Front page : Financial Intermediaries : Contributions : Deposit Guarantee Sectoral Fund

Deposit Guarantee Sectoral Fund

Formation of sectoral fund

The Deposit Guarantee Sectoral Fund shall be established out of the contributions of credit institutions.
The Deposit Guarantee Sectoral Fund shall be used in order to guarantee and compensate for deposits placed with credit institutions by persons entitled to receive compensation.
Credit institutions pay to the Fund the single contributions, regular contributions and extraordinary contributions using the rate established by the supervisory board of the Fund.

Credit institution comprises also the branches in a country which is a Contracting Party to the European Economic Area Agreement (EEA Agreement) and cross-border services for receipt of deposits from public provided in a contracting country.

At present, the contracting parties to the EEA Agreement are: Austria, Belgium, Bulgaria, Estonia, Spain, Netherlands, Ireland, Iceland, Italy, Creece, Cypros, Lithuania, Liechtenstein, Luxembourg, Latvia, Malta, Norway, Poland, Portugal, France, Sweden, Romania, Germany, Slovakia, Slovenia, Finland, United Kingdom, Denmark, Check Republic, Hungary.

Activity license of credit institution

Credit institution is a company whose primary and permanent business is to receive monetary deposits and other repayable funds from the public, and to grant credits or other financing for their own account and on their own behalf.

The company must have the relevant activity license to accept money for depositing or to receive other funds for other purposes. An activity license grants the right to provide the investment services specified in subsection 43 (1) of the Securities Markets Act and the non-core services specified in § 44 of the Securities Markets Act to the extent stipulated in the activity license.

The Financial Supervision Authority issues activity licenses to companies established in Estonia.

Companies that apply for activity licenses must submit to the Financial Supervision Authority, in addition to the other documents and data, the document with which the applicant enters into the obligation to make the single contribution into the Deposit Guarantee Sectoral Fund and the single contribution to the Investor Protection Sectoral Fund provided in the Guarantee Fund Act if the company plans to provide investment services in the business plan.

The Financial Supervision Authority may declare an activity license invalid if the credit institution has not paid the contributions to the Deposit Guarantee Sectoral Fund or the Investor Protection Sectoral Fund required pursuant to the Guarantee Fund Act during the prescribed deadline or to their full extent, and it has failed to comply with the corresponding precept of the Financial Supervision Authority by the prescribed deadline or to the prescribed extent.

Single contribution and terms of payment

The size of the single contribution shall be 3 200 euro.

A credit institution shall pay the single contribution within one month after notification of the resolution to issue authorisation to the credit institution.

Calculation and payment of regular contribution

Calculation

Contribution shall be calculated on the basis of the average covered deposits of a credit institution or the Estonian branch of a third country credit institution for a calendar year or shorter period preceding the payment of the contribution. Upon calculation of the contribution, the deposit provided for in subsection 25 of this Act shall not be considered to be a covered deposit. The amount of the deposits denominated in foreign currencies shall be converted into euros on the basis of the daily exchange rate of the European Central Bank.

The deposits of credit institution comprises also the deposits of branches in a state which is a Contracting Party to the European Economic Area Agreement (EEA Agreement) and deposits from cross-border services in a contracting state.

The amount of deposits nominated in foreign currencies shall be converted into euro on the basis of euro foreign exchange reference rates fixed by the European Central Bank.

The size of a contribution shall be calculated by multiplying the total amount of eligible deposits by the contribution rate established by the supervisory board of the Fund.

The total amount of eligible deposits and the size of a contribution to be paid shall be calculated by the credit institution.

Reporting and payment

The credit institution shall submit a report to the Fund on the size of the contribution through the Financial Supervision Authority pursuant to the procedure established by the minister responsible for the area.

Read Regulation No 14 “Establishment of the Report to the Deposit Guarantee Fund” issued by the Minister of Finance 4 March 2016 (More in Estonian Rahandusministri määrus 04.03.2016 nr 14 "Hoiuste tagamise osafondi aruandluse kord").

New corrected reports must be submitted to the Financial Supervision Authority if errors are found and if calculation principles are changed.

