The Deposit Guarantee Schemes Directive (DGSD) was published in the Official Journal of the European Union on 12 June 2014.

The DGSD is intended to harmonise at the EU level the methods of financing deposit guarantee schemes (DGSs), via a mix of ex ante and ex post contributions. As provided in recital 34, in order to guarantee that the available financial means of DGSs reach the target level, “It should be possible for the available financial means of DGSs to include cash, deposits, payment commitments and low-risk assets, which can be liquidated within a short period of time.”

Article 10(3) of the DGSD provides that the available financial means to be taken into account in order to reach the target level of the DGS may include payment commitments not exceeding 30% of the total amount of available financial means raised in accordance with that article. Article 10(3) of the DGSD also provides that the European Banking Authority (EBA) is required to issue guidelines on payment commitments, in order to ensure consistent application of the Directive across the EU.

The EBA has now issued draft guidelines on payment commitments to ensure that they are technically sound and implemented in a consistent way across the EU. The draft guidelines attempt to provide guidance on the legal instruments that should be entered into by DGSs and credit institutions, providing for the terms and conditions for the inclusion of payment commitments within the available financial means of the DGS, so that it is guaranteed, for instance, that the DGS has an irrevocable right to claim those payments on demand, and that the collateral is unencumbered by any third party rights and at disposal of the DGS. The draft guidelines also aim to provide criteria on the eligibility and management of the collateral regarding, for example, the valuation haircuts which should be applied in the valuation of underlying assets.

The deadline for comments on the draft guidelines is 2 January 2015.

View EBA consults on guidelines on payment commitments to deposit guarantee schemes, 25 September 2014