Published: 26.11.2022

Are deposits at the Latvia branch of Bigbank AS, Latvia branch of Luminor Bank AS, Latvia branch of OP Corporate Bank Plc and at the Latvia branch of TF Bank AB covered by the guarantees of the Deposit Guarantee Fund of Latvia?

No, deposits at the branches of foreign banks which are not members of the Deposit Guarantee Fund are covered by the deposit guarantee scheme of the country in which the bank is established.

What amount will the State disburse to each client of the bank or credit union?

The State guarantees 100 000 euro to each client in each Latvian bank or credit union, in case of unavailability of deposits, ensuring disbursement from the Deposit Guarantee Fund in case of unavailability of deposits.

The accrual, management of the Fund's assets and payment of the guaranteed compensation is performed by Latvijas Banka.

What types of client assets at a bank or credit union are covered by guaranteed compensation?

Compensations are paid for all types of deposits in all currencies in the amount not exceeding 100 000 euro for all of accounts together, including accounts opened with branches of the bank. The amount guaranteed by the State is applicable to deposits, current account balances, wage accounts, savings accounts, etc. The full amount is disbursed for the deposits that do not exceed 100 000 euro.

Does the calculated compensation include also interest?

Yes, interest profit is part of the compensation amount, including the interest calculated until the date of the occurrence of unavailability of deposits.

What will be the currency of the payable compensation?

According to the law the guaranteed compensation is payable in euro. In case the deposits were made in other currencies, they will be converted to euro.

Will currency exchange losses be compensated?

Laws and regulations do not provide for such compensation.

Who is eligible for the guaranteed compensation up to 100 000 euro?

The guaranteed compensation up to 100 000 euro applies to all clients of a bank or a credit union, both natural persons and legal entities, either residents or non-residents. The guaranteed compensation applies also to the bank accounts of Latvian state and local government institutions (if the budget of these institutions does not exceed 500 000 euro). Other exceptions where the guaranteed compensation is not due are described in Section 23 of the Deposit Guarantee Law.

What will happen if several clients have had a joint deposit that in total exceeds the standard compensation?

If the bank or credit union has identified each depositor in a timely manner, in the event of its insolvency, each of its depositors will be able to claim a full guaranteed compensation in amount of 100 000 euro.

Is the guaranteed compensation applicable also to 1 euro?

If a deposit is less than 10 euro and in two years before the day on which the unavailability of deposits occurred no transactions have been carried out, a client is not eligible for the guaranteed compensation. Other exceptions where the guaranteed compensation is not due are described in Section 23 of the Deposit Guarantee Law.

Does the guaranteed compensation apply to a subordinated loan to the bank?

No, the subordinated loan is one of exemptions not qualifying for the guaranteed compensation.

How is the payable amount of the guaranteed compensation determined?

The accounting records of banks and credit unions maintain information about all the clients eligible for guaranteed compensation and the amount of their deposits. This information base has been monitored and verified also by Latvijas Banka.

Is it possible to receive a larger amount of the guaranteed compensation and who is eligible for this?

Yes, there are certain types of transactions where the natural persons involved are eligible to apply for additional compensation (up to 200 000 euro), i.e. together with the standard compensation up to 300 000 euro. For example, in case the funds transferred in the account over last three months were derived from transactions with residential immovable property, state social security benefits, compensations for damages or for wrongful conviction.

What should be done to receive additional compensation?

To receive additional compensation, a client has to submit an application to the bank or credit union and supporting documents that the deposit meets the above criteria.

Will a client receive the guaranteed compensation if the bank account is seized?

No, the guaranteed compensation applies only to the amount that was available to the client on the date of the occurrence of unavailability of deposits.

If a sworn bailiff or tax administration has started the enforcement procedure against the depositor on cash recovery, the recoverable amounts up to the guaranteed limit of 100 000 euro will be disbursed to the sworn bailiff or the tax administration, respectively.

If after settlement with the bailiff or tax administration, part of the seized amount is released, the client will be able to receive remaining guaranteed compensation later. In this case, a five-year limitation period (during which the guaranteed compensations may be received) starts from the day when the guaranteed compensation or part of it has become freely available to the client.

How is the guaranteed compensation disbursed?

The Council of Latvijas Banka makes a decision on the procedure, place and time of the disbursement of the guaranteed compensation (both for natural persons and legal entities) and notifies it both on the website of Latvijas Banka, at the bank/credit union and in the media.

What is the time limit for receiving the guaranteed compensation?

Depositors may receive the guaranteed compensation within five years of the day of the occurrence of unavailability of deposits.

How much funds are currently accumulated in the Deposit Guarantee Fund?

Information on the accumulated funds of the Deposit Guarantee Fund is available in the Quarterly Financial Position Report.

What will happen to deposits above 100 000 euro?

Customers with deposited amounts exceeding 100 000 euro will be able to file their creditor's claims as part of the liquidation proceedings of a bank or credit union as soon as the liquidator starts accepting such claims.