Question
Which of the following amount should "Deposits covered by a Deposit Guarantee Scheme according to Directive 94/19/EC or an equivalent deposit guarantee scheme in a third country" definition include: (1) Covered Deposits as per Art. (2) of the European Directive 2014/49/EU on Deposit Guarantee Schemes i.e. all deposits eligible for compensation for each customer with the credit institution up to €100.000 for each depositor. OR (2) Payable amount i.e. all deposits eligible for compensation for each customer with the credit institution after setting-off any credit institution's counterclaims against that specific customer and taking into account the maximum amount of compensation that is €100.000 for each depositor.
Background on the question
One of the Cypriot Banks asked whether in section 2 - funding reliances the amount of deposits covered by DGS should be net of any loans which could be set off against such deposits in case of a bail in.
Answer
The amount included in the Funding plan should be covered deposits as per Article (2) of the European Directive 2014/49/EU on Deposit Guarantee Schemes, i.e. all deposits eligible for compensation for each customer with the credit institution up to EUR 100,000 for each depositor. Also temporary high deposit balances – stemming from real estate transactions (e.g. sale of a house) as well as from some specific life events (such as marriage, divorce, retirement, etc.) – and which are covered by a deposit guarantee scheme shall be reported here.