July 11, 2017 / 4:18 PM / 2 years ago

Italy, France, Germany need to plug deposit guarantee fund holes

LONDON, July 11 (IFR) - Italy, Spain, France and Germany are among countries that need to fill a substantial gap in their deposit guarantee funds in the coming years to meet European Union rules.

Other major countries with significant holes to plug include Ireland and the Netherlands, according to data released for the first time on Tuesday by the European Banking Authority.

Under rules passed in 2014, EU member states need to have funds in deposit guarantee schemes equivalent to at least 0.8% of the covered deposits. The aim is to harmonise rules across states and ensure there are funds available to bail out lenders who hit trouble. Countries have until July 2024 to reach the target.

All EU bank deposits are guaranteed up to €100,000, regardless of how much is in a member state’s fund.

European countries have in the past had different policies for guarantee schemes. Some countries did not have an ex-ante funding in place, so are having to catch up with other countries that had them.

The EBA said the national figures may also be distorted by payouts some countries have had to make to depositors in recent years.

The EBA data showed Italy, Ireland and the Netherlands had guarantee funds equivalent to just 0.1% of covered deposits at the end of 2016.

In Spain the figure was 0.2% and in France and Germany it was about 0.3%, according to IFR calculations of the data. In Britain, the guarantee fund stood at 0.6% of deposits.

That means all of those countries have to increase the funds they hold. In Italy, for example, its two guarantee schemes have available funds of €621m, well short of the €5.3bn they should have to cover the country’s €668bn of deposits.

Member states have another seven years to meet any shortfalls, however, to allow countries that had different funding models to gradually increase the level of cover. That is typically done by raising levies from banks each year, and several countries have levied taxes since 2015 to do so.

Some countries were already well above the 0.8% minimum target at the end of last year, including Norway, Sweden, Finland, Czech Republic, Poland and Romania, according to IFR calculations.

The European Commission has said it wants to go further than the national deposit guarantees and set up a European Deposit Insurance Scheme, which would pool the national funds. But that has met stiff opposition, including from Germany, which does not want its funds to guarantee savings in other EU countries.

The EBA said it will release the data every year. (Reporting by Steve Slater)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below