Legislation
The activities of the Deposit Insurance Fund are governed by Act No. 21/1992 Coll., on Banks, as amended.
Article 41a
(1) The Deposit Insurance Fund (hereinafter referred to as the “Fund”) is hereby established. The Fund shall be incorporated in the Companies Register as a legal entity.
(2) The Fund shall not be a state fund within the meaning of a special legislative act. 12 No special legal rules governing the insurance business shall apply to the insurance of deposit claims.
(3) Without prejudice to Articles 5a(4) and 41l, all banks and branches of foreign banks (hereinafter referred to as “banks” in this Part) shall participate in the deposit-claims insurance scheme and contribute to the Fund to the extent laid down in this Act.
(4) The source of the Fund shall be contributions from banks and other income, in particular yields on investment of funds, funds raised by the Fund in accordance with Article 41l, repayable financial assistance, and proceeds from closed insolvency and liquidation proceedings.
(5) Drawings may only be made from the Fund to pay compensation for deposit claims to eligible persons under the conditions laid down by this Act, and for the repayment of debts. The costs of the Fund’s activities shall be covered from the yields on the investment of funds.
(6) The financial statements of the Fund must be verified by an auditor.
(7) The Fund shall cooperate wit the Czech National Bank and the Ministry of Finance when carrying on its activities. The Czech National Bank shall notify the Fund in advance of a possible procedure pursuant to Article 41d(1).
Article 41b
(1) The Fund shall be managed by a Board of Directors consisting of five members.
(2) The Chairman, the Vice-Chairman and other directors of the Fund shall be appointed and dismissed by the Minister of Finance.
(3) The directors shall be appointed by the Minister of Finance for a five-year period, possibly repeatedly. One director shall be appointed each year. There shall be no remuneration for discharge of the office of director.
(4) A director shall perform his function with due professional care. In the event of a breach of this obligation, a director shall be liable for any damage he causes:
a) in full in the case of intentional conduct,
b) up to a total of CZK 600,000 per term of office in the case of negligence.
(5) If a director terminates his membership of the Board prior to the lapse of his period of office, a new director shall be appointed in his or her place. The new director’s period of office shall end on the same date the period of office of his of her predecessor would have ended.
(6) At least one director shall be appointed from among the employees of the Czech National Bank and at the proposal of the Czech National Bank. At least two directors shall be appointed from among the members of boards of directors of banks. Directors shall be entitled to reimbursement of the expenses incurred in connection with the discharge of their office.
(7) Details concerning the activities and powers of the Fund shall be laid down in the Statute of the Fund to be issued by the Board of Directors after having first received the consent of the Ministry of Finance. The consent of the Ministry of Finance shall be also required for an amendment of the Statute of the Fund.
(8) Directors of the Fund, employees of the fund and other persons authorised to perform activities relating to the payment of compensation from the Fund shall maintain confidentiality regarding all information acquired in the context of the performance of their occupation, employment or duties. Provision of information in cases and for purposes referred to in Articles 38(2) to (4) and (6), 41g(1), 41n and 41o(2) shall not be considered contravention of the obligation to maintain confidentiality in business matters. The provisions of Articles 38(5) and 39(2) shall apply mutatis mutandis.
Article 41c
(1) Insured shall be all claims arising from deposits, including interest accrued, held in the Czech currency or in a foreign currency, registered as credit balances on accounts or deposit books or evidenced by a certificate of deposit, deposit slip or other comparable document, except for the claims referred to in paragraph 2 and subject to compliance with the identification requirements provided for in paragraph 3.
(2) Uninsured shall be the deposit claims of banks, foreign banks, financial institutions, health insurance companies and state funds. This shall not apply in the cases referred to in Article 41f. Also uninsured shall be the deposit claims that a bank is entitled to include partly in its capital (subordinated debt).
(3) A bank shall ensure identification of depositors when maintaining their accounts or when accepting their deposits in any other form and shall keep identification data on its depositors and information about the amount of and reason for the insured deposit claim in its files. “identification data” shall mean:
a) in the case of natural persons: the first name, surname, address, birth certificate number, and if not allocated, date of birth or identification number,
b) in the case of legal entities: the commercial name or designation of the legal entity, its registered office and, for domestic legal entities, its identification number.
(4) The identification data referred to in paragraph 3 shall be stated in the account contract, in the deposit book and on the certificate of deposit, deposit slip or other comparable document evidencing the acceptance of the deposit.
(5) The deposit-claims insurance scheme shall not apply to bills of exchange and other securities.
