Do You Want to Know How It Works in Practice?
What all is insured with the Deposit Insurance Fund? To what accounts does it apply?
All deposits with banks, building societies, and cooperative savings banks that are maintained in the name and surname, personal identification number, and address of a natural person (individual) or the name, identification number, and registered seat of a legal entity. It applies, in particular, to current accounts, term deposits, etc. For example, bills of exchange, bonds, shares, unit certificates and other securities are not insured.
Is it necessary to insure deposits even at "large" banks (such as KB and CS)? And from what amount?
Deposits at banks are insured, as required by law. See the list of insured institutions. Your deposit at a bank is therefore insured automatically and you do not need to do anything in the matter.
Where does the DIF get its money?
All institutions (banks, building societies, and cooperative savings banks) that maintain insured deposits contribute to the Deposit Insurance Fund every year, as required by law. As at December 31, 2010, the Fund had an amount of approximately 18 billion crowns.
Do the disbursement limits also apply to the branches of foreign banks operating in the Czech Republic? If not, what rules are followed in the event of their bankruptcy?
The branches of foreign banks (which engaged in business here but are not Czech legal entities) are insured in the country of the registered seat of the parent institution. As of 30 June 2009, the minimum insurance limit in all EU countries is EUR 50,000, and as of 31 Dec. 2010, the insurance amount, uniformly throughout the EU, is EUR 100,000.
How soon after the collapse of a bank will I get my money? Do the same rules apply to domestic banks and the branches of foreign banks?
The deadline for the disbursement of deposit compensation is set by law at 20 business days from the announcement of insolvency. These rules apply to domestic banks. In the case of a branch of a foreign bank, the deadlines are governed by the rules applicable in the country of the registered seat of the parent bank (in the EU, the deadline is also 20 business days).
Does the deposit insurance cover even the interest accrued on the deposits? I.e., will the saved amount be returned to me inclusive of the interest on the deposit?
The insurance coverage extends even to interest accrued on deposits as at the record date.
How should I insure one million euros when I can only insure 100,000? Can I divide the deposit into several banks? Can it be under one name, or does each deposit have to be made by a different person?
The insurance limit applies to one bank and one person (its client). You would have to divide the amount you mention among several banks or several persons.
How is deposit insurance reflected in fees for the maintenance of a bank account, which are relatively high in this country compared to the EU?
Deposit insurance does not play a significant role in that. The premiums are paid by the bank or cooperative savings bank quarterly and amount to 0.04% of the volume of the deposit insured; in the case of a building society, it only amounts to 0.02%.
How is it with the insurance of deposits in pension funds and life insurance?
Those financial products are not insured with the Fund.
Is there any difference between the insurance of deposits in a bank and a cooperative savings bank?
No differences arise from the law in this case?
How is the deposit compensation amount calculated?
In calculating the deposit compensation amount, all insured deposits of a single depositor at a single insured institution, including the interest calculated as at the record date, are added up. Deposit compensation is disbursed in the amount of 100% of this aggregate sum of deposits, but to a maximum of EUR 100,000. Compensation for deposits in foreign currencies is paid out in Czech crowns.
When did the insuring of deposits first occur and where?
The oldest fund is the Federal Deposit Insurance Corporation, established in 1933. In addition to deposit insurance, the Federal Deposit Insurance Corporation also acts as the bank oversight institution over more than 4,900 banks and savings banks, which is more than a half of the institutions active in the US banking system. Since then, deposit insurance has spread worldwide; today, the International Association of Deposit Insurers (IADI) has 62 members. Deposit insurance exists in 104 countries around the world. The Deposit Insurance Fund was one of the 25 founding members of IADI.
At what exchange rate are deposits converted to establish the equivalent of the EUR 100,000 limit?
The equivalent of the limit in Czech crowns is calculated on the basis of the foreign exchange rate announced by the Czech National Bank as at the date which the Czech National Bank or, in the case of a branch of a foreign bank, a bank oversight body of the home country, issues a notice about a bank's inability to meet its commitments.
Is the DIF a state fund? What is the position of the DIF with respect to state administration?
The Deposit Insurance Fund was established as a legal entity pursuant to the Act on Banks and is not a state fund. The DIF is not a component of state administration. It is managed by a five-member Board of Directors, which is appointed and recalled by the Minister of Finance. At least one member represents the CNB and at least two members represent the management boards of banks. Members of the Board of Directors are not entitled to any remuneration for acting in that capacity. The costs of the operation of the Fund are paid from the revenues from the investment of financial reserves.
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