The credit institution or branch shall pay regular contributions on a regular basis at least once a year.

If a credit institution fails to pay a contribution or does not pay a contribution in full by the due date the Fund shall charge a fine for delay in the amount of 0.2% of the outstanding amount per day.

If a credit institution fails to pay a contribution by the due date or to perform any other obligation arising from the Guarantee Fund Act, the Fund shall immediately notify the Financial Supervision Authority of such failure.

Deposits refers to:

claims arising from the settlement contract of a depositor against the credit institution managing the account of the depositor;
claims arising from the settlement or loan contract of a depositor against the borrowing credit institution;
a sum for the transfer of which depositors or other persons have issued a corresponding payment order for their own account but the credit institution has not executed the payment order by the date on which deposits become unavailable;
non-transferable registered acknowledgements of obligation pertaining to deposits (deposit certificates);
a joint deposit which belongs to two or more persons jointly;
The funds of third parties deposited in accounts opened for the official operations of notaries public and bailiffs shall be treated as separate deposits for each person in the deposit compensation case.

Deposits not subject to guarantee and compensation

Deposits belonging to any of the following Estonian or foreign persons as at the date on which the deposits become unavailable shall not be guaranteed or compensated for out of the Sectoral Fund:

the Estonian state or foreign state or the following Estonian or foreign persons;

a local government;
an another credit institution;
an insurance undertaking or reinsurance undertaking;
a management company or investment fund;
an investment firm;
e-money institution;
a payment institution;
creditor or credit intermediary;
another financial institution not specified in clauses 4)-8) of this subsection, including a financial holding company, a mixed finacial holding company and an asset management company specified in point (26) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms and amending Regulations (EU) No648/2012 (OJ L 176, 27.06.2013, p. 1-337), excluding insurance holding companies and mixed-activity insurance holding companies for the purposes of the insurance Activities Act.

Extraordinary contribution paid ex post

The supervisory board of the Fund shall establish the contribution rate as a percentage of the total amount of eligible deposits and it shall not exceed 0.5 per cent annually. The Fund may, in exceptional cases and with the consent of the Supervision Authority, require a larger contribution, but the contribution shall not exceed 0.625 per cent of the average amount of the covered deposits of the credit institution with regard to the calendar year preceding the date on which deposits become unavailable.

On the proposal of the Supervision Authority, the obligation of a credit institution to pay the extraordinary ex post paid contributions pursuant to this section may be deferred by a resolution of the supervisory board, if the payment of the contributions would jeopardise the liquidity or solvency of the credit institution.

The specified exception shall not be established for a longer period than six months at a time.
At the request of the credit institution, the validity of the exception may be extended for to up to six months.
The deferred contributions shall be paid when their payment, based on the assessment of the Supervision Authority, no longer jeopardises the liquidity or solvency of the credit institution.

In November 2013 the supervisory board of the Fund established the quarterly contribution rate of the Deposit Guarantee Sectoral Fund at the level of 0,030% of the total amount of eligible deposits which will enter into force as at the beginning of the II quarter of 2014.

A uniform contribution rate shall be applied to all credit institutions.

Any amendment of a contribution rate shall enter into force as of the beginning of a quarter, but not earlier than three months after adoption of the corresponding resolution of the supervisory board.

Rate of contribution

The superviseory board shall establish the amount of contribution for a credit institution for a calendar year or shorter period.

To find amount of the contribution, the amount of the covered deposits specified in subsection of this section shall be multiplied by the contribution rate.

Any amendment of the size or rate of contribution shall enter into force on the due date established by the supervisory board, but not earlier than one month after adoption of the corresponding resolution of the supervisory board.

Suspension of collection of contributions

The collection of contributions may be suspended on the basis of a resolution of the supervisory board if the assets of the Deposit Sectoral Fund constitute at least 0,8% of the total amount of the covered deposits taken by Estonian credit institutions and branches of third country credit institutions founded in Estonia.

The collection of contributions shall be suspended if the assets of the Deposit Sectoral Fund constitute 5% of the amount of the covered deposits taken by Estonian credit institutions and branches of third country credit institutions founded in Estonia.