(6) The contribution of a bank to the Fund shall be 0.04% of the average volume of insured deposit claims for the relevant calendar quarter. The bank shall calculate the average volume of insured deposit claims using the stock of insured deposit claims as of the last day of each calendar month of the relevant calendar quarter, including interest accrued to each depositor as of the same day. The calculation shall be made in the Czech currency. In the case of claims arising from deposits held in a foreign currency, the foreign exchange market rate announced by the Czech National Bank as of the date on which the calculation is made shall be used for conversion into the Czech currency.
(7) The contribution of a building savings bank to the Fund shall be 0.02% of the average volume of insured deposit claims for the relevant calendar quarter. The building savings bank shall calculate the average volume of insured deposit claims using the stock of insured deposit claims as of the last day of each calendar month of the relevant calendar quarter, including interest accrued to each depositor as of the same day, excluding advance payments of state support.
(8) If the volume of funds of the Fund falls below 1.5% of the total volume of deposit claims insured with the Fund, the Fund shall issue a notification thereof, which shall be published in a manner allowing remote access. In this case the contribution of banks shall be 0.01% of the average volume of insured deposit claims calculated in accordance with paragraph 6 and the contribution of building savings banks shall be 0.005% of the average volume of insured deposit claims calculated in accordance with paragraph 7 as from the calendar quarter following the notification publication date.
(9) If the volume of funds of the Fund falls below 1.5% of the total volume of deposit claims insured with the Fund and in cases other than those referred to in Article 41k, the Fund shall issue a notification thereof, which shall be published in a manner allowing remote access. In this case the amount of the contribution of
a) banks shall be subject to the rate referred to in paragraph 6;
b) building savings banks shall be subject to the rate referred to in paragraph 7, as from the calendar quarter following the notification publication date.
(10) A bank shall pay its contribution to the Fund for the relevant calendar quarter by the end of the calendar month following the end of the calendar quarter at the latest. The contribution shall be paid in Czech koruna. The Fund shall inform the Czech National Bank of any nonpayment of a contribution without any delay. If the bank is in default in payment, it shall be obliged to pay the Fund interest on late payment stipulated by civil regulations.
(11) The bank shall maintain a register of information pursuant to paragraph 3 and in cases stipulated in this Act (Articles 41d(2) and 41n) provide the Fund with this information. The Ministry of Finance shall stipulate the form, structure and manner of maintaining and providing information in a decree.
Article 41d
(1) Compensation for an insured deposit claim shall be paid from the Fund to an eligible person after the Fund receives notification in writing from the Czech National Bank, or, in the case of a foreign bank branch pursuant to Article 5a having supplementary insurance pursuant to Article 41m, from the home country banking supervisory authority, that the bank is unable to meet its commitments to eligible persons under the legal and contractual conditions. Such notification shall be issued at the latest five working days after the date on which the material fact was established, and the bank or former bank must be informed thereof in writing. The date on which the Fund receives this notification, shall be considered the record date. The Czech National Bank shall publish information about when the record date occurred in a manner allowing remote access.
(2) The bank or former bank, liquidator, trustee or insolvency trustee shall, within eight working days of the record date, provide the Fund with information kept pursuant to Article 41c(3).
(3) No later than 12 working days from the record date, the Fund shall determine the date, place and manner of payment of compensation, make this information publicly known in an appropriate manner and notify the Ministry of Finance and the Czech National Bank. The Fund must be able to pay compensation to eligible persons within 20 working days of the record date. In wholly exceptional circumstances and after receiving the consent of the Czech National Bank and the Ministry of Finance, the Fund may grant an extension of no more than ten working days.
(4) The Fund shall inform the Czech National Bank of any failure to fulfil the obligation referred to in paragraph 2 at the earliest opportunity.
(5) The liquidator, trustee or insolvency trustee shall commit an offence by failing to fulfil the obligation stipulated in paragraph 2. The Czech National Bank may impose a fine of up to CZK 500,000 for this offence. The Czech National Bank shall impose a fine of up to CZK 500,000 on a bank or former bank that breaches the obligation stipulated in paragraph 2.
Article 41e
(1) To calculate the compensation, all the eligible person’s insured deposit claims at the bank, including shares in accounts kept for two or more joint account holders, shall be summed according to the position as of the record date. The share of a joint account holder shall be equal to a fraction with the total amount in the account as the numerator and the number of joint account holders as the denominator, unless the eligible persons when opening or disposing of the account provide evidence of a different share. The bank shall note the different share in its records. Any different share specified after the record date shall not be taken into consideration. The calculation shall be made in the Czech currency, conversion into the Czech currency shall be carried out for claims arising from deposits held in a foreign currency using the foreign exchange market rate announced by the Czech National Bank as of the record date. Interest calculated as of the record date shall form part of the insured deposit claim. The compensation shall be paid in the Czech currency. The right of an eligible person to payment of compensation from the Fund shall be a right associated with the deposit claim.
