Frequently Asked Questions
Following the bringing into force of the Deposit Guarantee Scheme Act, 1997 ("the Act"), implementing the European Union Directive on Deposit Guarantee Schemes (94/19/EC), credit institutions1 are required, on request, to provide all depositors and intending depositors with details of the Deposit Guarantee Scheme to which they belong and the conditions and procedures for making a claim. This leaflet describes the basic terms of the Gibraltar Deposit Guarantee Scheme (the "Scheme").
Which Banks Are Covered By The Scheme?
The following banks are covered by the Scheme:
- banks licensed under the Banking Act, 1992 incorporated in Gibraltar including their branches in the European Economic Area ("EEA")2;
- certain banks incorporated in EEA States who have joined the Scheme to supplement the cover available from the scheme operating in their home country in respect of deposits taken by their Gibraltar offices;
- certain banks incorporated outside the EEA in respect of deposits taken by their Gibraltar offices.
How Do I Know If A Particular Bank Is A Member Of The Scheme?
The bank's own literature in relation to the Scheme will state to which scheme(s) the bank belongs. The Gibraltar Deposit Guarantee Board ("the Board") can also advise you if the bank participates in the Scheme. You can also click here to see a list of present participants.
What Limits Apply To The Scheme?
The Scheme covers 100% of a bank's total liability to a depositor in respect of deposits which qualify for compensation under the Act made with EEA offices subject to a maximum payment to any one individual of €100,000. A bank's total liability to a depositor is the aggregate of all accounts in the name of that depositor in the currencies covered (see below), including the depositor's share in a joint account or a client account. Joint accounts are divided equally between account holders where there is no indication of the share of each holder in the account.
Partnerships or similar associations will be treated as one claimant.
Deposits held by trustees will be treated as one claimant unless each of the beneficiaries can be separately identified and has a separate right under the trust before the date of the declaration by the Commissioner of Banking.
The following will be deducted from the amounts payable under the Scheme:
- payments received from deposit guarantee schemes elsewhere;
- payments from any insurance policy taken out by the claimant in respect of the deposit;
- payments from the liquidator or receiver; and
- any amounts which had a right of set-off at the date of declaration.
The limits shown above are those which will apply in the majority of cases. However, if a deposit is made with the branch of a Gibraltar bank in a Member State or a Gibraltar branch of a European Authorised Institution, the limits may be higher or lower than those shown above. You should ask your bank for details.
Does The Scheme Cover Deposits In All Currencies?
The Scheme ONLY covers deposits denominated in an account in a currency of the territory of an EEA State or in ECU.
Are All Types Of Deposit Covered?
Most types of deposit are covered, including current, deposit and savings accounts. Certain deposits are not covered by the scheme as follows:-
- Deposits in currencies other than those of the countries referred to above.
- Amounts deposited by another bank for its own account.
- Deposits which form part of the capital of the bank.
- Deposits arising out of transactions in connection with which there has been a conviction under the anti money-laundering legislation.
- Deposits by financial institutions.
- Deposits by insurance undertakings.
- Deposits by governments, central administrative authorities or local or regional governments or authorities.
- Deposits by collective investment undertakings.
- Deposits by pension and retirement funds.
- Deposits by a credit institution's own directors, managers, members personally liable, holders of at least 5% of the institution's capital, persons responsible for carrying out the statutory audits of the institution's accounting documents and depositors of similar status in other companies in the same group.
- Deposits by close relatives and third parties acting for the depositors referred to in the paragraph above.
- Deposits by other companies in the same group which provide consolidated accounts.
- Non-nominative deposits.
- Deposits for which the depositor has, on an individual basis, obtained from the same institution rates and financial concessions which have helped to aggravate its financial situation.
- Debt securities issued by the same institution and liabilities arising out of own acceptances and promissory notes.
- Deposits by companies which are not permitted to draw up abridged balance sheets.
NB: Fiduciary deposits are not covered by the Deposit Guarantee Scheme. For further information please click here.
If My Deposit Has Earned Any Interest, Will This Be Covered?
