Deposit protection

Protection scheme

In Germany, deposit protection is provided by institutions organised by bank category (i.e. private banks, public sector banks, savings banks or credit cooperatives), with statutory schemes operating alongside voluntary schemes set up by the banking associations. Statutory depositor protection is governed by the Deposit Guarantee Act (Einlagensicherungsgesetz), which came into effect on 3 July 2015 and transposed the harmonised requirements set out by the recast European Directive on Deposit Guarantee Schemes of April 2014 into German law. According to the Deposit Guarantee Act, all credit institutions engaged in deposit business are required to belong to a statutory deposit guarantee scheme (DGS) in order to ensure customer protection. DGSs as defined under the Deposit Guarantee Act encompass the statutory depositor compensation scheme of the Association of German Banks (Entschädigungseinrichtung deutscher Banken GmbH, or EdB) as well as recognised institutional protection schemes.

The EdB provides protection for customers of private and public sector banks.

The focus of the institutional protection schemes operated by the German Savings Banks and Giro Association (Deutscher Sparkassen- und Giroverband, or DSGV) and the National Association of German Cooperative Banks (Bundesverband der Deutschen Volks- und Raiffeisenbanken, or BVR) is protecting the institutions themselves. Under the Deposit Guarantee Act, these schemes have also been recognised as statutory deposit guarantee schemes since 2015. The institutional protection scheme operated by the DSGV performs the additional task of insuring deposits. The BVR has a dual protection scheme consisting of an institutional protection scheme, BVR Institutssicherung GmbH, and its ongoing voluntary institutional 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 to 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 are financed through the collection of annual, risk-oriented contributions from the institutions assigned to them. 

Voluntary protection

The statutory deposit guarantee schemes are supplemented by the voluntary deposit insurance schemes established by the Federal Association of German Banks (Bundesverband deutscher Banken, or BdB) and the Association of German Public Sector Banks (Bundesverband Öffentlicher Banken Deutschlands, or 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 2020, the coverage limit has been set at 15% of a member bank's own funds. The voluntary deposit guarantee fund operated by the VÖB protects non-bank deposits with values exceeding the statutorily guaranteed claim to compensation of €100,000; this protection covers deposits of individuals, business enterprises and municipalities.