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REPORT (COM(2023)0228 – C90133/2023 – 2023/0115(COD))

On the proposal for a directive of the European Parliament and of the Council amending Directive 2014/49/EU as regards the scope of deposit protection, use of deposit guarantee schemes funds, cross-border cooperation, and transparency

A-9-2024-0154

Committee on Economic and Monetary Affairs · Rapporteur: Kira Marie PeterHansen

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Parliament's amended version of the proposed directive amends Directive 2014/49/EU on deposit guarantee schemes (DGSs). It harmonises DGS functions, expands deposit coverage, and sets rules for using DGS funds. It protects temporary high balances from real estate transactions and certain events up to EUR 500,000 to EUR 2,500,000 for 6 months, and covers client funds deposits under conditions. It requires DGSs to repay within 7 working days, with longer periods for complex cases, and mandates credit transfers for repayments over EUR 10,000. It sets rules for preventive and alternative measures, including a least cost test, and requires DGSs to have alternative funding arrangements not from public funds. It extends DGS coverage to branches of third-country credit institutions and excludes deposits in third-country branches of EU institutions, with some exceptions. It enhances transparency by requiring detailed depositor information sheets and reporting to the European Banking Authority (EBA).

Committee position. The Committee on Economic and Monetary Affairs proposes to amend the Commission proposal, adopting a position that expands deposit coverage, harmonises DGS interventions, and strengthens transparency and reporting.

Key points

  1. DGSs must protect deposits from real estate transactions and certain events up to EUR 500,000 minimum and EUR 2,500,000 maximum for 6 months, in addition to the standard EUR 100,000 coverage.
  2. Client funds deposits are covered if placed for eligible clients, segregated, and clients are identified before the determination of unavailability.
  3. DGSs must repay within 7 working days, but may extend to 20 working days for complex cases; they must provide access to cost-of-living funds within 5 working days if delayed.
  4. Repayments over EUR 10,000 must be made via credit transfer.
  5. DGSs may use funds for preventive measures only if the institution is not failing, the cost is less than payout, and conditions are met; they must have monitoring systems.
  6. Preventive measures require a note with commitments, an exit strategy, and restrictions on dividends and variable remuneration.
  7. A least cost test must compare the cost of the measure to the cost of repaying depositors, with specific calculation methodologies.
  8. DGSs must have alternative funding arrangements, but these cannot be financed from public funds.
  9. Branches of third-country credit institutions must join a DGS in the member state where they operate; deposits in third-country branches of EU institutions are not covered unless approved.
  10. Credit institutions must provide depositors with an information sheet in a data-extractable format, and inform them of changes in coverage.
  11. DGSs must report annually to the EBA on covered deposits and available financial means, and notify of certain events.

Who is affected

  • Deposit guarantee schemes (DGSs) and their member credit institutions, including branches of third-country institutions.
  • Depositors, including those with temporary high balances and clients of financial institutions.
  • Financial institutions such as e-money institutions, payment institutions, and investment firms that hold client funds.
  • Institutional Protection Schemes (IPSs) recognised as DGSs, with a three-year transitional period.
  • Competent authorities, designated authorities, and resolution authorities involved in DGS oversight.

Figures and deadlines

  • EUR 500,000 minimum and EUR 2,500,000 maximum for temporary high balances, for 6 months.
  • EUR 100,000 standard coverage level.
  • 7 working days for repayment, extendable to 20 working days.
  • EUR 10,000 threshold for credit transfer repayments.
  • 0.8% of covered deposits as target level for DGS funds.
  • 30% maximum share of payment commitments in available financial means.
  • 24 months for transposition, 36 months for preventive measures provisions.

Legal basis: Article 53(1) of the Treaty on the Functioning of the European Union