EU bids to boost bank deposit guarantees
European regulators want banks to increase guarantees on depositor
funds in a bid to avoid a repeat of the acrimony pitting EU hopeful
Iceland against Britain and the Netherlands, the European Commission
The commission is planning "to improve the financing of deposit
guarantee schemes ... basically, the way the banks pay contributions to
these schemes," said a spokeswoman for Financial Services Commissioner
"We want to assess the feasability of a pan-European deposit
guarantee scheme," to replace a patchwork of national plans, Chantal
Commission experts have drawn up plans that could cut bank profits by
10 percent, forcing financial institutions to pay "on average three or
five times more for the guarantee system, and in the long term devote
two percent of deposits to security systems" for accounts, the Financial
Times Deutschland said.
Moves to legislate will be brought forward before the summer, the
spokeswoman said, although she refused to confirm the two percent
The news comes after Iceland this week entered fresh negotiations
with Britain and the Netherlands for billions of euros in compensation
over the collapse of the Iceesave bank.
The compensation is for the two governments which have already
compensated 320,000 British and Dutch savers who lost money in the
collapse of the online bank. Iceland's parliament narrowly approved on
December 31 the terms of a payout to London and The Hague, but Iceland's
president refused to sign the bill and put the question to a referendum.
At present, European reserve funds which guarantee deposits amount to
some 23 billion euros (31 billion dollars), the newspaper said.
"In 10 years, 128 billion euros would be pre-financed, and 43 billion
more could be added later," it quoted an EU document as saying.