Newsletter Berlin, April 2015

IN THIS ISSUEp. 2 Message from the Board

p. 3 News and activity updates

from Members

p. 7 Events & Meetings

p. 8 Calendar

Field reports:

p. 9 ICS Romania

p. 11 NDIF Hungary

p. 13 DIA Serbia

p. 15 DIF Bulgaria

FOR YOUR DIARY8th May, 2015

EFDI PR Committee (Berlin)

8/9th June, 2015

EFDI EU Committee (Athens)

26th June, 2015

EFDI Banking Union WG (Rome)

2-4th September, 2015

EFDI Annual Meeting & International

Conference (Dubrovnik)

MESSAGE FROM THE CHAIRMANDear EFDI Members,

Welcome to the first edition of the

revived EFDI newsletter. First of all,

I would like to thank all EFDI mem-

bers who agreed to prepare con-

tributions for this edition. I am very

proud and happy about the nume-

rous interesting articles we received

and hope that you find them equal-

ly enjoyable and insightful. With

the EFDI Newsletter we intend to

provide a platform for you to ex-

change in-depth information and experiences with other

members. In order to fulfil this role, we are counting on your

collaboration and input. Therefore, I would like to encourage

all of you to stay active and contribute news about

your organisations, information on past and future

on events, as well as articles on topics of interest

to the community for future newsletters. The EFDI

Secretariat will be happy to provide assistance and information

in this respect. Apart from the newsletter a number of other

projects are currently under way, or have recently been con-

cluded, to improve communication within EFDI as well as

EFDI‘s external communication. Among others, the EFDI

Secretariat finalized and distributed the EFDI Directory 2015.

It contains contact details for all our members and an over-

view of the membership in EFDI‘s committees and working

groups. The Directory is continuously updated by the Secre-

tariat and the most recent version is downloadable from the

internal area of the EFDI website. In this context I would like to

remind you to convey any changes immediately to the secre-

tariat as the Directory can only be as up to date as the data we

have available. Furthermore, the Secretariat is actively

advancing the revision of the EFDI website, which is expec-

ted to be concluded in the summer. Apart from updating

the website‘s layout to enable accessibility of the webpage

from mobile devices, the most significant improvement will

be the enhancement of the internal area and the creati-

on of workspaces for our committees and working groups.

In the context of the relaunch of the website we also intend to

start twittering with EFDI in the near future. Last but not least,

I would like to draw your attention to a number of important

events in the next few weeks. On 8th May, the EFDI PR Commit-

tee will restart its work under the new chair Istvan Toth from the

Hungarian NDIF. On 26th June, the new EFDI Working Group

Banking Union will also start its activities. Moreover, the EFDI

Steering Group will meet on13th of May in Paris to continue its

work. I would also like to draw your attention to the fact that

on 19th June FSCS will be hosting the International Investor

Compensation Fund Meeting in London. We hope that many

of you will take the opportunity to attend this major event.

Wishing you an enjoyable lecture

Your

Dirk Cupei

CONTACTEuropean Forum of Deposit Insurers

Chairman Dirk Cupei

Vice Chairman Patrick Loeb

EFDI Secretariat

Juliane Seiter

Burgstrasse 28

10178 Berlin, Germany

Email secretariat@efdi.eu

Tel 0049 30 1663 2506

DEAR EFDI MEMBERS,

The EFDI Board would like to take this opportunity to in-

form you of the recent decisions taken by the Board. Most

importantly, this concerns the venue and date of the

2015 EFDI Annual Meeting and International Conference.

During its meeting in Paris on 14th January, 2015, the Board

discussed in detail the applications of the three candidates:

Armenia, Croatia and Montenegro. After intensive discus-

sion of the proposals, the Board Members present (absent:

Marija Hrebac and Francois de Lacoste Lareymondie) decided

on a preliminary basis to focus on Croatia as potential venue.

During the following regular Board meeting in Dubrovnik on

19th March 2015, the Board took the opportunity to assess in

detail the suitability of the venue proposed for the meeting

before making its final decision. As a result, we are happy to

inform you that the 2015 EFDI Annual Meeting and Interna-

tional Conference will take place in Dubrovnik from 2nd to

4th September 2015. Please mark the date in your calendars

already now. Further information regarding the agenda and

orga-nizational details will be sent to you shortly. The

other candidates, Armenia and Montenegro, will be in-

vited to host another EFDI meeting during the year.

Another important decision taken by the Board during its mee-

ting in Dubrovnik was the election of a new EFDI Spokesperson

following the resignation of Mr. Stephan Rabe last year.

The post will be taken over by Mr. Thomas

Schlüter from the German Banking Association. Mr. Schlü-

ter has been active in the field for more than twenty years,

among others as longstanding media spokesperson of the

German Banking Association. He will be working closely with

the EFDI PR Committee and its chairman Istvan Toth in order

to improve EFDI’s external communication and perception.

Please be informed that the next Board meeting will

take place in Kazan, Russia, on 28th/29th May 2015.

Your EFDI Board

Francois de Lacoste Lareymondie, Marija Hrebac, Patrick Loeb, Joseph Delhaye and Nikolay Evstratennko during the Board Meeting in Dubrovnik (Dirk Cupei and

Helmut Starnbacher not present at the meeting)

Message from the Board

2

esisuisse: NEW NAME AND STATUTESThe Swiss Banks‘ and Securities Dea-

lers‘ Depositor Protection Association

has a new name: esisuisse. At the an-

nual general meeting on 14 Novem-

ber 2014 in Zurich, the new statutes

were adopted. The Swiss banks and

securities dealers also adopted the

revised agreement on deposit insuran-

ce and elected the Board of Directors.

esisuisse formalized its further develop-

ment with the new statutes. The Associ-

ation follows now in principle the rules of

a public company. This has a big effect in

regard to risk control and reporting. The

governance of the association must now

be outlined in detail and is subject to an

auditing process. Furthermore a risk ana-

lysis and a risk prevention concept must

be established. The management of esi-

suisse is establishing all of these required

documents and processes. 2015 is con-

sidered a transition period for this work.

The statutes now allow also for inde-

pendent directors to become mem-

ber of the Board of Directors. It is

expected that at the AGM 2016 in-

dependent persons will be elected.

