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Deposit protection

Protection scheme

In Germany, institutions provide deposit protection according to their bank category (ie private banks, public sector banks, savings banks or credit cooperatives), with statutory and voluntary schemes set up by the banking associations operating alongside one another. Statutory depositor protection is governed by the Deposit Guarantee Act (Einlagensicherungsgesetz, or EinSiG) which came into effect on 3 July 2015, and which transposed the harmonised requirements set out by the recast European DGS Directive of April 2014 into German law. According to the Act, all credit institutions engaged in deposit business are required to belong to a statutory deposit guarantee scheme in order to secure their deposits. DGSs as defined under EinSiG encompass all statutory depositor compensation schemes as well as all recognised institutional protection
schemes.

Separate dedicated statutory compensation schemes, namely the compensation schemes of the Association of German Banks (EdB) and of German public banks (EdÖ), exist for private and public credit institutions respectively. The institutional protection schemes operated by the German Savings Banks and Giro Association (DSGV) and the National Association of German Cooperative Banks (BVR) are primarily focused on protecting the institutions themselves.

Under EinSiG, these schemes have also been recognised as statutory deposit guarantee schemes since 2015. From this time onwards, aside from safeguarding institutions as before, EinSiG has served as the basis for providing depositor compensation. The existing institutional protection scheme operated by the DSGV has remained intact, albeit supplemented by the additional task of insuring deposits. As regards the BVR, since EinSiG entered into force, this association has operated a dual protection scheme consisting of the newly created institutional protection scheme BVR Institutssicherung GmbH and its ongoing voluntary institutional deposit guarantee scheme.

Statutory protection

If a compensation event occurs, the statutory guarantee schemes ensure legal entitlement to compensation amounting to no more than €100,000 per depositor and bank, including any claims to interest on their part. A higher level of protection of up to €500,000 for a period of up to six months following the crediting of deposited amounts applies in the case of deposits considered particularly worthy of protection. Such funds include deposits resulting from the sale of private real estate and claims on social grounds. All compensation claims must be submitted no later than seven working days after a given compensation event has been recorded. Alongside all types of deposit – essentially, sight, time and savings deposits –, the statutory deposit protection scheme also covers registered savings bonds. Depositors with a claim to compensation include individuals, partnerships and corporations, regardless of their size. The deposit protection schemes, which are financed through the collection of annual, risk-oriented contributions from the institutions assigned to them, are obliged to ensure that, by 24 July 2024, their available financial means are at least equivalent to 0.8% of the amount of the covered deposits (deposits not exceeding the repayable cover limit of €100,000) of their member credit institutions. 

Voluntary protection

The statutory deposit guarantee schemes are supplemented by the voluntary deposit insurance scheme established by the Federal Association of German Banks (BdB) and the Association of German Public Sector Banks (VÖB), both of which operate a voluntary deposit guarantee fund.

Deposits are guaranteed by voluntary insurance schemes only if these are not already covered by a statutory compensation scheme. There is no legal entitlement to compensation. The voluntary deposit guarantee fund operated by the BdB protects all deposits of private individuals, private partnerships and foundations; this includes sight, time and savings deposits as well as registered savings bonds. Since 1 January 2015, the coverage limit has been set at 20% of a member bank's own funds. The voluntary deposit guarantee fund operated by the VÖB protects nonbank deposits with values exceeding the statutorily guaranteed claim to compensation of €100,000; deposits of individuals, business enterprises and municipalities are protected thereunder.