When determining the covered deposits, should netting with customer loans be applied before determining the amount of deposits which are not covered by the DGS?
The procedure for determining covered deposits and deposits which are not covered by the DGS, where the depositor also has a loan with the institution in respect of which the pay out is triggered, is not clear.
In accordance with Article 2(1)(5) of the DGSD, “covered deposits” means the part of eligible deposits that does not exceed the coverage level laid down in Article 6 of the DGSD, which will in most cases be 100,000 EUR.
In turn, in accordance with Article 2(1)(4) of the DGSD, “eligible deposits” means deposits that are not excluded from protection pursuant to Article 5. Article 5(1) of the DGSD enumerates the deposits that “shall be excluded from any repayment by a DGS”.
Article 7(1) of the DGSD further states that “the limit referred to in Article 6(1) shall apply to the aggregate deposits placed with the same institution irrespective of the number of deposits, the currency and the location within the Union”.
Article 7(4) of the DGSD stipulates that as a general rule “liabilities of the depositor against the credit institution shall not be taken into account when calculating the repayable amount” (i.e.: the amount to be made available to depositors and determined in accordance with the requirements set out in Article 7 of the DGSD).
However, Article 7(5) provides that “Member States may decide that the liabilities of the depositor to the credit institution are taken into account”, explicitly “when calculating the repayable amount” but only “where they have fallen due on or before the date on which a relevant administrative authority makes a determination as referred to in point (8)(a) of Article 2(1) DGSD or when a judicial authority makes a ruling as referred to in point (8)(b) of Article 2(1) DGSD to the extent the set-off is possible under the statutory and contractual provisions governing the contract between the credit institution and the depositor.” This provision is an optional national discretion (OND). Recital (24) of the DGSD clarifies that “DGSs should be permitted to set off liabilities of a depositor against that depositor’s claims for repayment only if those liabilities are due on or before the date of unavailability”.
Article 7(6) of the DGSD further states that “Member States shall ensure that DGSs may at any time request credit institutions to inform them about the aggregated amount of eligible deposits of every depositor”.
The expression “when calculating the repayable amount” suggests that in cases covered by Article 7(5), as a first step, and in line with Articles 5(1), 6(1) and 7(1) of the DGSD, the aggregate amount of eligible deposits of every depositor (the same amount that may be required by DGSs to get informed of from credit institutions at any time) should be calculated. Then, as a second step, the liabilities of the depositor to the credit institution which have fallen due on or before the date when deposits were determined to be unavailable should be netted against deposits of the depositor, to the extent that set-off is possible under the statutory and contractual provisions governing the contract between the credit institution and the depositor, and to the extent that the OND has been exercised. The limit referred to in Article 6(1) is then applied as a third step, after the set-off.