Last but not least esisuisse eliminated

all elements with reference to the Swiss

Bankers Association, the organizati-

on which initiated deposit protection in

the country and which founded the

Association now known as esisu-

isse. esisuisse is now also statuto-

rily an independent organization.

Patrick Loeb

esisuisse: CALL CENTER TESTINGOn 4 November 2014, esisuisse carried

out its first simulation aimed at testing

its new crisis communication facilities.

All relevant facilities and responsib-

le persons were involved. The objec-

tive was to test both quality (respon-

se times, quality of the responses, etc.)

and quantitative elements, and the-

reby to highlight whether the proces-

ses would work properly in an actu-

al incident or crisis or whether they

could or should be further optimised.

The simulation was aimed at approxi-

mating a crisis situation that is possib-

le at any time. Therefore, a bankrupt-

cy of a Swiss bank with market-typical

characteristics was chosen. The instituti-

on in question was described in the test

case as a bank (hereinafter „Reinfall Bank

AG“) that has mainly domestic ope-

rations and a high percentage of re-

tail customers. (12‘000 customers, in-

cluding many foreign customers.)

To carry out the simulation, esisuisse re-

lied on the assistance of voluntary parti-

cipants in order to obtain a meaningful

test result. The esisuisse Office drew up a

list of 52 questions for the simulation and

provided the questions in advance to

the 187 test callers in the form of a questi-

onnaire. In addition, the test callers recei-

ved a detailed specification (process de-

scription) for making their call and a link to

an electronic feedback form inviting the

callers to assess the quality of the hotline.

The simulation was the first of its kind

and it yielded very positive results and

feedback from the participants. The si-

mulation was deemed to have been

successful, even though the test revea-

led some necessary adjustments and a

degree of potential for improvement.

The detailed report is available on

request.

Patrick Loeb

News from Members

FINNISH DEPOSIT GUARANTEE FUND: NEW STRUCTUREThe Finnish Resolution Authority, esta-

blished on 1 January 2015 as a new go-

vernmental agency in the field of admi-

nistration of the Ministry of Finance, has

been designated to organize the deposit

guarantee scheme in Finland going for-

ward. This will be done by way of incor-

porating a New Finnish Deposit Guaran-

tee Fund (“New DGF”). Furthermore, the

Resolution Authority will establish a Re-

solution Fund which, in the future, will

operate in conjunction with the Euro-

zone Single Resolution Fund (SRF). The

New DGF will be capitalized within the

course of ten years up to the minimum

level required by the DGS directive

(0.8 per cent of covered deposits). In

practice, the New DGF will be capita-

lized by the private Old Deposit Gua-

rantee Fund (the “Old DGF”). This me-

ans that approximately 60 per cent of

the capital of the Old DGF will trans-

fer to the New DGF, whereas some 40

per cent will remain in the Old DGF.

The Old DGF will continue as a private

buffer fund, although still based on sta-

tutory provisions. The capital of the Old

DGF will be maintained for buffer pur-

poses in the field of future deposit in-

surance liabilities, typically an excep-

tionally large pay-out case in future

years. The Old Fund will become a

pure investment organization that

will no longer have a mandate for ma-

naging a deposit insurance scheme.

As of year-end 2014, the size of the

Old DGF was EUR 1.1 billion, cor-

responding to a coverage level of

1,4 per cent of covered deposits.

New contact details and further in-

formation: http://depositguarantee.fi.

Mirjami Kajander-Saarikoski

3

ACTIVITY UPDATE FROM SAVINGS DEPOSIT IN-SURANCE FUND OF TURKEY (SDIF) In 2014 and in the first quarter of 2015,

the SDIF continued to make import-

ant progress both in terms of deposit

insurance system improvements and

dealing with Core Principles and par-

ticipating in international activities.

SDIF is an Executive Council Member of

the International Association of Deposit

Insurers (IADI) and Member of the res-

pective Standing Committees, Regional

Committees and Subcommittees of IADI

and participated in all related Meetings.

In 2014, SDIF hosted the Deposit In-

surance Fund Kosovo (FSDK), Afghan De-

posit Insurance Corporation (ADIC), Pa-

lestine Deposit Insurance Corporation

(PDIC) and Philippine Deposit Insuran-

ce Corporation (PDIC) for working vi-

sits to share the deposit insurance and

resolution practices and experiences.

SDIF also signed Memoranda of Under-

standing (MOU) with FSDK and Kazakh-

stan Deposit Insurance Fund (KDIF).

With regard to Core Principles, SDIF

continued to address the Core Princip-

les SDIF does not comply with to beco-

me compliant or largely compliant with

all of the Core Principles. Other import-

ant work relates to the compliance of

SDIF with the FSB and EU regulations.

As Turkey continues the EU Mem-

bership talks, SDIF evaluates the com-

pliance of SDIF with the new EU

Directives on Bank Recovery and Resolu-

tion and on Deposit Guarantee Schemes.

Moreover, SDIF works to adopt/imple-

ment FSB Key Attributes of Effective Re-

solution Regimes for Financial Insti-

tutions together with other Financial

Safety Net Members and prepares for

the FSB Country Peer Review in 2015.

In December 2014, Turkey assumed

the Presidency of G20 and SDIF par-

ticipates in the respective Task Force.

With regard to Deposit Insurance Sys-

tem improvements, SDIF streng-

thened the IT infrastructure and in-

troduced the Single Customer View.

With regard to the Recovery and Reso-

lution performance, there are no bank

failures since 2003, and SDIF continu-

ed to recover the assets of failed banks

transferred to SDIF in previous years

further accelerating the process and

emphasizing the collection efforts.

Elif Aripinar

SWEDISH NATIONAL DEBT OFFICE APPOINTED RESO-LUTION AUTHORITY The Swedish Government has announ-

ced its intention to appoint the Swe-

dish National Debt Office national re-

solution authority, responsible for

resolution planning and managing fai-

ling banks according to the Bank Reco-

very and Resolution Directive (BRRD).

