Funds to protect deposits in case of bank failure are going up, EBA data shows

• Deposits protected by EU deposit guarantee schemes (DGS) increased by 1.7% to 8.5 trillion Euros between 2022 and 2023, whereas funds available to protect those deposits in case of bank failures rose by 14.9% to 73 billion Euros.
• The high increase in the amount of funds held by DGSs to protect deposits reflects the need for all the DGSs to reach the minimum target level of 0.8% of covered deposits by July 2024.
• As of 31 December 2023, 21 of the 36 DGSs in the European Economic Area (EEA) had already reached the minimum target level ahead of the deadline.

The European Banking Authority (EBA) today published end-2023 data related to two key concepts and indicators in the Deposit Guarantee Schemes Directive (DGSD), namely available financial means (AFMs) and covered deposits. The EBA publishes these data for the deposit guarantee scheme (DGS) in each Member State on a yearly basis to enhance the transparency and public accountability of DGSs across the EEA to the benefit of depositors, markets, policymakers, DGSs and Members States.

Under the DGSD, covered deposits are guaranteed up to 100,000 Euro or the equivalent in other currencies per depositor at each bank. The data as of 31 December 2023 shows that, compared to 2022, the amount of covered deposits across the EEA increased by 1.7%, which is lower than the increases of 2.6% in 2022, 5.4% in 2021, and 8.2% in 2020.

In parallel, EEA DGSs are obliged to raise funds from credit institution for the main purpose of reimbursing depositors in case of bank failures. The end-2023 data shows that most of the EEA DGSs continued raising contributions from the banks to reach the minimum target level applicable to all national DGSs imposed by the Deposit Guarantee Schemes Directive (DGSD). DGSs have until July 2024 to reach the minimum target level which in most cases is 0.8% of covered deposits. As of end-2023, 21 of the 36 EEA DGSs had already reached the target level ahead of the deadline, with further six DGSs within 0.05 percentage points of reaching the minimum target level.

Legal basis and background

The EBA is collecting DGS data in accordance with Article 10(10) of the DGSD. With its Decision EBA/DC/2018/243 from 23 July 2018, the EBA explained that it will make these data publicly available on its website.

In support of the DGSD, the EBA published in December 2021 the Guidelines EBA/GL/2021/17 on the delineation and reporting of AFMs of the DGSs and, thus, expanded the reporting requirements from DGSs to the EBA.