Deposit Guarantee Scheme Portugal

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

Deposit Guarantee Scheme Portugal: The Fundo de Garantia de Depositos (FGD) guarantees the reimbursement of deposits held in member credit institutions when deposits become unavailable in one of those institutions. The Fund may also intervene in the implementation of resolution decisions applied to member credit institutions.

Activation of the FGD Scheme: The unavailability of deposits in a FGD member institution triggers reimbursement of the secured deposit limit to eligible creditors. Unavailability of deposits is deemed to exist when:

  1. The member credit institution, for reasons which are directly related to its financial circumstances, has not repaid the deposits due and demandable under the legal and contractual conditions applicable, and the Banco de Portugal has verified, no later than five working days after being informed that the credit institution concerned appears to be unable for the time being to repay the deposits and has no current prospect of being able to do so in the forthcoming days;
  2. The Banco de Portugal makes public the decision through which it withdraws the authorization of the member credit institution, if such disclosure is prior to the above situation.

Secured Deposit Limit: In line with the EU directive on Deposit Guarantee Schemes the secured deposit limit is 100.000 euro per customer per bank.

Additional Insured Coverage: Extra coverage is provided for deposits arising from real estate transactions relating to private residential properties, deposits that serve social purposes laid down in a specific statutory law, and deposits whose amount results from the payment of insurance benefits or compensation for criminal injuries or wrongful conviction. These deposits will be fully guaranteed, therefore potentially to beyond the 100 000 EUR limit, for a year from the date after the amount has been credited in the respective deposit account

Claim Filing Procedure: Repayment by the Fundo de Garantia de Depósitos will take place as soon as possible, without the need for the depositors to present any request, and by the most convenient means according to the situation. An information system specifically designed for these operations, the RED, is used for repaying eligible account holders. 

In practice, should the Fundo de Garantia de Depósitos’ guarantee be activated, an application accessible by internet will be provided to depositors, through which they will be able to consult information on their deposits and interact with the Fund, after respective accreditation, including to indicate a bank account to which they wish the value repayable by the Fund to be transferred.

The Fund is responsible for contacting any depositors who are unable to use the application, based on the information provided by the member credit institution whose deposits have been deemed unavailable, in order to repay the deposits.

The preferred payment instrument for the repayment process is credit transfer (bank transfer), due to its security and auditability. However other payment methods may also be used.

Repayment Timeframe: The Fund has gradually reduced the maximum timeframes for repayment of insured deposits and currently strives to reimburse eligible account holders within 7 to 10 working days after the claim is submitted, verified and approved.

Repayment Conditions: Not all deposits and account holders qualify for reimbursement under the FGD scheme. Foremost, account holders must be identifiable before and after to the unavailability of their deposits. Dormant accounts where no transactions were made during the last 24 months and those in connection with which there has been a criminal conviction for money laundering are also excluded from FGD coverage. Furthermore deposits held on behalf and for the account of a broad range of financial institutions and other service providers and public funds are ineligible.

DGS Claim Rejections: The Portuguese DGS repayment process is strictly organized and severely automated. It lacks flexibility that is needed by divergent and unusual situations that risk claim rejection on subjective grounds. A request for reinspection of a rejected DGS claim can be submitted to the FGD. This request must be supported by objective claim evidence and eligibility. A similar procedure applies to creditors who take their case to court.

Scheme Architecture: The reserves of the fund that are paid by the members via annual contributions and premiums are currently estimated at 1.6 Billion Euro. EU guidelines require DGS funds to raise and hold at least 0,8% of covered deposits in 2024.

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