This new announcement gives the

Debt Office an expanded and cen-

tral role in the work to maintain finan-

cial stability in Sweden. Since 2008

the Debt Office is responsible for ad-

ministrating government bank sup-

port as well as the deposit guarantee

and investor compensation schemes.

The Government is currently working on

the implementation of BRRD into Swe-

dish law. The Debt Office will now start

preparing for taking on the new role; one

urgent task is to recruit new employees.

Helena Persson

HUNGARY: BANKING RESOLUTION ISSUESIn September, 2014, the Board of Direc-

tors of the Resolution Fund (Hungary)

accepted the risk-based premium sys-

tem that was initiated by the CBH, ac-

ting in its capacity as the bank resolu-

tion authority. The Resolution Fund

(Hungary) that was established in July

2014, by operation of the Hungarian

national law implementing the BRRD,

has 181 member institutions (all mem-

bers of NDIF plus all investment firms).

At the beginning of January 2015, Hun-

gary‘s MKB Bank (one of the top 5 com-

mercial banks) has come under the con-

trol of CBH, acting as the resolution

authority in order to clean up bad as-

sets following an ownership change from

Bayerische Landesbank to the Hungarian

State. Although the capital and liquidity

situation of the MKB Group is reportedly

adequate, group losses necessitated ac-

celerated reorganization of the bank and

its subsidiaries. The resolution authority

plans to rationalize the bank’s procedures

by reorganizing the institutional structu-

res and by identifying and separating the

bad portfolio elements of the group in the

interest of restoring the bank’s compe-

titiveness and growth potential. Neither

the Resolution Fund (Hungary) nor NDIF

has been involved in the operation yet.

Istvan Toth

4

News from Members

Did you know?

You can find summaries of the re-

sults from recent members’ sur-

veys in the internal area of the

EFDI Website. If you need assistan-

ce in accessing the internal area,

please contact the EFDI Secretari-

at: secretariat@efdi.eu

ITALY: FITD ACTIVITY NATIONAL AND INTERNATIONAL2014 Projects: Completed and ongo-

ing

The DGSD impacts substantially on

the activities of FITD. This is parti-

cularly so in the following areas:

(i) Pay-out to depositors: definition of the

guarantee scope, shortened time-scale

for the pay-out, introduction of the Sing-

le Customer View;

(ii) new funding mechanism;

(iii) procedures for interventions in sup-

port of member banks;

(iv) revision of indicators and risk-based

contributions;

(v) customer information and public

awareness.

In all these areas, targeted analyses and

initiatives have been started and are still

on-going to evaluate all the aspects and

possible implications of DGSD imple-

mentation. Further institutional publica-

tions have demanded FITD attention, for

example EBA issued guidelines on pay-

ment commitment and risk based con-

tributions. On this last document, FITD is

now conducting an impact assessment.

The changes in progress and especi-

ally the reception of the DGSD into

national legislation will entail an over-

all revision of FITD’s Statute. Work

has already begun in this direction.

Interventions

In 2014, FITD provided capital support

for a member bank placed under speci-

al administration (support intervention)

within a restructuring plan, based on

recapitalisation made by a member bank,

which took over control of the bank. The

bank was returned to ordinary business.

During the year, FITD also engaged in a

second intervention in favour of another

bank under special administration; the

recovery plan is still in preparation and the

intervention will be carried out in 2015.

Data management and communication

In the last quarter of 2014, work was

focused largely on building a data base

on depositors‘ aggregate positions (SCV)

in prospect of depositor reimbursement.

A second project is the revision of FITD’s

Internet Page. The FITD Logo has been

already changed and the new website

is scheduled to be completed in 2015.

FITD Annual Report for 2014 was

published with a revised format and

hard copies will be distributed to

all EFDI Members via regular mail.

HRD

FITD in 2014 embarked on a program-

me of training for personnel. The aims

were to update, enhance and broaden

personnel skills across the board for

the purpose of achieving greater fle-

xibility. Papers on various aspects of

FITD-DGS activities were presented.

This training experience was very positi-

vely received and will continue in 2015.

FITD drew up a new Code of Profes-

sional Ethics in 2014. It was appro-

ved by the Board on 15 October 2014.

It will regulate all aspects of work and

all relationships between the Instituti-

on, employees and other collaborators.

International Activities

On 29-30 September 2014, 19 Euro-

pean countries, representing 22 DGSs,

attended an EFDI meeting in Rome.

The delegates discussed and reflected

on their own experiences in the run-

up to the implementation of DGSD.

At the meeting:

a) the French DGS launched a new ini-

tiative called Home/Host Cooperation

– H2C. It aims at analyzing all aspects

of cooperation among DGSs in cases of

cross-border payouts (Art. 14 DGSD).

Accordingly 5 Working Groups have

been established to deepen some topics:

1) Single Customer View ;

2) Legal;

3) Finance and Risk;

4) Communication;

5) Implementation Tools (still to be esta-

blished);

b) the FITD proposed, under the patron-

age of EFDI, to launch a survey, managed

also by FITD, to monitor the implementa-

tion of DGSD in national legislations. The

survey was carried out using an on line

platform on 15 October 2014. The aim is

to provide a data-base of easy access for

all EFDI members which will be regularly

updated. It will provide a flow of updated

information to all members on themes

of significant mutual interest. The first

Interim Report on the DGSD Transpo-

sition Survey was sent to all EFDI Mem-

bers on 23 March by EFDI Secretariat.

The last meeting of 2014 of the EU Com-

mittee was hosted by the FITD in the pre-

mises of the Banca d’Italia (Italian Central

Bank) in Naples on 6 November. 22 DGSs

were represented with a total of 42 par-

ticipants. The object of the meeting was

to analyse different impacts on DGSs

related to the reception of 2014/49/EU

such as: risk-based contributions, tempo-

rary high balances, single customer view,

cross-border cooperation between DGSs

in cases of pay-out. There was also an

exchange of information on recent cases

of DGS interventions in Europe.

FITD holds the present Chair of IADI ERC.

A first initiative is an ERC meeting to be

held in Rome on 15 May 2015. The mee-

ting will discuss future plans and works.

For further information kindly contact

Debora Poli, dpoli@fitd.it.

