The European Banking Authority (EBA) today published its final revised Guidelines on deposit guarantee schemes (DGS) contributions. The revised Guidelines further strengthen the link between the riskiness of a credit institution and how much it needs to contribute to the DGS funds that will be used to reimburse depositors in case their bank fails.

The Guidelines harmonise the methodology for the DGS to collect contributions from credit institutions in proportion to their riskiness. Following an in-depth review of the application of the existing Guidelines over the period from 2015 to 2021, the EBA decided to revise the Guidelines, with a view to enhance the link between the riskiness of a credit institutions and its contributions to the DGS fund. The most substantial changes to the existing Guidelines include:

• setting minimum thresholds for the majority of core risk indicators, in line with the applicable minimum regulatory requirements, and adjust their minimum weights to better reflect the indicators’ performance in measuring the risk to the DGSs;
• introducing a technical mathematical improvement to the formula for determining the risk adjustment factor of each member institution that ensures a constant relationship between the riskiness of institutions and their DGS contributions;
• specifying how to account for deposits where the DGS coverage is subject to uncertainty. This is the case, for example, where a deposit is subject to an inheritance settlement, and also when client funds are placed with a bank by another financial institution. Such specification will ensure closer alignment between the amount of covered deposits of a credit institution and its contributions;
• introducing the possibility for DGSs to use a stock-based approach to raising contributions which incentivises banks to reduce their riskiness even after the DGS fund has reached its target level of contributions;
• clarifying how to raise contributions following the use of DGS funds.

Finally, the EBA streamlined and simplified the wording of the Guidelines.

Legal basis and background

Article 13(3) of Directive 2014/49/EU on deposit guarantee schemes (DGSD) mandates the EBA to issue Guidelines to specify methods for calculating the contributions to DGSs. To that end, the EBA issued Guidelines EBA/GL/2015/10 on methods for calculating contributions to deposit guarantee schemes on 22 September 2015, which had to be implemented by 31 May 2016. Furthermore, Article 13(3) of the DGSD further requires the EBA to conduct a review of said Guidelines every five years. The first review was conducted in 2017, with the findings published in the form of an EBA Report, while the second review in 2022 resulted in a revision of the Guidelines as published today.