Guaranteed deposit compensation
What is guaranteed compensation?
The state guaranteed amount to be disbursed to the depositor - a natural or a legal person - in the case of unavailability of deposits, to be paid in accordance with the certain procedure and in the certain amount.
Who is entitled to receive the state guaranteed compensation?
Depositors shall be entitled to receive the state guaranteed compensation:
customers of credit institutions registered in Latvia and branches thereof, credit unions as well as Latvian branches of credit institutions registered abroad;
customers of Latvian branches of credit institutions registered in the Member States if they participate in the Deposit Guarantee Fund.
Who is entitled to receive the guaranteed compensation?
The State guaranteed compensation is subject to investments, current accounts, salary accounts, savings accounts of a depositor and other monetary funds of the depositor in the credit institution, besides, all investments of one depositor made to one credit institution shall be added together and shall be deemed as one guaranteed deposit. The amount of the guaranteed compensation shall refer to one such deposit in a particular credit institution.
In what cases is it possible to receive the guaranteed compensation?
A depositor may receive the guaranteed compensation in cases, when the deposit taker is not able to disburse deposits and at lease one of the following circumstances has occurred:
a court has declared the deposit taker as insolvent;
The Financial and Capital Market Commission has cancelled an authorisation (permit) for operation of the credit institution or credit union;
The Financial and Capital Market Commission has established that the deposit taker is not able to disburse a deposit to the depositor and has taken a decision regarding occurrence of inaccessibility of deposits.
The guaranteed compensation shall not be paid for:
- deposits of credit institutions and credit unions;
- deposits of financial institutions;
- deposits of such local governments, the annual budget of which is exceeding 500000 euros, and direct administration authorities;
- deposits, which are related to money laundering or to be recognized as criminally acquired resources if a verdict of guilty has come into force;
- deposits, the depositor of which has not been identified as a customer, in accordance with the provisions of the Law on the Prevention of Money Laundering and Terrorism Financing;
- deposits, constituting equity capital of the deposit taker;
- deposits of insurance companies;
- deposits of investment firms;
- deposits of investment management companies;
- deposits of private pension funds;
- deposits of alternative investment fund managers;
- debt securities issued by the credit institution, as well as liabilities arising from promisory notes thereof, including bills of exchange;
- deposits, by which no transactions have been performed within the last two years from the day of ocurrence of inavailability of deposits and the value of which is below 10 euros.
What is the amount of guaranteed compensation?
Amount of the guaranteed compensation for one depositor is determined regardless of the time, when the deposit was submitted to the bank.
In the case of unavailability of deposits disburse of the guaranteed compensation shall be ensured to both, natural as well as legal persons, from the funds of the Deposit Guarantee Fund for deposits in all currencies, but not exceeding the amount of EUR 100 000.
The guaranteed compensation shall be paid in euros.
When the guaranteed compensation is disbursed?
The guaranteed compensation shall be disbursed as of the 21st working day from the day of yhe ocurrence of unavailability of the deposit.
What happens if the Deposit Guarantee Fund is short of resources?
If the Deposit Guarantee Fund is short of resources for payments of the guaranteed compensation, the compensation shall be paid from the State budget.
Information was prepared on the basis of the report of the Financial and Capital Market Commission, submitted to mass media, in accordance with the Deposit Guarantee Law adopted by the Saeima.
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