EFDI Guidance on DSGs’ Alternative Funding Policy

On December 5, the European Forum of Deposit Insurers (“EFDI“) published a non-binding guidance paper (dated June 18, 2018) on deposit guarantee schemes’ (“DGSs“) alternative funding policy. The guidance paper can be found here.

Under Article 10(9) of the Deposit Guarantee Schemes Directive (2014/49/EU) (“DGSD“), DGSs are required to have in place adequate alternative funding arrangements to enable them to obtain short-term funding to meet their obligations. EFDI notes that, in practice, DGSs have only a few available options to enable them to implement this requirement: credit lines, bond issuances, repos, ex-post contributions and other private sources.

In the guidance paper, EFDI provides a set of recommendations for DGSs alternative funding arrangements on issues including:

  • The size of the alternative funding reserve.
  • The selection of alternative funding instruments.
  • Alternative funding instruments and ex-post contributions’ terms and parameters.
  • Concentration risks arising from counterparties.

EBA Publishes Final Report on Guidelines on Co-operation Agreements Between DGSs Under Recast DGSD

The European Banking Authority (“EBA“) has published a final report on guidelines on cooperation agreements between deposit guarantee schemes (“DGSs“). The guidelines have been developed to promote a common and consistent approach to co-operation agreements between DGSs throughout the EU, as provided under the recast Deposit Guaran-tee Schemes Directive (“DGSD“).

To promote a consistent approach and facilitate entry into co-operation agreements between DGSs across the EU, the guidelines specify the objectives and minimum content of co-operation agreements, and provide further guidance on the sequence and timing of events when the local DGS performs a pay-out of depositors on behalf of the DGS in another member states. The guidelines also include a multilateral framework co-operation agreement to which the DGSs or, where relevant, the designated authorities should adhere, although they allow DGSs or designated authorities to enter into bilateral or multilateral agreements where it is intended that co-operation agreements will go beyond the level of detail required by the guidelines.