: 

– 

– 

improve  depositors'  access  to  the  guarantee,  with  reduced  repayment  deadlines, 
single  contact  points  for  cross-border  failures,  and  improved  individual  depositor 
information; 

introduce  financing  rules  for  DGSs,  in  particular  requiring  mandatory  ex  ante 
financing from the banking sector; 

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2 

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– 

– 

3. 

further harmonise the scope of coverage; 

specify the role of DGSs in the crisis management framework. 

COMMENTS ON THE POSITION OF THE COUNCIL 

3.1. 

General Comments 

Political  agreement  was  reached  between  co-legislators  at  the  trilogue  meeting  of  17 
December  2013.  COREPER  endorsed  the  political  agreement  on  20  December  2013.  The 
ECON Committee sent a non-objection letter to COREPER on 10 January 2014. 

3.2. 

(1) 

(2) 

(3) 

Follow up of amendments introduced by the European Parliament 

Scope of coverage: The European Parliament aimed at maintaining higher coverage 
of  deposits  made  before  31  December  2010  and  which  were  held  by  depositors 
residing in a Member State which, before 1 January 2008, had a statutory DGS with 
a  coverage  level  up  to  EUR  300  000.  The  political  agreement  clarifies  this 
amendment. As a result of the compromise, Member States with a coverage level up 
to  EUR  300  000  would  apply  this  higher  coverage  until  31  December  2018.  The 
Commission considers that this clarification is beneficial and respects the essence of 
the European Parliament’s amendment. 

Repayment deadlines: The European Parliament suggested that Member States could 
maintain  the  current  repayment  period  of  20  working  days  until  the  end  of  2016 
when it would be shortened to five working days. During the transitional period, an 
‘emergency  repayment’  of  up  to  EUR  5  000  would  be  made  available  on  request. 
According to the political agreement, repayment deadlines would be reduced in three 
phases: 

– 

– 

– 

fifteen working days as from 1 January 2019; 

ten working days as from 1 January 2021; and eventually 

seven working days as from 1 January 2024. 

Financing:  The  European  Parliament  had  requested  a  target  level  of  DGS  funds  of 
1.5%  of  covered  deposits  to  be  reached  over  15  years  (instead  of  1.5%  of  eligible 
deposits1  within  10  years  proposed  by  the  Commission).  The  political  agreement 
envisages a target level of 0.8% of covered deposits to be reached within 10 years. 
The share of payment commitments that may be counted towards the target level is 
increased  from  10%  as  suggested  by  Parliament,  to  30%.  In  case  of  insufficient  ex 
ante funds, DGSs would collect ex post contributions from the banking sector, and, 
as  a  last  resort,  get  access  to  alternative  funding  arrangements  such  as  loans  from 
public  or  private  parties.  The  political  agreement  endorses  the  originally  proposed 
principle  that  bank  contributions  must  be  risk-weighted.  However  the  originally 
proposed  annex  on  the  calculation  of  risk-weights  would  be  substituted  with 
guidelines from the European Banking Authority (EBA). 

(4) 

Use  of  funds:  The  political  agreement  maintains  the  principle,  as  proposed  by  the 
Commission  and  endorsed  by  the  Parliament,  that  DGS  funds  are  to  be  primarily 
used  to  repay  depositors  but  may  also  be  used  for  failure  prevention  or  resolution 
measures under certain conditions. 

1 

Covered deposits are eligible deposits below the coverage level of EUR 100 000. 

EN 

3 

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With regard to failure prevention, qualitative conditions similar to those introduced 
by the Parliament are envisaged, in particular ensuring that: 

– 

– 

– 

the scheme is equipped with appropriate systems and procedures for selecting 
and implementing alternative measures and monitoring affiliated risks; 

the  measures are  linked to  conditions  imposed on the credit institution that is 
being  supported,  including  a  minimum  of  more  stringent  risk  monitoring  and 
greater verification rights for the DGS; and 

the measures put in place by the DGS are linked to commitments made by the 
credit  institution  being  supported,  with  a  view  to  securing  access  to  covered 
deposits. 

However,  the  political  agreement  introduces  further  safeguards  to  prevent  moral 
hazard and to secure sufficient funding for the scheme, such as a requirement that no 
resolution measure has been taken with regard to the credit institution. 

New measures introduced by the political agreement 

Financing:  the  political  agreement  introduces  two  main  elements  which  did  not 
feature in the Parliament’s legislative resolution in the first reading. 

First, the compromise aligns the DGS Directive with the political agreement on the 
proposal  for  a  Bank  Resolution  and  Recovery  Directive2  by  introducing  the 
possibility  to  raise  contributions  to  existing  DGS  for  the  purpose  of  covering  the 
costs  related  to  systemic  risk,  failure  and  resolution.  These  funds  will  allow  bank 
levies  to  count  towards  the  target  level,  provided  that  they  are  not  already  counted 
towards resolution funds, and provided that the DGS is effectively entitled to these 
sums. 

Moreover,  the  political  agreement  foresees  that  the  Commission  could  authorise  a 
Member  States  to  have  a  target  level  between  0.5  and  0.8%  of  covered  deposits 
under the following conditions: 

(a)  The  reduction  is  based  on  the  assumption  that  it  is  unlikely  that  a  significant 
share  of  available  means  will  be  used  for  measures  other  than  to  preserve 
access  of  depositors  to  deposits  in  resolution  or  in  national  insolvency 
proceedings; and 

(b)  The  banking  sector  in  that  Member  State  is  highly  concentrated  with  a  large 
quantity  of  assets  held  by  a  small  number  of  credit  institutions  or  banking 
groups.  These  are  subject  to  supervision  on  a  consolidated  basis  and,  given 
their size, are likely to be subject to resolution proceedings in case of failure. 

Use  of  funds:  The  political  agreement  also  foresees  a  national  option  to  use  DGS 
funds in the context of national insolvency proceedings provided that the costs borne 
by the DGS do not exceed the net amount of compensating covered depositors at the 
credit institution concerned. 

Proposal for a Directive of the European Parliament and of the Council establishing a framework for the 
recovery  and  resolution  of  credit  institutions  and  investment  firms  and  amending  Council  Directives 
77/91/EEC and 82/891/EC, Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC 
and 2011/35/EC and Regulation (EU) No 1093/2010, COM(2012) 280 final, 6.6.2012. 

3.3. 

(1) 

(2) 

2 

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4. 

CONCLUSION 

Even  though  the  political  agreement  diverges  from  the  Commission  proposal  to  a 
considerable extent, it achieves the objectives behind the original Commission proposal. The 
Commission therefore supports a Council position that reflects the political agreement of 17 
December  2013  so  that  the  co-legislators  can  adopt  the  final  text  in  early  second  reading 
before the end of the legislature. 

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5 

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