Opinion of the European Central Bank of 21 January 2016 on the deposit guarantee scheme (CON/2016/3)
Date: 2016-01-21
Institutions: European Central Bank
Subjects: Greece, bank deposit, credit guarantee, credit institution, financial legislation, financial stability, investment protection

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 21 January 2016 

on the deposit guarantee scheme  

(CON/2016/3) 

Introduction and legal basis 

On 8 January 2016 the European Central Bank (ECB) received a request from the Minister of Finance of 

the  Hellenic  Republic  for  an  opinion  on  a  draft  law  on  the  Deposit  and  Investment  Guarantee  Scheme 

(hereinafter  the  ‘draft  law’),  which  transposes  into  Greek  law  Directive  2014/49/EU  of  the  European 
Parliament and of the Council1. 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  third  and  sixth  indents  of  Article  2(1)  of  Council  Decision 
98/415/EC2,  as  it  relates  to  the  Bank  of  Greece  (BoG)  and  to  rules  applicable  to  financial  institutions 

insofar  as  they  materially  influence  the  stability  of  financial  institutions  and  markets.  In  accordance  with 

the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing 

Council has adopted this opinion. 

1.  

Purpose and overview of the draft law  

1.1  The main purpose of the draft law is to recast and update the national legal framework governing 

the  establishment  and  operation  of  the  Hellenic  Deposit  and  Investment  Guarantee  Fund 

(hereinafter ‘HDIGF’), by bringing it in line with Directive 2014/49/EU. Once the draft law enters into 
force, the current national legal framework on the establishment and operation of the  HDIGF3 will 

be automatically repealed, and several of the core provisions will be incorporated into the draft law. 

1.2  Under the draft law, the HDIGF is to continue to operate as a private law legal entity, owned by the 
participating credit institutions and supervised by the Ministry of Finance of the Hellenic Republic 4 
while  its  tasks  will  remain  the  same5.  Additionally,  the  HDIGF  is  to  continue  to  comprise  three 

separate schemes: (a) a deposit cover scheme, for the protection of depositors; (b) an investment 

cover  scheme,  for  the  protection  of  investors;  and  (c)  a  resolution  scheme,  for  the  financing  of 

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Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes 
(OJ L 173, 12.6.2014, p. 149). 
Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
The  reference  is  to  Law  3746/2009  (Official  Government  Gazette,  Part  A,  27),  as  amended,  inter  alia  by  laws 
4021/2011  (Official  Government  Gazette,  Part  A,  218)  and  Law  4051/2012  (Official  Government  Gazette,  Part  A, 
40). 
See Article 4(1) of the draft law. 
See  Article  4(2)  of  the  draft  law.  This  requirement:  (a)  provides  compensation  to  depositors  in  the  event  that  their 
bank is unable to repay their deposits; (b) provides compensation to investors/customers of credit institutions in the 
event that their bank is unable to fulfil its obligations to them, and (c) finances bank resolution measures.  

 
 
 
 
                                                 
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resolution measures, the assets of which are distinct6. With regard to its governance structure, the 

HDIGF  is  to  continue  being  governed  by  a  seven-member  Board,  appointed  by  the  Minister  of 

Finance  of  the  Hellenic  Republic,  comprising  a  Chairperson,  to  be  selected  from  amongst  the 

BoG’s  Deputy  Governors,  and  six  other  members,  nominated  by  the  Ministry  of  Finance  (one 
member), the BoG (three members), and the Hellenic Bank Association (two members)7. 

