How does the Deposit Guarantee Scheme work?

Whether the money you have entrusted to your bank is covered by the Deposit Guarantee Scheme depends on three factors.

  • Is your bank covered by the Deposit Guarantee Scheme?
  • Is your balance covered by the Deposit Guarantee Scheme?
  • Do you, as an accountholder, qualify for compensation under the Deposit Guarantee Scheme?

You may enquire with your bank whether the account or the product you use or intend to apply for falls within the scope of the Deposit Guarantee Scheme. All banks – from whatever country – are obliged by law to offer this information.

What banks fall into the scope of the DGS?

Dutch banks operating under an authorisation issued by DNB fall into the scope of the Dutch DGS. To see whether your bank is in this category, look it up in the Registry of Banks. Your bank is covered by the Dutch DGS if the left column contains one of the following texts: 'Uitoefenen van het bedrijf van bank met beleggingsdiensten (2:13 lid 1)' (i.e. 'Authorised to operate as a bank also offering investment services') or 'Uitoefenen van het bedrijf van bank of electronische geldinstelling (2:12 lid 1)' (i.e. 'Authorised to operate as a bank or an electronic money institution') or 'Kredietinstelling aangesloten bij centrale kredietinstelling (3:111)' (i.e. Credit institution affiliated with a central credit institution). Electronic money institutions are not covered by the DGS.

Banks incorporated in the European Union, Norway, Iceland or Liechtenstein, and operating a branch in the Netherlands fall into the scope of the DGS of their country of origin. To see whether your bank is in this category, look it up in the Registry of Banks. Your bank is covered by the DGS if the left column reads 'Branch of bank from the EEA (2:14)'. Your bank will be able to tell your more about the (cover of) the DGS from the country of origin.

If the DGS in the country of origin provides more limited cover than the Dutch DGS, the branch concerned may opt to participate in the Dutch DGS for supplemental cover.

To find out if a branch is a supplemental participant in the Dutch DGS, look it up in the Registry of Banks. If it is, this will be indicated in the Explanation.

Different rules apply to foreign banks which are not incorporated in the European Union, Norway, Iceland or Liechtenstein but do operate a branch in the Netherlands.

What products are covered by the DGS?

Money held in current accounts, savings accounts or special savings accounts such as fixed-term deposits are covered by the DGS. Shares or bearer bonds held through a bank are not covered. Whether subordinated deposits fall under the DGS will have to be assessed on a case-by-case basis. Your bank can give further information on specific products.

Who may claim compensation under the DGS?

Private people and small enterprises (specifically: enterprises allowed to publish a summary balance sheet) are eligible for compensation under the DGS.

A small group of private people are excluded from compensation under the DGS: directors of the bank in difficulties, persons holding a 5% or larger stake in that bank and close relations of such persons. Certain categories of enterprises are also excluded, such as financial undertakings and government bodies.

What amount is guaranteed by the DGS?

The Deposit Guarantee Scheme guarantees an amount of EUR 100,000 per person per bank (regardless of the number of accounts held). Two persons holding a joint account ('en/of-rekening') each qualify for full compensation.

Will my balance be netted against my (mortgage) debt?

A less well-known detail of the Scheme is that a set-off takes place before a claim under the Scheme is fixed. This implies that an depositor’s debts to the bank (e.g. a mortgage loan or a consumer credit) will be reduced by their deposits (e.g. savings or current account balances) as per the date the emergency regulations or bankruptcy were declared. If a positive deposit balance remains, the depositor may claim that balance from the Guarantee Scheme, up to the amount of the guarantee.

The administrators of the Scheme will assume that depositors make optimum use of their set-off abilities, as if the DGS had not existed. Whether a set-off is possible depends on the applicable laws and regulations and on the substance of the agreement between the parties involved. DNB will have to assess on a case-by-case basis whether a set-off  possibility applies.

Who pays for the DGS?

DNB will determine and pay compensations under the Dutch DGS and subsequently apportion the total sum paid among the participating banks according to size.

