Deposit Guarantee Scheme Update – March 2013
From midnight 28th March, 2013, no new deposits made with Allied Irish Banks (AIB) plc, Bank of Ireland (BOI) plc, Permanent TSB plc or their subsidiaries EBS ltd. and ICS Building Society will be guaranteed under the Eligible Liabilities Guarantee Scheme. The removal of the guarantee will equally apply to all other categories of eligible liabilities in all participating Institutions in the ELG Scheme after midnight 28 March, 2013
The cessation of the ELG Scheme does not affect the Deposit Guarantee Scheme. Retail deposits with all credit institutions authorised in Ireland (including credit unions) up to and including €100,000 per individual per institution (€200,000 for joint accounts) are covered by the DGS. The DGS has no end date and monies up to the amounts indicated are protected at all times.
From the 29th March 2013 the following will apply:
Current Accounts & Demand Deposit Accounts:
Funds in these accounts will no longer be covered by the ELG.
Notice Deposit Accounts:
Funds on which notice has been served will be covered by the ELG for the duration of the notice period. Any other funds will no longer be covered by the ELG.
Fixed Term Accounts:
Funds invested prior to 29th March 2013 will be covered under the ELG until the fixed term maturity date (up to a maximum term of five years).
General Information on Deposit Guarantees
Does the ELG Scheme cover all deposits? – (Please see note below relating to Corporate Deposits)
Most personal deposits will continue to be guaranteed under the existing statutory €100,000 Deposit Guarantee Scheme (DGS) which covers 100% of retail deposits with all credit institutions authorised in Ireland (including credit unions) up to a maximum of €100,000 per qualifying depositor per institution.
The ELG Scheme only guarantees the balance of personal deposits in the participating institutions over the €100,000 limit of the DGS. A private individual with a deposit of less than €100,000 is guaranteed solely under the DGS. If, however, the same individual has a deposit of over €100,000, the first €100,000 will be guaranteed under the DGS and the balance that exceeds €100,000, will be guaranteed under the ELG Scheme.
The ELG Scheme will close to new liabilities from midnight 28th March 2013.
What guarantee applies for personal deposits in excess of €100,000?
As noted above, the ELG Scheme only guarantees the balance of retail deposits over the €100,000 limit of the DGS. The balance in on demand accounts or current accounts in an ELG Scheme participating institution in excess of €100,000 will be guaranteed until 28th March 2013 regardless of the date the account was opened.
The balance on fixed term deposits in excess of €100,000 opened with a participating institution during a period from the date the participating institution joined the ELG Scheme up to 28th March 2013 will be guaranteed for the full term of the deposit, up to a maximum deposit term of five years.
What guarantee applies for corporate deposits?
The DGS applies to the first €100,000 of ‘small companies’. A company is considered a small company if it satisfies at least two of the following conditions for the current year and the year immediately preceding that year:
(a) its balance sheet total for that year shall not exceed €1,904,607,
(b) the amount of its turnover for that year shall not exceed €3,809,214, and
(c) the average number of persons employed by the company in that year shall not exceed 50.
The ELG Scheme applies to the remainder of these ‘small companies’ deposits.
For all other companies the ELG Scheme applies to the entirety of their deposits until 28th March 2013, or maturity and subject to a maximum of 5 years.
The Scheme will close to new liabilities from midnight 28th March 2013.
Other Credit Institutions
Some Banks operating in Ireland are regulated in their home country and operate here under EU rules. Such institutions are not covered by the ELG, and are instead guaranteed by their own, domestic compensation schemes and where relevant for Irish accounts, the Deposit Guarantee Scheme (DGS).
Foreign Compensation Schemes and Participating Institutions Include:
UK Scheme: UK FSA Financial Services Compensation Scheme- covers deposits up to an equivalent of £85,000.
Institutions covered include: Investec Bank plc, Nationwide UK Building Society, Leeds Building Society and Northern Rock.
Dutch Scheme: The Dutch Central Bank Deposit Guarantee Scheme– similarly to the Irish DGS, the Dutch scheme guarantees 100% of the first €100,000.
Institutions covered include: Rabodirect.
Deposits covered through combined protection under the Danish Guarantee Fund for Depositors and Investors and the DGS up to a maximum of €100,000 per depositor.
Institutions covered include: Danske Bank
For further information please contact Aoibheann Daly on 01 6471200
All opinions and estimates constitute best judgment at the time of publication and are subject to change without notice. This document is not to be relied upon in substitution for the exercise of independent judgment. Nothing in this publication constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you.