1.3 

It  follows  from  Article  25  of  the  draft  law  that  the  assets  of  the  HDGIF’s  deposit  cover  scheme 

comprise  (i)  the  regular,  extraordinary  and  initial  contributions  payable  by  participating  credit 

institutions; (ii) the HDGIF’s registered capital; and (iii) revenues from other sources, such as the 

management  of  its  cash  reserves,  the  recovery  or  liquidation  of  its  claims  and  donations.  It  also 

follows from Article 29 of the draft law that, should the funds available to the HDGIF’s deposit cover 

scheme  not  suffice  to  cover  depositor  compensation  claims,  the  HDIGF  Board  may  decide  (a)  to 

borrow the necessary funds, whether from the participating credit institutions or from other sources, 

with  or  without  a  State  guarantee  and  subject  to  terms  and  conditions  stipulated  by  way  of  a 

decision of the HDGIF Board, or (b) otherwise borrow the necessary funds, so as to put the HDGIF 

in a position where it can ensure the short-term financing of its obligations. 

1.4  Following  the  example  of  the  Directive  2014/49/EU,  the  adoption  of  the  draft  law  will  mark  a 

departure from the current situation as regards deposit guarantee schemes, particularly in relation 

to: (a) the temporary protection of certain deposits in excess of the EUR 100 000 harmonised level 
of coverage provided for in Directive 2014/49/EU 8; (b) the reduction of the period necessary for the 
repayment  of  deposits  from  twenty  to  seven  working  days 9;  (c)  the  recognition  of  an  actionable 
right  to  compensation,  to  be  exercised  directly  by  depositors  against  the  HDIGF10;  and  (d)  the 

introduction  of  a  legal  duty  for  credit  institutions  to  provide  depositors  (and  investors)  with  all 

relevant information with regard to the protection extended to their deposits and/or investments by 
the HDIGF11. 

2. 

General observations 

2.1  The ECB welcomes the draft law, which codifies the legal framework governing the establishment 

and operation of the HDIGF.  

2.2  At the same time, the ECB stresses that it does not opine on whether or not the draft law effectively 

discharges the obligations of the Hellenic Republic to implement Directive 2014/49/EU. Rather, the 

ECB  focuses  on  those  provisions  that  may  affect  the  BoG’s  role  as  a  member  of  the  European 

System of Central Banks (ESCB) as well as on the likely implications of specific provisions of the 

draft  law  on  the  ECB’s  supervision  of  significant  institutions  and  the  preservation  of  financial 

stability in the Hellenic Republic. 

See Article 4(3) of the draft law. 

See Article 48(1) of the draft law. On the BoG’s role in the governance of the HDGIF, see paragraph 4.2 of Opinion 
CON/2008/51. All ECB opinions are available on the ECB’s website at www.ecb.europa.eu.  
See Article 6(2) of Directive 2014/49/EU and Article 9(2) of the draft law. 
See Article 8(1) of Directive 2014/49/EU and Article 11 of the draft law. 
See Article 9(1) of Directive 2014/49/EU and Article 21 of the draft law. 
See Article 16 of Directive 2014/49/EU and Article 46 of the draft law. 

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3. 

Specific observations 

3.1  No provision of liquidity from the BoG to the HDIGF 

The ECB understands that there is nothing in the draft law that would expressly permit the BoG to 

provide liquidity to the HDIGF. Articles 25 to 29 of the draft law, which set out the sources for the 

financing of the tasks of the deposit cover scheme of the HDIGF, do not explicitly refer to the BoG’s 

involvement  in  the  provision  of  liquidity  to  the  HDGIF.  As  the  ECB  has  repeatedly  stated  in  the 

past,  any  national  legislation  that  provides  for  a  deposit  guarantee  scheme  to  be  financed  by  an 

ESCB  national  central  bank  (NCB)  would  only  be  compatible  with  the  monetary  financing 

prohibition  under  Article  123  of  the  Treaty  where  certain  restrictive  conditions  are  met,  i.e.  such 

financing  is  short-term,  it  addresses  urgent  situations,  systemic  stability  issues  are  at  stake  and 
decisions are made at the NCB’s discretion 12. The ECB expects these conditions to be fulfilled with 

regard  to  any  potential  involvement  by  the  BoG  in  the  short-term  financing  arrangements  of  the 

HDGIF, by way of the provision of loans by the BoG, as per Articles 29 (1) or (2) of the draft law. 

