All members of the Financial Market Guarantee System, which arose from the Deposit Insurance Fund, have been appointed
On 1 January 2016, the Act on Financial Crisis Prevention and Resolution and an accompanying act which amends the rules of deposit insurance, came into force. Thus from that date there has been a more comprehensive system to protect depositors and promote stability on the financial market. The Deposit Insurance Fund has been transformed into the Financial Market Guarantee System and, besides the funds in the Deposit Insurance Fund, it administers the funds in the Crisis Resolution Fund, which can be used for the potential future resolution of financial institution crises.
- 08.01.16important The Deposit Insurance Fund has been transformed into the Financial Market Guarantee System
The Deposit Insurance Fund in Brief
- The Deposit Insurance Fund (DIF) was established pursuant to Act No. 156/1994 Coll., amending and supplementing Act No. 21/1992 Coll., on Banks, as amended, supplementing Act No. 513/1991 Coll., the Commercial Code, as amended, and Act No. 328/1991 Coll., on Bankruptcy and Composition, as amended.
- By law, deposits with banks, building societies, and cooperative savings banks are insured
- The deposits of both natural persons and legal entities, i.e., individuals and companies, are insured, both in Czech crowns and foreign currencies, and including interest
- Deposits kept at the branches of foreign banks are not insured through the DIF. Deposits with those branches are insured in the deposit insurance system in the country in which the parent bank is based.
The main role of the Deposit Insurance Fund is to protect bank deposits and enhance trust in the banking system in a time of economic turbulence.
Since its establishment, the Deposit Insurance Fund has paid compensation for insured deposits to some 300,000 clients, amounting to more than 41,9 billion crowns. The payments concerned the clients of the 12 banks and 5 cooperative credit unions that went bankrupt between 1995 and 2014.
Payment of compensation of deposits held in Metropolitní spořitelní družstvo represented the second biggest payout for the Deposit Insurance Fund in its history. The Fund commenced the payment of compensation on 27th January 2014 through all branches of Česká spořitelna. Within the first month of compensation payments, over 96% of all the deposits were paid out to MSD clients. The total value of insured deposits exceeded CZK 12 billion. This payment affected nearly 14,000 clients who had money deposited with MSD. The Deposit Insurance Fund currently secures deposits in the value of CZK 2,9 trillion, deposited with 34 insured financial institutions, which paid a total of CZK 4,2 trillion in contributions to the Fund in 2014.