On 1 July 2013, the Netherlands will move to a DGS whose funding will be partially advanced by the participating banks on the basis of risk-dependent premiums. DNB and the Ministry of Finance are preparing the transition. From 1 July 2013, banks will be obliged to send quarterly reports to DNB on their deposit balances covered under the DGS. Partly based on these reports, banks will be required to make quarterly contributions to the Stichting Depositogarantiefonds, a not-for-profit organisation to be created to hold the DGS funds.

How long will it take to get compensation?

The Dutch DGS must, in principle, pay compensation within three months of the date on which the application was received. Since this period is a European rule, it also applies to DGSs in other EU countries, Norway, Iceland and Liechtenstein. In special cases, this term may be extended.
What is the procedure for supplemental participation in the Dutch deposit guarantee scheme?
Banks incorporated in the European Union, Norway, Iceland or Liechtenstein and operating a branch in the Netherlands fall within the scope of the DGS of their country of origin. If the DGS in the country of origin provides for more limited cover than the Dutch DGS, the branch concerned may opt for supplemental participation in the Dutch DGS. This implies that if the bank in question runs into payment difficulties, you may be eligible for two compensations, depending on your balance. In the first place, you will receive compensation under the DGS from the country of origin of the bank concerned.
In addition, you may receive supplemental compensation under the Dutch DGS. Such compensation is calculated as follows: [compensation to which you would have been entitled if the bank had been incorporated in the Netherlands] – [compensation to which you would have been entitled under the DGS in the country of origin] = [supplemental compensation under the Dutch DGS]. Whether or not you qualify for compensation under any of the said schemes also depends on the conditions governing eligibility for compensation under either of those schemes (for the Dutch DGS, see under What products are covered by the DGS? and Who may claim compensation under the DGS?)

Which supervisory authority is responsible for a branch of a bank from the European Union, Norway, Iceland or Liechtenstein come?

Banks incorporated in the European Union, Norway, Iceland or Liechtenstein are licensed to pursue their business in other EU countries and Norway, Iceland or Liechtenstein. Such banks hold a so-termed Single European Licence. They may, for example, open a branch in one of those countries. Such banks and, hence, also their branches, are subject to supervision in the country of origin. The relevant authority of the country where a branch is established will only exercise supervision on the liquidity of that branch. In the case of a Dutch-based branch of a bank from Iceland or Belgium, for example, this means that the Icelandic or Belgian supervisor is the principal supervisor and De Nederlandsche Bank only exercises supervision over the liquidity position of that branch.

Under what schemes may I claim compensation in the event of a branch from the European Union, Norway, Iceland or Liechtenstein?

Banks incorporated in the European Union, Norway, Iceland or Liechtenstein and operating a branch in the Netherlands fall within the scope of the DGS of their country of origin. To see whether your bank is in this category, look it up in the Registry of Banks. Your bank is covered by the DGS if the left column reads 'Bijkantoor bank uit EER (2:14)' (‘Branch office of EEA-resident bank’). Your bank will be able to tell your more about the (cover of) the deposit guarantee scheme from the country of origin. The deposit guarantee scheme from the country of origin is responsible for the determination and payment of compensations under that foreign deposit guarantee scheme.

If the DGS in the country of origin provides for more limited cover than the Dutch DGS, the branch concerned may apply for supplemental participation in the Dutch DGS. If your bank is a supplemental participant in this scheme, you may be eligible for compensation under two schemes: the DGS from the country of origin and the Dutch DGS.  The DGS from the country of origin is responsible for the determination and payment of compensation under that foreign DGS. Subsequently, DNB will determine and pay the supplemental compensation under the Dutch DGS. 

We trust that the above information is helpful to you. Should you have any more questions further to the above, please do not hesitate to contact our DNB Information Desk, via email at info@dnb.nl or by telephone, on working days between 9:00 and 17:00 hours, at 0800 020 1068 (toll free).

The above information will be regularly updated, also on the basis of inquiries received by the Information Desk.

 

Latest update: 6 September 2012, 13:00