3.2  Role of the BoG in the operation of the HDIGF 

Under Article 27(4) of the draft law, which corresponds to Article 13(2) of Directive 2014/49/EU, the 

Board  makes  a  recommendation  on  the  type  of  methodology  to  use  in  calculating  regular 

contributions to the HDIGF, after which a BoG decision will be taken, then notified to the Ministry of 

Finance  of  the  Hellenic  Republic.  The  ECB  is  satisfied  that  the  BoG’s  responsibilities  under  the 

aforementioned  provision  of  the  draft  law  do  not  materially  differ  from  the  BoG’s  responsibilities 

under  Articles  4(4)(a)  and  (b)(ii)  of  Law  3746/2009  on  the  establishment  and  operation  of  the 
current  HDIGF 13.  It  follows  that  the  draft  law  does  not,  in  the  ECB’s  view,  confer  genuinely  new 

tasks on BoG in connection with the operation of the HDIGF. 

3.3   Temporary protection of deposits in excess of the Union-wide harmonised level of coverage  

As  noted  in  paragraph  1.4  of  this  opinion,  Article  9(2)  of  the  draft  law  allows  certain  deposits  in 

excess  of  EUR  100  000  to  be  protected  temporarily.  In  particular,  the  aforementioned  provision 

states  that  certain  deposits  falling  within  the  broad  categories  identified  in  Article  6(2)  of 

Directive 2014/49/EU are to be protected up to an additional margin of EUR 300 000 for up to six 

months  after  the  relevant  amount  has  been  credited  to  the  relevant  account,  subject  to  the 

submission of an ex post application to the HDIGF by the account holder(s). The ECB understands 

that  Article  9(2)  of  the  draft  law  is  the  exercise  of  a  national  discretion  under  Article  6  of  the 

Directive  2014/49/EU.  The  ECB  also  notes  that,  according  to  the  accompanying  Explanatory 

Memorandum,  the  exercise  of  this  discretion  is  not  backed  by  additional  contributions  from  the 

participating  credit  institutions.  The  ECB  stresses  the  importance  of  ensuring  that  the  financing 

capacity  of  the  HDIGF  is,  at  all  times,  proportionate  to  its  liabilities,  and  expects  that  the 

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See the ECB’s 2014 Convergence Report, p. 30, available on  the ECB’s website at www.ecb.europa.eu. See also 
paragraph  3.2  of  Opinion  CON/2015/40;  paragraph  4.1  of  Opinion  CON/2015/17;  paragraph  2.2  of  Opinion 
CON/2014/86; and paragraph 3.1.3 of Opinion CON/2011/76. 
Under  the  currently  applicable  legal  regime,  the  BoG  is  responsible  for  allocating  credit  institutions  to  one  of  the 
several  statutory  bands,  on  the  basis  of  which  annual  contributions  are  calculated,  taking  into  account  all  relevant 
prudential supervisory criteria.  

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determination  of  the  aforementioned  additional  margin  of  EUR  300  000  is  the  product  of  a  prior 

impact assessment, to ensure that the HDIGF will be in a position to meet depositor and/or investor 

claims in the event of the insolvency of a credit institution holding protected deposits in excess of 

the Union-wide harmonised level of coverage. 

3.4  Suspension of extraordinary contributions jeopardising the liquidity or solvency of a credit institution 

In  order  to  safeguard  the  soundness  of  the  capital  base  of  credit  institutions,  the  ECB  welcomes 

Article  28(4)  of  the  draft  law,  where  it  is  stated  that  the  BoG  may  suspend  extraordinary 

contributions  to  the  deposit  cover  scheme  if  these  contributions  would  jeopardise  the  liquidity  or 

solvency  of  a  credit  institution.  Where  significant  institutions  are  concerned,  this  competence  is, 

however, to be exercised by the ECB.  

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

Done at Frankfurt am Main, 21 January 2016. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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