Deposit Guarantee Scheme of Czechia

Information Leaflet – A Deposit Guarantee Scheme Reimburses a Limited Amount to Compensate Account Holders Whose Bank in the Czech Republic Has Failed

Deposit Guarantee Scheme of Czechia: The Garanční Systém Finančního Trhu (GSFT) is the Financial Market Guarantee System of the Czech Republic. The fund combines the traditional deposit insurance insurance fund and a crisis resolution fund to prevents banks, building societies and credit unions from failure by providing financing for resolution and restructuring.

Activation of Deposit Insurance in the Czech Republic: Intervention by the Czech National Bank or court is needed to trigger the Financial Market Guarantee System. Events that allow for such intervention are the bankruptcy of the financial institution, and the determination by the Czech Nation Bank that the financial institution is unable to meet its obligations to beneficiaries under statutory and contractual conditions.

Secured Deposit Limit: 100.000 Euro per depositor per institution

Increased Compensation: In certain legally defined matters, the secured deposit limit can be raised for natural persons in relation to temporary high balances. The level of increased compensation is set at an additional 100.000 euro.

Claim Eligibility: Current, savings, term and deposit accounts held in Czech Crowns or foreign currency are covered for natural persons and legal entities.

Excluded Deposits: Uninsured deposits are excluded from coverage and some claims may be suspended. Uninsured deposits include:

  • Bills of exchange and other securities (e.g. shares, bonds, unit certificates)
  • Deposits of banks (inter-bank deposits), cooperative credit unions, investment firms, financial institutions (e.g. investment companies, pension companies), insurance companies, reinsurance companies and health insurance companies. Deposit insurance therefore does not cover pension insurance, life insurance or capital insurance.
  • Deposits of the government (including foreign diplomatic entities)
  • Subordinated debt (deposits that the insured institution may in part include in its capital)
  • Pre-paid debit cards not linked to any account, issued in the form of electronic money (e.g. my paysafecard, etc.)
  • Receivables from deposits that, according to a final judgment, arose from the intentional crime of money laundering, unless they were secured for the benefit of victims of the crime.
  • Member’s investments (contributions) of cooperative credit union members (i.e. basic member’s investments and subsequent member’s investments under Section 4b of the Act No 87/1995 Coll., on Savings and Credit Cooperatives, as amended.)
  • Deposits of self governing territorial parts of the city of Prague and also regions and municipalities whose tax revenues are over EUR 500,000.

Deposit compensation payouts may be suspended in the following cases:

  • The insured deposit claim could originate in criminal activity in respect of which criminal prosecution has been initiated;
  • It is unclear whether and who is entitled to receive the compensation;
  • The insured deposit claim is the subject-matter of a legal dispute;
  • The insured deposit claim is subject to a measure restricting the disposal of the deposit pursuant to special legislation, the legislation of another State, or the regulations of an international organization (e.g. measures against money laundering and the financing of terrorism);
  • The bank, liquidator, administrator, deputy administrator or insolvency practitioner denies the existence of the insured deposit claim, and for this reason did not provide the Guarantee System with information necessary for the payment of compensation.

Claim Filing Procedure: For the standard coverage of the secured deposit limit of 100.000 euro, the GSFT and CNB appoint a ‘payout bank’ responsible for the verification of claims and reimbursement of eligible creditors. A compensation transfer request can also be submitted in writing to the payout bank. However, handling of such cases may take longer. In matters of temporary high balances, creditors must pro-actively contact the GSFT to submit a claim for increased compensation.

Timeframes: Deposit compensation will be paid out over a period of three years following the payout start date. Account holders can collect their compensation at any time during this period.

DGS Claim Rejections: Claimants must identify themselves and legal entities must present certified and official evidence of the corporate structure and ownership to allow verification by the payout bank. Indistinctness or incomplete information provisioning may result in a DGS claim rejection. Claimants are therefore advised to threat the claim filing procedure with care and diligence. Reinspection is possible within the applicable timeframes and the civil court may refer the case back to the GSFT or payout bank for re-evaluation purposes.

Financial Structure of the Scheme: The Garanční Systém Finančního Trhu is funded by its members who make periodic contributions and pay risk based premiums. The fund value is about CZK 35.512 billion (€1.340 billion) that allows for a fast reimbursement of insured deposits.

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