The new Deposit Guarantee Schemes Directive (DGSD) enhances the resilience of deposit guarantee schemes (DGSs) and improves depositor protection, including in cross-border bank failures. Depositors will be compensated quicker, and in case of failure of a branch of an EU bank established in a different Member State, will benefit from the assistance of their local DGS, which will provide them with the payout, on behalf of the DGS in the Member State where the bank is established.
In order to promote a consistent approach and to facilitate entry into cooperation agreements between DGSs across the EU, the Guidelines specify the objectives and minimum content of such cooperation agreements.
In particular, these Guidelines specify the minimum content in relation to the three key areas to be included in cooperation agreements: modalities for repaying depositors by the local DGS at branches of banks established in other Member States, modalities for the transfer of contributions from one DGS to another in case a credit institution ceases to be a member of a DGS and joins another DGS, and modalities for mutual lending between DGSs.
To ensure that depositors in EU branches of institutions headquartered in other Member States are treated similarly to depositors in the home Member State, these Guidelines provide further guidance on the sequence and timing of events when the local DGS performs a payout of depositors on behalf of the DGS in another Member State.
The minimum standard and increased consistency brought about by these Guidelines will also facilitate the mediation role of the European Banking Authority (EBA). As laid down in the DGSD, the EBA will be able to perform binding mediation if designated authorities or DGSs cannot reach an agreement or if there is a dispute about the interpretation of an agreement.