Repayment of deposits
Occurrence of a payout event
The German Federal Financial Supervisory Authority (BaFin) determines that a payout event has occurred if
a) bank is unable to repay its deposits, or
b) moratorium imposed has already lasted six weeks.
Deposit protection covers demand, term and savings deposits, including registered savings certificates. Liabilities in respect of which a bank has issued bearer instruments such as bearer bonds and certificates are, on the other hand, not protected.
Scope of protection
Claims for compensation are limited to €100,000 per person and per bank. In addition, depositors are legally entitled, for a period of at least six months after paying in deposits, to compensation up to an amount of €500,000 if the deposits resulted from certain life events such as the purchase of a private residential property, marriage or an employee severance payment.
If a payout event occurs, depositors are notified thereof without delay by the EdB.
Before the EdB can compensate depositors, it first has to determine the amount of the repayable deposits in each case.
The EdB must examine depositors’ claims for compensation independently and meet these within seven working days of the date on which the German Federal Financial Supervisory Authority (BaFin) determines that a payout event has occurred. Depositors are not required to officially apply for compensation. Should the EdB require additional information from depositors to enable it to provide compensation, it will contact the depositors concerned in writing.
Amounts that are subject to a temporarily higher coverage level must be substantiated separately in writing by the depositor, who is required to provide proof of the facts supporting the claim for compensation. The EdB must repay such amounts within seven working days of receipt of their registration and their substantiation (for details of the exceptions where a higher coverage level applies, see Section 8 (2) of the German Deposit Guarantee Act (EinSiG).
Once the claim for compensation has been met, the depositor’s claims against the bank are assigned to the EdB. The claim for compensation becomes time-barred five years after the depositor has been notified of the occurrence of the payout event.
Compensation is provided in euros. If accounts of a depositor are held in a currency other than euros, the European Central Bank reference rate applying on the day when BaFin determines that a payout event has occurred is taken as the exchange rate.
Disputes about the reason for and the amount of a claim for compensation may be submitted to civil courts.
Where banks are both assigned to the EdB and members of the Association of German Banks’ Deposit Protection Fund, compensation for both schemes is provided from a single source. For this purpose, the EdB instructs the Deposit Protection Fund to handle the payout procedure. The Deposit Protection Fund then deals with depositors also on behalf of the EdB.