Deposit Guarantee Schemes

Brev til den polske finansministeren av 21. juni 2011 om innskuddsgarantidirektivet.

I want to thank you for the pleasant meeting we had in Warszawa 6 June 2011.

As you will recall, the main issue we discussed was the need for adaptations to the present, and proposed, EU rules concerning bank deposit guarantee schemes, in order for us to maintain the coverage level for the Norwegian deposit guarantee scheme. This is, as you are aware of, a very important issue for Norway. The coverage level in Norway is 250 000 euro. This has been unchanged since 1996, and represents a well known and important part of Norwegian financial regulation. We have a topping up scheme for foreign banks operating in Norway, which will be continued, and we are willing to introduce an effective “export ban” which means that Norwegian banks will not be allowed to offer higher coverage than 100 000 euro to customers outside Norway.

The ECON Committee in the European Parliament has recently (24 May 2011) proposed an amendment to the Commission proposal 12 July 2010 for a new Deposit Guarantee Scheme Directive. The proposal from the ECON Committee includes a grandfathering clause (article 5.3a, enclosed) that will allow countries that had a fixed coverage level between 100 000 euro and 300 000 euro before 1 January 2008 to maintain their current coverage level, but only for depositors who are residents in that country.

The proposal from the ECON Committee ensures that unlimited guarantees will not be allowed, and also ensures that export of such higher coverage level to depositors residing in other countries will be forbidden. In fact, only Norway is covered by the proposed wording of Article 5.3a. The proposal will effectively prevent a new “Ireland case”, where depositors moved large amount of deposits from UK banks to Irish banks in the autumn of 2008, following the introduction of unlimited guarantees in Ireland 30 September 2008 (see EU Commission Impact Assessment 12 July 2010 chapter 4.1.1).
Please also find enclosed a copy of the non-paper I gave you in Warszawa which outlines the Norwegian position and arguments with regard to maintaining the coverage level for the Norwegian deposit guarantee.

Yours sincerely,

Sigbjørn Johnsen