Riccardo de Lisa

5

News from Members

HUNGARY: DEPOSIT INSURANCE SYSTEM IMPROVEMENTSAs part of the preparation for the parallel

compensation capability project, NDIF

successfully tested the supplementary

NDIF Deposit Insurance Card activation

methods in September 2014. Owing to

the good cooperation with the related

payout agent bank (OTP Bank), deposi-

tors have now multiple choices to activate

their cards such as using the internet, IVR

or ATM machines of OTP Bank network.

On November 12, 2014, having analy-

zed the premium declaration reports of

member institutions and the risk level of

the Hungarian banking and cooperative

credit institution sectors, NDIF’s Board

of Directors decided to raise the flat rate

annual premium to be paid by mem-

ber institutions from 0.1% to 0.14%. Be-

fore this decision, the rate of the annual

premium was last modified in Decem-

ber 2013, when it was raised from 0.06%

to 0.1%. The growing trend of multime-

dia content on the internet and also on

the social media platforms prompted

NDIF to have two video films shot, ba-

sed on true stories of depositors expe-

riencing bank closures and consequent

reimbursement by NDIF. In December

2014 as well as in March 2015, the three

minute films, that also describe the key

features of deposit insurance, were

broadcast on local television channels

in the areas where the failed credit ins-

titutions have branch offices and were

also used for geo-targeting campaigns

on Facebook and YouTube the first time

in history of NDIF. An English subtitled

version of the films will be soon avai-

lable on our website. With the excepti-

on of the introduction of the risk-based

premium system, the Hungarian Parlia-

ment implemented the rules of DGSD2

into Hungarian national law (Act CCXXX-

VII of 2013 on Credit Institutions and Fi-

nancial Enterprises) in December 2014,

with an effective date of July 3, 2015.

Istvan Toth

LIECHTENSTEIN: PROTECTION ORGANISATION OF LBA RENEWED A resolution to transform the Deposit

Guarantee and Investor Protection Foun-

dation of LBA (EAS) into a protected cell

company under Art. 243 et seq. of the

Liechtenstein Persons and Companies

Act (PGR) was adopted at the Extraordi-

nary General Meeting of the LBA on 21

January 2015. Following the recent entry

in the Liechtenstein commercial register,

the EAS is now ready to offer its services

to an expanded range of financial service

providers and assume its activity as com-

bined protection scheme for deposits and

investors for the entire financial centre.

First protected cell company in Liech-

tenstein

On the occasion of the introduction of

the protected cell company into the

Liechtenstein company law as of 1 Janu-

ary 2015, the existing LBA scheme was –

in coordination with the partner associ-

ations Association of Independent Asset

Managers in Liechtenstein (VuVL) and

Liechtenstein Investment Fund Associa-

tion (LAFV) – expanded to the effect that

apart from banks, other financial service

providers can also join the protection

scheme. As an important pillar of stabili-

ty, the newly created combined solution

can easily, flexibly and efficiently map the

dynamic development of the financial

centre and its financial service providers.

Independent presence

The entry in the commercial register is

accompanied by a new, independent ex-

ternal presentation. Renamed „Deposit

Guarantee and Investor Compensation

Foundation PCC“ („PCC“ for protected cell

company) and furnished with a new logo,

the protection organisation has recei-

ved a clear, unmistakable identity faci-

litating communication with national

and international financial service pro-

viders, authorities and society in gene-

ral. The word/colour combination of the

logo implies the bond with Liechtenstein

as well as the significance and reliability

of the only protection organisation for

deposits and investors. The new websi-

te (www.eas-liechtenstein.li) and the in-

tegrated „Frequently asked questions“

section help to explain the function and

duties as well as the organisation of the

EAS in a transparent, easy manner. The

English version will be activated shortly.

The new EAS will continue to be admi-

nistered by the secretariat of the LBA.

The contact for EAS is Rafik Yezza, Depu-

ty Director of the LBA and First Secretary

of EAS.

Simon Tribelhorn

6

News from Members

EFDI BANKING UNION WORKING GROUP - 26 JUNE 2015, ROMEIn the light of the major changes being

introduced by the Banking Union,

EFDI decided to create a WG, within

the EU Committee, to explore

relevant aspects triggered

by the Banking Union. The

project for the Working Group was

presented at the Annual Meeting of

EFDI in Bucharest (22-24 September

2014) by Prof. Salvatore Maccarone,

President of FITD, who will chair the

WG. The WG will examine Banking

Union regulation, for the purpose of

developing operational and

organizationtal proposals, in view of a

possibility of a pan-European DGS. The

first meeting of the group is scheduled

to take place on 26th June. 2015 in

Rome. If you would like to join the

group, or wish further information

kindly contact Debora Poli: dpoli@fitd.it.

INTERNATIONAL INVESTOR COMPENSATION SCHEME CONFERENCE - 19 JUNE 2015, LONDONOn Friday 19 June, right after the week

of IOSCO annual meeting in London,

FSCS will be hosting a meeting of interna-

tional investor compensation schemes.

Over the years, ICS from Europe and

across the world have met to

share experiences, updates, and

issues of mutual interest. We last

met in Rome, in September 2013.

FSCS is working with colleagues in the

Canada Investor Protection Fund (CIPF)

to finalise the agenda. We expect to

include presentations from the Fi-

nancial Stability Board on non-bank/

investment firm resolution, OECD on

consumer protection in financial ser-

vices, and the UK authorities on re-

form of the Special Administration Re-

gime applicable to investment firms.

The seminar will be an opportuni-

ty to share experiences from the fai-

lure of MF Global, in the US, Canada,

the UK and beyond. CIPF will also pre-

pare a survey of investor compensa-

tion schemes in advance of the semi-

nar, and share the results on the day.

If you are an investor compensati-

on scheme interested in attending,

and have not already done so, plea-

se email john.king@fscs.org.uk to re-

gister your interest. Formal registra-

tion will proceed early in the Spring.

We look forward to seeing our col-

leagues from investor compensa-

tion schemes in London in June.