(2) The compensation paid to an eligible person shall be the sum calculated in accordance with paragraph 1 up to a maximum of EUR 100,000 per eligible person per bank, unless stipulated otherwise in a directly applicable regulation of the European Communities. The equivalent of the limit in Czech koruna shall be calculated using the foreign exchange market rate announced by the Czech National Bank as of the record date.
(3) The government may increase the amount referred to in paragraph 2 in a regulation based on relevant EC regulations 12a.
Article 41f
(1) The funds of two or more persons deposited on a single account shall constitute a deposit claim with special treatment.
(2) On opening the account referred to in paragraph 1 or on the first occasion of disposing of such an existing account, the account holder shall notify the bank in writing of the fact that the funds of two or more persons are deposited on the account, provide evidence of the share of each of them, identify those persons to the extent laid down in Article 41c(3) and demonstrate the truthfulness of this information. The bank shall treat deposits in such an account as any other insured deposit claim and shall keep information on them in its records.
(3) For the purposes of calculating compensation from the Fund for a claim arising from a deposit on the account referred to in paragraph 1, the bank shall submit to the Fund a breakdown of the deposit claims by person and the amounts falling to each of them, and shall demonstrate the truthfulness of the information. It shall submit the information to the Fund.
(4) Compensation for a deposit claim with special treatment shall be paid to the eligible persons in an amount equal to that which would have been paid had each of the aforementioned eligible persons had the funds registered on their own accounts.
(5) Where the real owner of the funds differs from the account holder, the compensation shall be paid to the real owner. The account holder shall notify the bank of this fact on opening the account or on the first occasion of disposing of the account and shall identify the real owner of the funds to the extent laid down in Article 41c(3). The bank shall record this information in the account contract or in another document the issuance of which is associated with the acceptance of the deposit, and in its records.
(6) Any notification pursuant to paragraphs 2 and 5 made by the account holder after the record date shall not be taken into consideration.
(7) A payment institution or small-scale payment service provider on whose account are recorded funds entrusted to it by payment service users in order to execute a payment transaction 13 shall notify the bank thereof in writing without undue delay; in such case it shall not be subject to the obligation stipulated in the first sentence of paragraph 2 and the second sentence of paragraph 5. The identification of the real owner pursuant to paragraph 5 shall be based on the records of the payment institution or small-scale payment service provider as of the record date. A payment institution or small-scale payment service provider shall maintain a register of information pursuant to Article 41c(3) and submit it to the bank on demand without any delay in cases stipulated in Articles 41d or 41n.
(8) Paragraph 7 shall apply mutatis mutandis to an investment firm on whose account are recorded funds constituting client assets under the act governing capital market undertakings 14.
(9) A bank is entitled to use information that it receives from an entity referred to in paragraphs 7 or 8 only to fulfil its duties to the Fund in accordance with this part of the Act and in cases referred to in Article 38(2) to (4) and (6).
Article 41g
(1) The Fund shall cooperate to the necessary extent to ensure the payment of compensation and exchange information with entities through which it ensures the payment of compensation.
(2) The following persons shall not be eligible for the payment of compensation from the Fund:
a) persons having a special relation to the bank concerned, except for the persons referred to in Article 19(e),
b) persons otherwise eligible if it has been proven by a final and conclusive judgment that the deposit originates from criminal activity.
(3) The Fund shall suspend the payment of compensation for those deposit claims regarding which it becomes clear during the course of criminal proceedings that they are deposit claims within the meaning of paragraph 2(b).
(4) The duty to render a contribution to the Fund from the deposit claims of the persons referred to in paragraph 2 shall remain unaffected.
(5) For the purposes of calculating the amount to be paid to an eligible person, no account shall be taken of accruals of insured deposit claims which occur:
a) on the basis of in-bank transfers made between individual accounts maintained with the same bank after the record date,
b) as a result of the assignment of a deposit claim made after the record date.
Article 41h
(1) As of the date of commencement of payments, the claim of an eligible person on a bank shall be decreased by an amount equalling his right to payment of compensation from the Fund.
(2) As of the date referred to in paragraph 1, the Fund shall become a creditor of the bank in the amount of the rights of eligible persons to payment of compensation from the Fund.
