EBA peer review on stress tests of European Deposit Guarantee Schemes

Conclusions of the report

The results of the evaluation were positive: overall, the stress tests have contributed to strengthening the resilience and preparedness of the DGSs. All seven DGSs have developed test programmes and demonstrated effective cooperation with other authorities such as national supervisors and resolution authorities. Five of the seven DGSs fully or largely comply with the five EBA benchmarks tested. The EBA makes a number of recommendations to all DGSs in the EU for further strengthening the stress test framework.

DNB, together with the Deposit Guarantee Fund, is the executor of the Dutch Deposit Guarantee, but was not among the assessed DGSs during this EBA peer review. DNB participated in the peer review committee.

Stress tests contribute to the crisis readiness of DGSs

Performing stress tests on the systems and processes is crucial for the preparation for a possible DGS intervention. The purpose of testing is twofold: to assess the crisis readiness of the DGS, and to identify shortcomings, areas for improvement and best practices.

According to the EBA, European DGSs should regularly test the aspects of the DGS payout process and possible other types of DGS interventions. An important element is the assessment of the quality of the Single Customer View (SCV) files of European banks. The SCV is a crucial condition for being able to repay depositors within seven working days. Also in the Netherlands, banks must comply with an SCV standard. DNB supervises this. The annual assessment shows that the quality of SCV files and systems of Dutch banks has improved significantly in recent years. This is one of the reasons why the Dutch Deposit Guarantee is well prepared for a possible DGS payout.

In addition to the assessment of the SCV standard, DNB regularly tests its own internal DGS payout organisation. This includes the financial systems and communication with customers of the failed bank. DNB uses various types of tests, such as desktop tests and simulations. During some tests, DNB works together with external partners. For example DGSs from other European countries, to test the processes of a possible cross-border DGS payout to depositors of branches.

The video and fact sheet about the DGS payout for Amsterdam Trade Bank (ATB, 2022) provide an insight into the payout organisation of the Dutch Deposit Guarantee.

Background report

The DGS Directive stipulates that DGSs must perform stress tests on their systems. Such tests should take place at least every three years, and more often if necessary. Based on the results of these stress tests, the EBA conducts a peer review at least every five years. The previous peer review was published in June 2020.

Publication

The EBA has published the report on its website.