EFDI PR & COMMUNICATION COMMITTEE MEETING IN BERLIN - 8 MAY 2015, BERLINUnder the chairmanship of newly elected

Istvan Toth from Hungary‘s NDIF, the EFDI

PR & Communication Committee will re-

commence its activities with a first mee-

ting in Berlin, Germany on the 8th May

2015. Overall aim of the Committee‘s

activities is to create a network of

the communications professionals of

the European DGS by sharing views and

expertise. In view of recent payout expe-

riences in many countries, the focus of

the upcoming meeting will be on the ex-

change of experiences in this respect

from a PR point of view. Another topic

will be a comparative study on

how to set up and run a call cen-

ter (in-house vs. outsourced – ex-

periences of UK and Hungary).

The meeting will furthermore provi-

de opportunity to draft future activities,

plans and demands of the Committee.

In this context, some first ideas for fu-

ture meetings include the following to-

pics: differences in handling local vs. in-

ternational media relations; aspects

of pitching and managing agencies;

usage of social media; difficulties of

multilingual payouts. If you are interes-

ted in joining the PR Committee or at-

tending the meeting, kindly contact the

EFDI secretariat at secretariat@efdi.eu

to be put on the mailing list for the PR

Committee. Further information con-

cerning the agenda and organizatio-

nal details will be distributed shortly.

7

Events Events & Meetings

UPCOMING EVENTS

Month Event Contact

April

20./21.04. EFDI H2C SCV Subgroup, London, UK andy.gan@fscs.gov.uk;

john.king@fscs.gov.uk

22.04. EFDI H2C Legal Subgroup, Budapest, HU ccohen@garantiedesdepots.fr;

nagy@oba.hu

20.-22.04. 13th APRC Annual Meeting and International Conference, Taipei, TWN

May

04.-07.05. 8th IADI Regional Workshop “Assessment of Compliance with the Core

Principles for Effective Deposit Insurance Systems”

Pristina, Kosovo.

VioletaKrasniqi@fsdk.org;

vdeshpande@fdic.gov

08.05. EFDI PR Committee, Berlin, DE toth@oba.hu;

secretariat@efdi.eu

EBA Public Hearing on Financial Contracts BRRD

11.05. EBA Public Hearing on Business Reorganisation Plan BRRD

12.05. CEPS Conference: Consumer Protection in Financial Services - The Challen-

ges of Innovation and Capital Markets Union, Brussels, BE

13.05. EFDI Statutes Steering Group, Paris, FR secretariat@efdi.eu

15.05. IADI ERC Meeting, Rome, IT dpoli@fitd.it

18.-20.05. Swedish National Debt Office:

Financial Safety Net Conference 2015

“Discussions on how to move towards a global best practice in resolution

planning and crisis management“, Stockholm, SE

fsnc@riksgalden.se

28./29.05. EFDI Board Meeting, Kazan, RU secretariat@efdi.eu

June

03.-04.06. 2015 IADI Biennial Research Conference on “Current Issues Facing Deposit

Insurers” at the Bank for International Settlements, Basel, CH

gail.verley@iadi.org

08./09.06. EFDI EU Committee Meeting, Athens, GR alex.kuczynski@fscs.gov.uk

secretariat@efdi.eu

19.06. International Compensation Fund Meeting hosted by FSCS,

London, UK

john.king@fscs.gov.uk

26.06. EFDI Banking Union Working Group, Rome, IT dpoli@fitd.it

September

02.-04.09. EFDI Annual Meeting and International Conference, Dubrovnik, HR secretariat@efdi.eu

08.-10.09. Joint FSI - IADI Seminar: Bank Resolution, Crisis Management and

Deposit Insurance issues, Basel, CH

October

26.-30.10. IADI 14th Annual General Meeting & Conference, Malaysia

Events & Meetings

1. Summary update on compensati-

on cases in Romania

Recently, Romania has faced two situ-

ations in which brokers have failed to

return financial instruments and monies

to investors, resulting in two compensati-

on cases. These are the first compensati-

on experiences for the Investor Compen-

sation Scheme in Romania and both will

hopefully be solved by the end of 2015.

2. The difficulties in compensation

cases (Romania’s point of view)

The starting date for a compensation

case.

Romania has noticed that there are

significant delays in starting the com-

pensation procedure, even though the

investors signal publicly from an early

stage the fact that they cannot get their

assets back from the member of the

ICS. This is due to the slow legal process

of bankruptcy, the poor communicati-

on between the liquidator and the ICS,

and the fact that the judicial system is

not aware of the existence of an investor

compensation scheme. After the pro-

cess is actually started, the Fund con-

fronts itself with the inefficiency of the

press releases in reaching the investors.

Poor documentation of the capital mar-

ket in the judicial system.

Due to the fact that, in most of the cases

of bankruptcy, the former member of

the Fund has already lost its authoriza-

tion to act in the capital market due to

irregularities, the judicial trial is done

for a “commercial company” and not an

“authorized intermediary in the capi-

tal market”. This aspect transforms the

investors into creditors and so, they

are considered to have similar claims

as other commercial partners, like sup-

pliers. This aspect resulted in the Harin-

vest case in a lot of arguments, since

the investors consider they are not credi-

tors, since their assets were their property.

Legal aspects regarding compensation –

holding a contract.

During the analysis of the compensa-

tion claims in the Harinvest and Euro-

savam cases, Romania faced a difficult

situation regarding the legal right of

an investor to be compensated by

the Fund: The inexistence of a legal

contract and the outdated contract.

Even though the Directive 97/9/EC states

that “‚investor` shall mean any person

who has entrusted money or instru-

ments to an investment firm in connec-

tion with investment business”, the nati-

onal regulation for the functioning of

the Investor Compensation Fund states

that the investor shall mean “any per-

son who has entrusted money or instru-

ments to an investment firm in connec-

tion with investment business, client,

based on a contract, of the intermedi-

ary or an asset management company”.

This addition in the national law provi-

ded difficulties in assessing the claims.

(continued on next page)

Eurosavam S.A. (Ploiesti, Romania)

Key facts:

Moment of first concerns – October 2013; The

Fund received by mail a compensation claim from

an investor, client of a former member of the Fund,

Eurosavam S.A. The Financial Supervisory Autho-

rity withdrew the license of Eurosavam in Feb-

ruary 2013, due to irregularities in their activity.