Interest earned on your account at the time when the deposit becomes due and payable will be protected, subject to the limits of the Scheme mentioned above. Section 2(2) of the Act defines- "Qualifying deposit" as including any accrued interest up to the date of declaration of default.
Will My Deposit Be Covered If I Have Borrowed Money From The Bank?
In general, all loans, overdrafts and other amounts owing to the bank will be deducted when calculating the amount of the deposit on which compensation will be paid.
How Is The Scheme Activated?
The Scheme is activated upon the occurrence of one of the criteria prescribed in section 10 (6) of the Act. The most likely of these events is a Court's decision to put the bank into liquidation. The Scheme will also be activated if the Commissioner of Banking determines that a bank has been unable to repay its deposits for reasons which are directly related to its financial circumstances and has no current prospect of being able to do so.
If your deposit is made with the branch of an institution incorporated elsewhere in the EEA which has joined the Scheme to supplement its cover, the Scheme can also be activated by the Commissioner of Banking considering that an event corresponding to, inter alia, those mentioned above has occurred.
How Do I Make A Claim Under The Scheme And How Are Payments Made?
If the Scheme is activated, the Board will obtain from the bank in default the name and address of each depositor with an account denominated in an EEA currency or ECU/EURO. The Board will then write to each account holder enclosing a claim form for each account. Full details of how to complete the form will be advised at the time. In the normal course, depositors need take no action until they have heard from the Board.
Each claim will need to be verified before payment can be made. This will usually involve the Board asking the liquidator or administrator to confirm the amount of the deposit and to confirm that your deposit is due and payable under the terms on which it was made and is not a type of deposit which is excluded from protection.
If the bank has been placed in liquidation by the Gibraltar Courts, depositors will need to lodge a proof of debt or a claim for repayment in the liquidation with the liquidator. This procedure will normally be notified to depositors by the relevant liquidator. If a Liquidator has not been appointed, depositors will be asked to complete an appropriate form by the Board which the Board will be able to lodge on their behalf with a liquidator or administrator, if one is appointed at a later date.
All payments to depositors will be made as soon as practical after a deposit becomes due and payable. In a liquidation, all deposits become due and payable immediately and therefore payments can be made as soon as a claim is verified. However, in other cases, deposits normally continue to their original maturity date. Depositors will therefore have to wait for a compensation payment until that maturity date is reached. Payments will be made by cheque in favour of the individual depositor.
Before paying any compensation, the Board must receive confirmation from the claimant that:
- the rights in respect of that deposit will vest in the Board;
- he will assist the Board in exercising those rights;
- he will pay the Board any amounts he receives in respect of those rights, after deduction of any amount the Board may be required to repay him; and
- any prospect of recovering an amount in excess of the compensation payable will vest in the Board.
Any costs incurred by the Board directly in relation to that deposit will be deducted from the amount of compensation paid or payable to the claimant.
A claimant who is dissatisfied with a decision of the Board relating to compensation may appeal to the Supreme Court who may direct the Board to take any action which the Board may take under the Act.
The information contained in this leaflet is a summary of the terms of the Scheme and claims procedures and conditions that must be fulfilled before payments under the Scheme can be made. If you have any queries about the Scheme, please write to the Gibraltar Deposit Guarantee Board, C/O PO Box 940, Gibraltar. Advice from a professional (lawyer and accountant etc) should also be sought if you have any questions about the Scheme. Reference should also be made to the original legislation for its full terms and effect.
In an effort to promote transparency, the GDGB has mapped the 18 Core Principles of the International Association of Deposit Insurers (IADI) alongside the Gibraltar Deposit Guarantee Scheme’s actions, which establish these shared principles.
|IADI Core Principles: Mapping Against the GDGB|
1 The term "bank" is used throughout this leaflet as meaning credit institutions, banks and building societies. The term "bank" is used throughout this leaflet as meaning credit institutions, banks and building societies.
2 The members of the EEA can be viewed at the following website. Please click on the link http://eeas.europa.eu/eea/.