Deposit Guarantee Fund
The Deposit Guarantee Fund covers customer funds deposited in an account with a deposit bank. Funds deposited in connection with long-term saving are also covered. The deposit guarantee does not cover for example funds in accounts used for investment services, as these are compensated by the Investors’ Guarantee Fund.
Level of compensation
The maximum compensation provided from the Deposit Guarantee Fund is EUR 100,000 for one customer in one bank. If the customer’s deposits exceed EUR 100,000, the excess is not covered by the deposit guarantee.
For banks belonging to the amalgamation of cooperative banks, the maximum compensation is EUR 100,000 even if a customer has deposits in more than one bank in the amalgamation.
In calculating the amount of compensation, all deposits of a customer placed with the same bank are aggregated.
Customer’s possible liabilities in the same bank have no impact on the level of compensation.
Exception: The depositor’s claim is compensated in full if the depositor has received the funds from the sale of a residence in his own use and if the funds are intended for the acquisition of a new residence for the depositor’s own use. This exception is only applicable to depositor’s funds that are deposited in an account no more than six months prior to the date at which the deposit bank failed to pay the depositor’s due and undisputed claim deposited in the account. Unless proven otherwise, the deposit bank is deemed to have failed to fulfil its payment obligation at the date at which the depositor has made a notification to FIN-FSA or at an earlier date at which FIN-FSA has received similar notification from another depositor and on the basis of which FIN-FSA has made a decision on the Deposit Guarantee Fund’s payment liability.
Who is entitled to compensation?
The deposit guarantee applies to private persons and companies irrespective of the company’s form and size. Associations are also protected. Only the state, banks and other credit institutions do not fall within the scope of the deposit guarantee.
Owners of a joint account are each entitled to the full cover of EUR 100,000. The guarantee does not apply to persons with only the right to use a deposit account.
Deposit banks in the guarantee scheme
All Finnish deposit banks – commercial, cooperative and savings banks – are obliged to join the Deposit Guarantee Fund.
Finnish branches of foreign banks are subject to the bank’s home state scheme and do not fall within the scope of the Finnish deposit guarantee scheme.
When is the compensation paid?
When a bank has run into permanent payment difficulties, FIN-FSA must decide within 5 working days whether the Deposit Guarantee Fund is liable to compensate the bank’s depositors. The deposits must be paid within 20 days of such decision. FIN-FSA may grant, on special grounds, an extension of no more than 10 working days for the payment of the deposits.
Deposit guarantee and EEA bank branches
All EU countries and countries belonging to the European Economic Area (EEA) are in process of harmonising the level of cover to EUR 100,000. However, there can be differences in the scope of the cover.
Deposit guarantee and non-EEA bank branches
Deposit guarantee schemes offered in non-EEA countries differ from schemes provided in EEA countries. Customers are advised to ascertain the scope of the deposit guarantee scheme applied in their banks.
24 October 2011