Compensation procedure start date – October

2014;

The judicial insolvency procedure started in Au-

gust 2013, but the Fund received the official ru-

ling only in September 2014, from the liquidator.

The press release was issued 3 days later announ-

cing that investors can file compensation claims.

Nr. of investors claiming compensation: 4

Total amount of claims: 0.4 million euro

Estimated total compensation: 16.800 euro

Harinvest S.A. (Ramnicu Valcea, Romania)

Key facts:

Moment of first concerns – November 2013;

Harinvest defaulted on a transaction of 500.000 euro, which

was covered by the Guarantee Fund of the Central Depo-

sitory. Afterwards, clients began to ask for their financi-

al instruments and were told by Harinvest employees that

part of the financial instruments are missing from their ac-

count. Investors were told to wait for the end of a current

audit of the situation in order to receive an explanation.

Compensation procedure start date – September 2014;

The judicial insolvency procedure started in March 2014, but

the Fund received the official ruling only in September 2014,

from the liquidator. The press release was issued 3 days la-

ter announcing that investors can file compensation claims.

Nr. of investors claiming compensation: approx. 111

Total amount of claims: 3.71 million euro

Estimated total compensation: 1.05 million euro

9

Field report ICS Romania

SURVEY RESULTSThe Romanian ICS has sent an open question regarding this aspect to the EFDI members handling an investor compensation

scheme. The results are summarized as follows:

The possible resolution

for compensation wi-

thout a contract

How do the answering ICS’s see the situation ?

1 Possibly yes The ICS would analyse the evidence and then consider whether to accept the claim or not.

2 No The compensation is based on the records obtained from the trustee or from any other sour-

ces.

3 No The legislation forbids the possibility of compensating investors which do not have a formal

contract.

4 Possibly yes Even though the legislation (Civil Code) states that the fact that there is no written contract

shall cause the nulity of a transaction, the court may accept other evidence of the relation,

in order not to contradict the principles of good faith, justce and reasonableness.

5 Possibly yes Whether the fund is required to compensate an investor for securities which the investor

can not retrieve from the member company, depends on whether the relevant company is

obligated to return the securities to the investor.

6 Yes It happened before and the ICS considered all material elements through a contractual rela-

tionship could be inferred, as a matter of facts and evidences.

7 Possibly yes There is no requirement that a formal contact signed by both parties is in existence. Howe-

ver, a contractual relationship may be implied arising from the conduct of the parties and

may be evidenced from supporting documentation available.

8 Possibly yes The confirmation/evidence of each claim is based on the accounting books and records of

the member of ICS as well as the documents provided by the applicant/investor. However

there is not a strict requirement to produce a signed formal contract, even though this is

standard procedure.

Stefan Chirtu

10

Field report ICS Romania

DGS PAYOUT CASE 2015The Central Bank of Hungary (CBH),

acting in its capacity as the superviso-

ry authority of financial organizations,

withdrew the operating license of DRB

Banking Group (consists of 4 regio-

nal banks) on 3rd March 2015. NDIF

started the payout on 4th March and

reimbursed 95.5% of the affected depo-

sitors (73,000) by HUF 107 billion (EUR

356 million) on the 5th working day. Ful-

filling its task the NDIF received an ELA

loan of HUF 107 billion from the CBH.

Please see the dispersion of the de-

positors in the country, as well as

in major settlements and the por-

tion of foreigner depositors in the

bank group in the infographics.

11

Field report NDIF Hungary

PAYOUT CASES 2014 The CBH withdrew the operating license

of three credit institutions (Szechenyi

István Credit Union, Szechenyi Com-

mercial Bank, and ‘Tisza’ Cooperative

Savings Bank) in December 2014. As a

result, the National Deposit Insurance

Fund (NDIF) started the indemnifica-

tion of the depositors on December

5th, 8th, and 11th respectively, and

finished the indemnification process

in each case before the Christmas holi-

day season. In total, NDIF compensated

11,200 depositors by paying out EUR

106 million only in December last year.

As December is the busiest shopping

period of the year for families, the

operational speed of NDIF compensa-

tion got special public spotlight. Due

to the close cooperation among NDIF,

CBH and the experienced payout agent

organizations, as well as NDIF was

prepared for an eventual simultaneous

multiple payout early enough, as a

result, it had successfully completed the

indemnification of the overwhelming

majority of the depositors before Christ-

mas. In the case of Szechenyi István Credit

Union, the rate of reimbursed depositors

reached 84% on December 9th; Szeche-

nyi Commercial Bank the rate of compen-

sated depositors reached 93% on Decem-

ber 10th and ‘Tisza’ Cooperative Savings

Bank the rate of indemnification reached

98% on December 13th respectively.

Summarizing 2014 in a nutshell,

NDIF carried out 6 payout cases

alltogether and compensated

63,200 depositors by paying out

HUF 123 billion (EUR 410 million).

The consolidated results of the

Client Satisfactory Surveys that NDIF

conducts in each case (consolidated

response rate: 7%) were as follows:

• 73% of the depositors satisfied with

the EUR 100,000 compensation

limit

• 81% of the depositors satisfied with

20-working day time frame

• 68% of the depositors satisfied with

the NDIF’s reimbursement service,

including reclamation handling.

A White Paper on NDIF’s payout

experience will be available in Eng-

lish after May 2015 at www.ndif.com.

Istvan Toth

12

Field report NDIF Hungary

THE MOST RECENT PAYOUT CASE – FAILURE OF UNIVERZAL BANKA IN 2014 On withdrawal of the bank license

from the local bank - Univerzal ban-

ka (UBB) by the National Bank of Serbia

at the end of January 2014, the Com-

mercial Court of Belgrade initiated the

bankruptcy (insolvency) procedure over

that bank in early February last year,

appointing at the same time the Serbi-

an Deposit Insurance Agency (DIA) as

bankruptcy administrator of the bank.

Accordingly, the deposit insurance sche-

me was activated in line with the appli-

cable law, namely, the Deposit Insurance

Law. The reimbursement of all covered

categories of depositors: individuals,

entrepreneurs, small and medium-si-

zed legal entities started on 4 February

2014 up to the coverage level (insured

amount) of EUR 50,000 per depositor,

after set-off of their total deposits held

with the bank with their due liabilities.

