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Home  > Deposit Guarantee Scheme    

Deposit Guarantee Scheme

Fundamental objectives of the deposit guarantee scheme

The fundamental objectives of the deposit guarantee scheme are to protect investors and to maintain their confidence in the banking system.

A sound and effective deposit guarantee scheme is one of the important conditions for the maintenance of financial stability in a country.

Legal arrangements

The area of deposit guarantee schemes has been harmonised at the European Union level since 1994, when Directive 94/19/EC of the European Parliament and of the Council on deposit-guarantee schemes was adopted.
The directive was amended in March 2009 in response to the financing crisis (by Directive 2009/14/EC). The amount up to which deposits at EU Member State banks are guaranteed was standardised, first up to an amount of at least EUR 50,000 and then up to an amount of EUR 100,000.
The new Directive 2014/49/EU of the European Parliament and of the Council on deposit guarantee schemes has been in force since July 2014. This maintains the deposit guarantee up to EUR 100,000, but compared with the previous legislation it gradually shortens the deadlines for the repayment of guaranteed deposits from 20 days to seven days, and further increases the requirements to inform depositors with regard to the guarantee before the conclusion of a contract in connection with a deposit.

The new directive additionally sets out a requirement for Member States to establish a separate guarantee fund, which must have at its disposal sufficient assets to provide for the smooth repayment of guaranteed deposits.
Directive 2014/49/EU was transposed into the Slovenian legal system by the Deposit Guarantee Scheme Act (Official Gazette of the Republic of Slovenia, No. 27/16; hereinafter: the ZSJV), which entered into force on 12 April 2016. At the same time the new law abrogated provisions of the Banking Act (the ZBan-1) regarding the deposit guarantee.
 

Deposit guarantee scheme in Slovenia

The deposit guarantee scheme in Slovenia is operated by the Bank of Slovenia. This means that the Bank of Slovenia:
•  establishes and manages the deposit guarantee fund,
•  collects the banks’ regular and ad hoc contributions to the deposit guarantee fund, and enters into agreements on other forms of financing the fund,
• puts in place, vets and updates the procedures and arrangements for the repayment of coverage of guaranteed deposits (including stress testing),
• conducts activities for using the deposit guarantee fund to finance measures of bank recovery or compulsory dissolution, i.e. measures that ensure that depositors retain access to guaranteed deposits,
• supervises members of the deposit guarantee scheme (all banks and savings banks established in Slovenia, and branches of third-country banks included in the system in Slovenia) with regard to their fulfilment of the obligations of membership.

In connection with the exercise of the powers and tasks related to the deposit guarantee scheme, the Bank of Slovenia works with the deposit guarantee authorities of other EU Member States, the resolution authorities and other relevant authorities of EU Member States.
For more on the functioning of the current deposit guarantee scheme, see FAQs
 

Deposit guarantee fund

One of the key innovations brought by the ZSJV is the establishment of a deposit guarantee fund, to which funds will be contributed by banks, and from which guaranteed deposits will be repaid.
The amount of funds, i.e. the fund’s target level, will be stipulated as a percentage of the total amount of all guaranteed deposits in Slovenia, and will be determined by the Bank of Slovenia.
Total guaranteed deposits amounted to EUR 16.2 billion as at 31 December 2015.
The fund’s target level is at least 0.8% of total guaranteed deposits. Funds will be paid into the fund by banks in annual contributions until the fund’s target level, as determined by the Bank of Slovenia, is reached, whereby funds equivalent to at least 0.8% of total guaranteed deposits as at 3 July 2024 must be paid in by banks by the aforementioned date.
To date the deposit guarantee scheme in Slovenia has been financed by ex-post contributions by the banks, which in the event of the collapse of an individual bank would be called on by the Bank of Slovenia to provide funds for the repayment of the guaranteed deposits at the bank in question, the government guaranteeing the repayment in the last resort, should the banks be unable to provide the funds in timely fashion.

Under the new arrangements ex-post contributions are retained in the event of the deposit guarantee fund not having sufficient funds at its disposal to repay guaranteed deposits; in such an event the banks would have to provide additional funds via extraordinary contributions, and in extremis the law provides for the possibility of a short-term loan to be provided to the fund by the government, and a liquidity loan to be provided by the Bank of Slovenia subject to the requisite collateral.
Another innovation brought by the law is the possibility of using the fund’s assets for the purposes of bank resolution and dissolution, when depositors’ access to guaranteed deposits is being maintained in proceedings for the resolution or dissolution of a bank, which in particular includes cases when the guaranteed deposits are being transferred to a new bank and the ability to transact with the guaranteed deposit is being ensured for depositors.

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