(3) The right of an eligible person to payment of compensation from the Fund shall be forfeited upon the lapse of three years from the date determined as the date of commencement of payments.
Article 41i
Wherever the resources of the Fund are not sufficient for payment of the compensation laid down by law, the Fund shall raise the necessary funds on the market. The Fund shall see to it that the conditions under which the funds are provided to the Fund are as advantageous to it as possible. If the Fund is not able to raise funds on the financial market before the date of commencement of the payment of compensation pursuant to Article 41d, it may be provided at its request with a subsidy or repayable financial assistance of the necessary amount from the state budget.
Article 41j
The Fund may only invest its funds in a safe manner in compliance with its Statute.
Article 41k
Where the Fund has been granted a loan or any other form of repayable financial assistance (Article 41i), the contribution of banks to the Fund shall, as from the calendar quarter following the granting of the loan or other forms of repayable financial assistance, be increased to double the percentage rate laid down in Article 41c(6) and (7). In the calendar quarter following the repayment of the loan or other forms of repayable financial assistance, the contribution shall be reduced to the percentage rate laid down in Article 41c(6) and (7).
Article 41l
(1) Foreign bank branches shall not be obliged to participate in the deposit-claims insurance scheme provided that they notify the Czech National Bank of their intention and at the same time demonstrate that the deposit-claims insurance scheme in which they do participate ensures eligible persons a level of protection at least the same as that required by European Community law.
(2) This shall be without prejudice to the obligation of the foreign bank branch to pay a contribution to the Fund for the relevant part of the calendar quarter in which it made the notification referred to in paragraph 1.
Article 41m
(1) Foreign bank branches may take out supplementary deposit-claims insurance under contract with the Fund. The supplementary insurance must be such that the amount up to which deposit claims are insured overall, including supplementary insurance, does not exceed the equivalent of EUR 100,000. The contribution to the Fund shall equal the contribution referred to in Article 41c multiplied by a fraction whose numerator shall be the difference between the amount up to which deposit claims are insured overall, including supplementary insurance and the limit for maximum compensation under the deposit-claims insurance scheme in which the branch participates, and whose denominator shall be the amount up to which deposit claims are insured overall, including supplementary insurance.
(2) The supplementary insurance referred to in paragraph 1 shall be terminated by agreement or by serving notice of withdrawal from the contract with a three-month notice period which shall start running on the first day of the calendar quarter following the date on which notice was served. The Fund may withdraw from the contract only if the foreign bank branch fails to fulfil its obligations toward the Fund, although in the case of a foreign bank branch pursuant to Article 5a it may do so only if Article 5a(6) was complied with. The foreign bank branch may withdraw from the contract without giving its reasons. The foreign bank branch shall inform clients of these facts on its premises.
(3) Banks may not make use in advertising of differences in deposit-claims insurance between Member States.
Article 41n
The Fund shall verify the functioning of the compensation payment system at least once a year. In doing so, it shall cooperate with the Czech National Bank, the Ministry of Finance and banks, which are obliged to provide the Fund at the Fund’s request and within the time limit stipulated by the Fund with information maintained pursuant to Article 41c(3). The Fund shall be obliged to submit the report on the results to the Czech National Bank and the Ministry of Finance without any delay.
Article 41o
(1) The Fund shall cooperate with foreign deposit-claim insurance scheme operators when carrying on its activities.
(2) Where so stipulated by an agreement between the Fund and a foreign deposit-claim insurance scheme operator, in the event of failure of
a) a foreign bank carrying on business in the Czech Republic through a branch, the Fund may be involved in the payment of compensation from the foreign deposit-claim insurance scheme in which the foreign bank participates,
b) a bank having its registered office in the Czech Republic carrying on business abroad through a branch, the foreign deposit-claim insurance scheme may be involved in the payment of compensation from the Fund.
Act No. 21/1992 - full version
Notes
12) Czech National Council Act No. 576/1990 Coll., on the Rules for Financial Management of the Budgetary Funds of the Czech Republic and of Municipalities in the Czech Republic (the National Budget Rules), as amended.
12a) Article 7(7) of Directive 94/19/EC of the European Parliament and of the Council, as amended by Directive 2009/14/EC of the European Parliament and of the Council.
13) Article 19 of Act No. 284/2009 Coll., the Payment System Act.
14) Article 2(1)(h) of Act No. 256/2004 Coll., on Capital Market Undertakings, as amended by Act No. 120/2007 Coll. and Act No. 230/2008 Coll.