The process of payout of insured deposits

to depositors of the failed UBB was orga-

nized and carried out (and still is) accor-

ding to the applicable by-law, adopted

by the Serbian DIA in 2011, named Insu-

red Deposits Reimbursement Procedure.

According to the procedure for selecti-

on of the payout (agent) bank, the DIA

Managing Board made the decision, a

few days before the beginning of the

reimbursement process, by which insu-

red deposits of the failed bank had

to be paid out via network of a local

bank (Postanska Stedionica) as pay-

out bank, after which the DIA ente-

red into a corresponding agreement

with that bank. The payment to about

50,000 former depositors of the fai-

led UBB started on 04 February 2014.

In addition to this, after takeover of

the eligible depositors’ database from

the failed bank, the DIA IT Office created

the payout database which was for-

warded to the payout bank one day

before the beginning of the process.

According to the said database, a total

payable amount was around EUR

83 million, of which 86% rela-

ted to individuals, and 14% to dif-

ferent categories of legal entities.

According to the law, the reimbursement

period shall last for three years as from

the reference day, namely, the day on

which the competent court initiated the

bankruptcy procedure over the failed

UBB. Until 31 December 2014, a total of

around EUR 81.9 million was paid out,

based on both deposits held in RSD and

foreign currency, which is 98% of the

total payable amount on account of insu-

red deposits held with the failed UBB.

The development of the payout process

is recorded through changes in the data-

bases maintained by the DIA, failed bank

(UBB) and payout bank, and through

recording of the files on the made pay-

ments according to the documentati-

on submitted by the payout bank. In

order to repay the borrowing from the

state budget used for payment of insu-

red deposits, a sum of RSD 1.89 billi-

on and EUR 72.16 million (totally in EUR

87.78 million) was disbursed from the

Deposit Insurance Agency (account of

the Deposit Insurance Fund (DIF)) with

accrued interest. Until 15 December

2014 inclusive, the liability of the DIA

(DIF) towards the Republic of Serbia,

based on payment of insured deposits

held with the failed UBB, was fully repaid.

Plan for Harmonization with the EU

Directive 2014/49

The Serbian deposit insurance (gua-

rantee) scheme is largely harmoni-

zed with the Directive EU/2014/49.

Further harmonization with the

EU Directive 2014/49 provides for:

• Increase of the coverage level to

EUR 100,000 per depositor per

bank;

• Inclusion in the insurance scheme

of business entities that have the

status of large legal entities (except

for financial institutions, insuran-

ce companies, pension funds, state

bodies and institutions, and bodies

of local governments);

• Introduction of the risk-based pre-

mium assessment;

• Use of the insured amount as a

base for calculation of the deposit

insurance premium;

Possibility of payout of the so-called

“social deposits” within 5 working days.

According to the plan, the full har-

monization with the EU regula-

tions will be accomplished at the

latest until the moment of accessi-

on of the Republic of Serbia to the EU.

Recent Changes to the Legal (espe-

cially: Bank Resolution) Framework

As the result of the activities that were

performed throughout 2014, and espe-

cially in its last quarter, the new legal

framework governing DIA activities was

enacted in early February 2015. That

new framework is comprised of the DIA

Law, the Deposit Insurance Law, the

Law on Bankruptcy and Liquidation of

Banks and Insurance Companies and the

Amendments to the Law on Banks. The

primary objective of all these activities

that were initiated by the IMF and car-

ried out in close collaboration with the

World Bank, the EBRD and the Serbian

authorities, was precise stipulation and

division of duties within the bank reso-

lution processes. According to the new

provisions, the DIA will be in charge of

the interventions on the gone concern

basis, whereas the going-concern reso-

(continued on next page)

13

Field report DIA Serbia

THE MOST RECENT PAYOUT CASE – FAILURE OF UNIVERZAL BANKA IN 2014 (CONTINUED)lutions will be the responsibility of

the National Bank of Serbia (NBS)

and the Ministry of Finance.

While the DIF assets may be used to sup-

port the some resolution instruments,

the budget of the Republic of Serbia has

been recognized as the main source of

funding for bank resolutions. Any finan-

cial support provided by the DIA will be

limited to the amount of losses that de-

positors would have suffered in respect

of insured deposits had they participated

with other creditors with the same level

of priority in covering these losses. The

amount of these assets may not exceed

the outlays from the Deposit Insuran-

ce Fund had bankruptcy or liquidation

proceedings been instituted against the

bank instead of the resolution process,

and in all cases may not exceed 50% of

the target level of Deposit Insurance

Fund (5% of total amount of insured de-

posits). The legal changes also enab-

le the usage of the Deposit Insurance

Fund for the transfer of ‘good’ assets (via

P&A) from the failed to a healthy bank

as well as for carving out of bad assets,

but not for bank recapitalization and es-

tablishing a bridge bank. More import-

antly, the DIA will join the resolution

efforts early on by receiving the informa-

tion about problems from the NBS and

will be granted direct access to the fai-

ling bank to prepare for the resolution.

DIA Serbia

14

Field report DIA Serbia

PAYOUT OF THE FOURTH LARGEST BANKOn 20 June 2014 the Bulgarian National

Bank (BNB) placed the Corporate Com-

mercial Bank (KTB) under special supervi-

sion. This action of the Central Bank follo-

wed the request of the KTB Management

that KTB be placed under special super-

vision, due to the lack of liquidity provo-

ked by a severe run on the bank during

the week before that date. With its act

the BNB suspended all KTB’s obligations,

restricted the bank’s activities, dismissed

the management, divested shareholders

of their rights and appointed conserva-

tors. BNB was not able to provide liqui-

dity in order to stop the run as under

Currency Board Arrangements in force in

Bulgaria the Central Bank is not allowed

to provide credits to banks without col-

lateral in the form of high-liquid assets

(gold, foreign currency, etc.), which KTB

was not able to provide after the run.

