European Forum of Deposit Insurers
EFDI
EFDI is an International Non-profit Association under Belgian law (INPA - AISBL).
ID: 497118818456-08
Lobbying Activity
Response to Banking Union: Review of the bank crisis management and deposit insurance framework (DGSD review)
30 Aug 2023
The European Forum of Deposit Insurers (EFDI) is a platform for practitioners established in October 2002. As a nonprofit umbrella organization EFDI has no commercial interests and its main objective is to contribute to the stability of financial systems by enhancing the role of and promoting European and international co-operation in deposit insurance (and investor compensation), facilitating discussion and exchange of experiences and expertise among its 54 members from 48 European countries. On the content of the COM proposal on the CMDI framework review (DGSD), the EFDI Banking Union Working Group (BUWG) carried out a survey in which 25 different DGSs covering more than EUR 6 trillion (EUR 6000 billion) of deposits took part, in order to gauge the opinions of practitioners within the EEA. Although opinions differed in some cases, there was a convergence of a significant majority of participants on several statements of principle. These key statements (see also the attachment) could support the debate in the current first phase of legislative work on the DGS directive and related legislative texts within the CMDI framework. These, in the view of the majority of EEA members of EFDI (including a vast majority for most statements), could be seen as the basic requirements for the well-functioning of DGSs. Please find below the 13 Statements and in annex the accompanying text: 1) Where supervision is at national level, crisis management should be too. 2) The expansion of the PIA should be further precised and should not by default be positive for most credit institutions. 3) An adequate limit on the use of DGS available financial means for the financing of resolution tools should be kept to safeguard the credibility of a DGS. 4) The use of DGS available financial means to bridge the gap towards the 8% SRF bail-in threshold should be reevaluated. 5) The super-preference of covered deposits is an essential tool to ensure the well-functioning and credibility of a DGS. Further harmonisation of the creditor hierarchy is welcomed but should not include a pari passu ranking of all deposits. 6) An updated Commission Communication on the application of State aid rules for banks is necessary to give room to DGSs as well as to public interventions where appropriate. 7) The decision-making powers of a DGS to perform alternative measures (such as deposit book transfers in insolvency) should be enhanced and clarified. 8) The practical ability of a DGS/IPS to perform preventative measures should be safeguarded, both when restoring the viability of a bank as well as when accompanying a bank's exit from the market. 9) The transfer of contributions issue should be addressed, with an EBA mandate to develop a solution. 10) The calculation of DGS intervention costs within the LCT should always be performed by a national DGS. 11) The application and expected outcome of several key elements of the proposals, such as i) the PIA ii) the role of the DGS in the decision-making process iii) the Least Cost Test and (iv) MREL requirements for banks, should be further clarified and defined on the legislative level. 12) Client funds and beneficiary accounts should enjoy a similar level of coverage and treatment. 13) A DGS should be able to compensate depositors in any safe and adequate way that covers AML concerns, also above 10,000.
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