New European Directive on Deposit Guarantee Schemes | KPMG | BE

Belgian Implementation of the new European Directive on Deposit Guarantee Schemes

New European Directive on Deposit Guarantee Schemes

The Belgian legislator is currently implementing the new European DGS Directive. This new Directive aims to harmonize the different European DGSs and will effect change on several aspects.

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The Deposit Guarantee Scheme (hereafter: “DGS”) is one of the corner stones of the European Banking Union alongside the Single Supervisory Mechanism and the Single Resolution Mechanism. Besides the protection of the individual customer, the DGS aims to ensure financial stability within the European Union.

As from 1994 the national DGSs are based on EU Directives, with the latest Directive (2014/49/EU) aimed at a further harmonization of the scope of products and covered depositors within the European Union, and easier access for depositors to DGSs. Besides these changes, the latest Directive will have a significant impact on the funding mechanisms of the DGS.

The Belgian legislator has implemented this European DGS Directive in Belgian legislation by the Law of 22 April 2016.

Belgian DGS – Scope

The scope of the Belgian DGS will be amended to exclude some financial products and depositors that were previously covered by the DGS. On the other hand, the coverage will be broadened for instance for exceptional temporary increases of deposits resulting from the sale of private real estate.

Moreover, the depositors will benefit from significantly improved access to DGSs by shortening the repayment periods.

Belgian DGS – Revised funding mechanisms

Previously, the contribution to the Belgian DGS was calculated based on the eligible deposits taking into account a risk-factor.

As a result of the implementation of the new DGS Directive, the DGS will be calculated on the so-called ‘covered’ deposits and no longer on the ‘eligible’ deposits.

‘Eligible deposits’ can basically be defined as the total amount of deposits which have not been excluded from repayment (i.e. no threshold), whereas the ‘covered deposits’ are the deposits that do not exceed the threshold of 100.000 EUR.

The revised funding mechanism will only enter into force as from 2017 since the Belgian legislator applies a transitional provision which is foreseen for in the new DGS Directive. As the required information on covered deposits is not yet available, the eligible deposits have still been used as a calculation base for the contribution in 2016.

Finally, the new Directive explicitly provides a target level which should be reached. By 2024 the available DGS funds should in principle reach a target level of at least 0,8% of the amount of the covered deposits .
 

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