Yesterday, on 1 January 2019 the fundamental transformation of the Austrian deposit guarantee system entered into force. Previously there were five sectoral deposit guarantee facilities, which have been combined into two facilities: the Einlagensicherung AUSTRIA GesmbH, established at the Austrian Economic Chambers (Wirtschaftskammer Österreich), and the Sparkassen Haftungs GmbH.
Fitness programme for the new deposit guarantee system
The Austrian Financial Market Authority (FMA) is the competent authority for the supervision of deposit guarantee facilities in Austria in accordance with the Deposit Guarantee Schemes and Investor Compensation Act (ESAEG; Einlagensicherungs- und Anlegerentschädigungsgesetz). During the year that has just ended the FMA has worked closely with the existing and future deposit guarantee schemes, as well as the Oesterreichische Nationalbank (OeNB), to prepare in the best possible manner for the changeover to the new system. In addition to the ongoing review of progress made regarding preparations for the new system, the FMA and OeNB have also conducted several on-site Inspections. “The deposit guarantee system is an anchor for the stability of the financial market as a whole. Banks and customers alike must be able to rely on its ability to function in an orderly manner. To allow the new system to be able to assume this role, we prescribed an intensive fitness programme in 2018 for the deposit guarantee system”, remarked the FMA’s Executive Directors, Helmut Ettl and Klaus Kumpfmüller, who added with regard to the FMA’s priorities for supervision for 2019: “This programme with also carry on into the new year. Above all, we will check whether the new deposit guarantee facilities are in a position to reimburse deposits quickly and without complications in the event of a pay-out event occurring.“
Customer deposits of up to EUR 100,000 per depositor and per bank are legally guaranteed by the deposit guarantee system. Currently approx. EUR 670 million has been paid into Austria’s deposit guarantee system. In June 2024, once the full target level has been reached, 0.8% of the covered deposits of Austrian banks will be available in the system as a whole (i.e. from all deposit guarantee facilities). Based on the current information, this amount would be approx. EUR 1.7 billion.
Both the Einlagensicherung AUSTRIA GesmbH deposit guarantee scheme, which was established at the start of 2018, as well as Sparkassen-Haftungs GmbH had to satisfy a comprehensive range of organisation requirements in 2018 in relation to the changeover. This included that their directors were required to prove to the FMA that they were fit & proper for their new role. In addition an adequate early warning system had to be established for potential crisis events for member institutions. Einlagensicherung AUSTRIA GesmbH assumed its role at the start of this year. The deposit guarantee funds of the previously existing facilities were transferred to it as of this qualifying date. Only the savings bank (Sparkassen) sector’s facility, Sparkassen-Haftungs GmbH, will continue to be operated as a standalone deposit guarantee facility. This is permitted, since the institutional protection scheme (IPS) that exists within the Erste Group has been recognised by the FMA as a deposit guarantee system based the Deposit Guarantee Schemes and Investor Compensation Act (ESAEG).
Is the next step a European deposit guarantee system?
The transformation that has taken place in Austria is a consequence of the European Deposit Guarantee Schemes Directive (DGSD) issued in 2014. The framework for national deposit guarantee systems in the European Union (EU) was harmonised by this Directive. Within the Euro area this harmonisation is considered as being a stepping stone towards the establishment of a single integrated deposit guarantee system. This system is intended to complement the existing first and second pillars of the European Banking Union – the Single Supervisory Mechanism (SSM) for banks established in the European Central Bank (ECB) and the Single Resolution Mechanism (SRM) based in Brussels, and complete it as its third pillar.
Mr. Stefan Maier
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