Initially the bank was placed under

special supervision for three months,

thereafter prolonged by another two

months till 20 November, as the Law on

Credit Institutions allows for a six-month

period of special supervision. During the

whole period of special supervision KTB

depositors had been denied access to

their deposits. Nevertheless, the Bulga-

rian Deposit Insurance Fund (BDIF) was

not triggered as according to the Law

on Bank Deposit Guarantee (LBDG), the

only payout trigger is license revocation.

KTB was the fourth largest bank in Bul-

garia. As of end-March 2014 its assets

amounted to BGN 7.3 bln. / EUR 3.7 bln

which represented 8.44% of the ban-

king system assets and 9.44% of GDP. It

shall be noted that KTB developments

were happening against the backdrop

of a major political crisis in the coun-

try - resignation of the Government

on 24 July followed by a dissolved

Parliament, Caretaker government

from 6 August till 7 November, gene-

ral elections held on 5 October, a new

Parliament as of 27 October and a

new government as of 7 November.

On 6 November 2014 the BNB revo-

ked the license for banking activity

of the KTB due to insolvency, whe-

re it had found that the amount of

the bank’s own funds was negative.

Covered deposits with KTB amount to

BGN 3.7 bln / EUR 1.9 bln. At the date of

license revocation BDIF availed of BGN 2.1

bln (EUR 1.07 bln). To secure in advance

all the necessary amount for the payout

the Government extended a loan of up

to BGN 2 bln / EUR 1.02 bln to the BDIF.

Following the legally required 20 busi-

ness days of license revocation on

4 December 2014, BDIF commenced

the payout of the guaranteed deposits.

Reimbursement has been carried out

via approx. 1500 branches of nine banks

determined by BDIF Management Board.

The agent banks were selected in com-

pliance with the criteria approved by

the BDIF Management Board, the main

being at least 70% coverage of KTB

network by the agent bank branch net-

work. Payout via agent bank/s is the only

payout method according to the LBDG.

To ensure smooth payout, distribution of

depositors across agent banks has been

made as per the last digit of the uniform

civil number for individuals, respectively

the last digit of the unified identification

code for legal entities. One of the nine

banks has been assigned to service for-

eign nationals - individuals and legal

entities. A uniform tariff on service char-

ges for KTB depositors has been intro-

duced. The first transaction - opening an

account with the agent bank or transfer

up to BGN 100,000 (approx. EUR 50,000)

to another bank is free for the deposi-

tor. Prior to the payout tripartite agree-

ment between BDIF, the agent banks

and KTB conservators were concluded.

There is no statutory requirement for

depositors to submit claims to BDIF.

To receive their reimbursable amount

depositors have to visit an office of the

agent bank where they may opt among

the following: open an account with

the respective agent bank and transfer

their money therein; order a transfer of

the sum to a bank account with ano-

ther bank; withdraw their sum in cash.

Foreign currency deposits are repaid

in Bulgarian levs according to the

BNB exchange rates at the initial

day of payout. Prescriptive period

is 5 years as of 4 December 2014.

On 4 December, the first day of the

payout, BGN 1.188 bln / EUR 572 mln

or 32% were repaid; during the first

three days – BGN 2.04 bln / EUR 1.02, or

55%; and during the first 20 business

days – over 90% of insured deposits.

Thereafter the process slowed down.

Minor impediments in the payout were

related to discrepancies in depositors’

documents with KTB database, as new

ID cards; changed family name in case of

marriage or divorce; misspelled name, or

wrong ID card number, or uniform civil

number, etc., as agent banks require full

compliance with depositors’ identificati-

on data. Depositors’ complaints in case

of objection to the repayable amount

or exclusion from the depositors’ list are

addressed to conservators of the KTB.

To facilitate the payout BDIF launched

an awareness campaign shortly after

KTB license revocation using traditional

communication channels. The special

microsite for KTB depositors, launched

in Bulgarian and in English at the date

of the bank’s license revocation, (has

been amended along developments

with all necessary information for KTB

depositors: FAQ, news, useful documents,

payout terms and servicing banks’

(continued on next page)

15

Field report DIF Bulgaria

PAYOUT OF THE FOURTH LARGEST BANK (CONTINUED)branch network. Paid advertise-

ments were published in major dailies.

Two sequel spots were broadcast nearly

200 times by the national television and

over 300 times by the national radio till

end-December 2014. BDIF call center

for KTB depositors has served around

3,500 depositors till end-February 2015.

As of date BDIF has answered thousands

of queries by phone or email. Several

interviews and press conferences for the

media have been organized. The effi-

cient payout to KTB depositors is due

to the close cooperation with the servi-

cing banks and the institutions involved

- Ministry of Finance, BNB, Ministry of

Interior as well as to the good coordina-

tion with KTB conservators and IT staff.

Since the initial day of reimbursement till

23 March 2015 104,100 depositors with

the KTB have disposed with their gua-

ranteed deposits to the amount of BGN

3.54 bln / EUR 1.81 bln, which represents

over 95% of the total amount of gua-

ranteed deposits. As of 23 March 2015

KTB bank bankruptcy proceedings have

not been opened yet because of licen-

se revocation challenge and postpone-

ment of court’s ruling on the opening of

bankruptcy proceedings. The amend-

ments to the Law on Bank Bankruptcy

passed on 18 March 2015 provide

for an interim trustee to be appoin-

ted by the court upon BDIF propo-

sal. The interim trustee will have the

necessary powers to preserve and

enhance the property of the bank.

The draft Law on Bank Deposit Guaran-

tee, which passed first reading in Par-

liament in February 2015, will redress

incompliances with EU requirement

regarding establishment of unavailabili-

ty of deposits. Further, the 7-day payout

deadline will be introduced as of 2015.

Roumyiana Markova

16

Field report DIF Bulgaria

The next edition of the EFDI Newsletter is planned for July / August 2015

Dear EFDI Members,

For the next newsletter we kindly ask you for your input. Please send

• news about your organization

• information about past and future events and meetings

• articles on topics of interest to the community, e.g. payout cases, implementation issues regarding the DGSDII, etc.

you would like to share with the EFDI members to the EFDI Secretariat: secretariat@efdi.eu until 15th July 2015.

If you have any questions concerning the newsletter or ideas for improvement, please send an email to the EFDI

Secretariat. We are looking forward to hearing from you!