28 April 2021
- The proposed Guidelines aim to improve consumer confidence in financial stability throughout the EU by establishing a more harmonised approach to funding DGSs and increase transparency and comparability of the financial position of DGSs.
- The EBA proposes to delineate clearly that only funds contributed by credit institution to the ex-ante funds of DGSs will count towards reaching the target level of said funds.
- The EBA proposes to expand the current reporting requirements from DGSs to the EBA and to publish more information about DGS funding on the EBA website.
The European Banking Authority (EBA) launched today a public consultation on its draft Guidelines on the delineation and reporting of available financial means (AFM) of Deposit Guarantee Schemes (DGSs). The purpose of the Guidelines is to ensure that only funds that credit institutions contributed, or that stem indirectly from such contributions such as recoveries or investment income, will count towards reaching the target level of the DGS fund. Conversely, funds that stem directly or indirectly from borrowed resources should not count towards the target level. This clarification aims at preventing the situation where a DGS could meet the target level by taking out a loan.
By developing these Guidelines, the EBA follows up on its recommendations made in the EBA Opinion on deposit guarantee scheme funding and uses of deposit guarantee scheme funds (“the Opinion”) published on 23 January 2020. In the Opinion, the EBA identified differences across Member States in relation to the interpretation of the concept of AFM. The Opinion recommended clarifying Directive 2014/49/EU (DGSD) that borrowed funds or funds stemming from borrowed funds should not count towards reaching the minimum target level for DGS funds.
Given that a review of the DGSD is still several years away from being proposed, negotiated and finalised, the proposed Guidelines provide such a clarification ahead of any such changes, using the existing DGSD as a legal basis. More precisely, the draft Guidelines clarify that AFM are comprised of two subsets:
- Qualified AFM (QAFM) – funds stemming directly or indirectly from contributions of DGS member institutions, which qualify towards reaching the target level of the DGS fund;
- Other AFM – funds, which are not QAFM, including borrowed funds that stem from liabilities such as loans, and hence do not count towards reaching the target level of the DGS fund.
In terms of reporting, the proposed Guidelines will extend the reporting requirements from DGSs to the EBA in order to reflect the clarified concept of AFM, QAFM and other AFM proposed earlier in the Guidelines. They also require the reporting on outstanding liabilities of DGSs, unclaimed repayments, and high-level information on alternative funding arrangements that are in place. That information would be published on the EBA website annually and should provide more transparency and comparability of the financial position of DGSs across the EU.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 28 July 2021. All received contributions will be published at the end of the consultation, unless requested otherwise.
A public hearing will take place via conference call on Monday 28 June 2021 from 10:00 to 12:00 CEST.
These draft own-initiative Guidelines have been developed according to Articles 16(1) and 26(2) of Regulation (EU) No 1093/2010 (EBA Regulation). The Guidelines aim at harmonizing the funding of DGSs according to Article 10(1) of Directive 2014/49/EU (DGSD) and thereby strive to strengthen the European system of national DGSs in accordance with Article 26(1) of the EBA Regulation.