Deposit guarantee scheme
The Deposit Guarantee Scheme in Ireland was established by the European Communities (Deposit Guarantee Schemes) Regulations, 1995 and amended by the European Communities (Deposit Guarantee Schemes) (Amendment) Regulations 2009 (S.I. No. 228 of 2009).
The Irish Deposit Guarantee Scheme is funded by credit institutions which are authorised by the Central Bank of Ireland. The system is administered by the Central Bank of Ireland. The scheme protects eligible deposits in banks, building societies and credit unions authorised in Ireland.
Deposits with credit institutions authorised in another European Economic Area (“EEA”)* country and operating in Ireland on a branch basis are covered under that country’s system. These credit institutions may opt in to the Irish Deposit Guarantee Scheme, in which case the terms set out in this leaflet apply. Ulster Bank Ireland Limited contributes to the Irish Deposit Guarantee Scheme.
2. Eligible deposits
Deposits eligible for cover under the deposit protection scheme are deposits denominated in any currency held at EEA branches of banks, building societies and credit unions authorised in Ireland. Deposits not eligible for cover include:
• interbank deposits, including a deposit by the Central Bank, the Post Office Savings Bank, a trustee savings bank, a building society, an industrial and provident society or the central bank of another member state of the European Communities (that is a member of the European Central Bank) with the institution;
• negotiable certificates of deposit;
• items which make up the own funds or capital of the institution;
• deposits in respect of which (a) there is reason to suspect that a money laundering offence has been committed or (b) where a person has been charged or there has been a conviction for a money laundering offence;
• deposits by a company connected to the credit institution; *i.e. all European Union Member States and Iceland, Liechtenstein and Norway.
• deposits by a person who, on an individual basis, obtained rates and financial concessions that helped aggravate its financial situation;
• deposits by the directors, secretary, chief executive or their close families;
• deposits by a person who is entitled (either directly or indirectly) to 10% or more in nominal value of either the allotted share capital or the shares carrying voting rights, or their close family;
• deposits by a trustee of a trust for the benefit of the person in the previous two bullet points;
• deposits by financial institutions (as defined in Regulation 2 of the European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992 (S.I. No. 395 of 1992));
• deposits by insurance companies;
• deposits by the Governments or municipal, local, regional or provincial authorities of any State;
• deposits by a public international organisation of which one or more member states of the European Communities are members;
• deposits by collective investment schemes;
• deposits by a manager, trustee or custodian of a unit trust or a collective investment undertaking or an entity that provides services to such an undertaking;
• deposits by pension schemes and retirement funds (except for small self-administered pension schemes);
• debt securities issued by the credit institution or a liability arising out of own acceptances and
promissory notes; and
• deposits by companies that do not qualify to be treated as a small company under section 8(1)(a) of the Companies Amendment Act 1986,i.e. the company satisfies at least two of the following three conditions in respect of the last and previous financial year:
(a) Its balance sheet total for that year does not exceed €1,904,607,
(b) The amount of its turnover for that year does not exceed €3,809,214, and
(c) The average number of persons employed by the company in that year does not exceed 50
3. Limits on compensation
The maximum compensation payable is €100,000 per person per credit institution and includes any interest due up to the date of default.
Thus, a depositor with a deposit account totaling €75,000 would receive compensation of €75,000 while a depositor with eligible deposits of €100,000 or more would receive the maximum compensation of €100,000.
Similarly, two depositors holding a joint account totaling €150,000 would receive compensation of €75,000 each while two depositors holding a joint account totaling €300,000 would receive maximum compensation of €100,000 each.
4. Joint accounts
Unless otherwise specified, joint account balances will be apportioned equally between each account holder for this purpose and aggregated with any other balances held by that account holder. However, deposits in an account to which two or more persons are entitled as members of a business partnership, association or grouping of a similar nature, without legal personality, are not treated as joint accounts, but aggregated and treated as if made by a single depositor for the purpose of calculating the compensation limit of €100,000.
5. Multiple accounts
All balances held in the depositor’s name (including balances held in a joint account or beneficially in a trustee account) will be aggregated for the purpose of calculating the funds owed to the depositor by the Irish Deposit Guarantee Scheme.
In the event of a payment, set-off will not take place. In other words, a depositor’s debts to the institution (such as their mortgage loan and/or overdraft amount) will not be deducted from the sum of their deposits.
6. Compensation payment procedure
Under the Regulations, the compensation payment process is initiated by:
- the Central Bank of Ireland determining that a credit institution is unable to repay deposits due to its financial condition, or
- a court making a ruling, for reasons directly related to a credit institution’s financial circumstances, that suspends depositors’ ability to make claims against that institution.
The Central Bank of Ireland is expected to pay compensation to depositors within 15 working days of a determination by the Central Bank of Ireland that deposits are unavailable, or of a ruling by the court (subject to the terms and conditions set out in the Regulations).
The Central Bank of Ireland will publish compensation procedures in the event of the process being initiated.
Special provisions may apply in cases where further information is required in order to clearly identify beneficiaries and allow compensation payments to be made.
7. Further information
Further information on the Deposit Guarantee Scheme is available on the website of the National Consumer Agency - www.nca.ie
This Guidance Note should not be considered to be a comprehensive summary of the Regulations and does not constitute legal advice. A copy of the Financial Services (Deposit Guarantee Scheme) Act 2009 (No. 12 of 2009), the European Communities (Deposit Guarantee Schemes) Amendment Regulations 2009 (S.I. No. 228 of 2009) and the European Communities (Deposit Guarantee Schemes) Regulations 1995 (S.I. No. 168 of 1995) may be obtained from the Government Publications Office, Molesworth Street, Dublin 2 or on www.irishstatutebook.ie.