Deposit Guarantee Schemes in European Territories

13 October 2014

Several European countries have dependent territories which are geographically separated from these countries. These territories have different dependency types relatively to their controlling countries. Traditionally, these territories specialize on tourism, agriculture and offshore finance. Amongst more than 30 such territories, only 10 provide offshore financial services.

Deposit guarantee scheme is an important factor to be taken into account when dealing with an offshore financial center: it increases the level of customer protection by protecting a part of the depositors' wealth from bank failures and improves financial stability by preventing depositors from making panic withdrawals from their bank.

This article outlines main features of deposit guarantee schemes of the following territories providing offshore financial services:

Territory Location Controlling Country Dependency Type
 Anguilla Caribbean Sea United Kingdom British Overseas Territory
 Bermuda North Atlantic Ocean United Kingdom British Overseas Territory
 British Virgin Islands Caribbean Sea United Kingdom British Overseas Territory
 Cayman Islands Caribbean Sea United Kingdom British Overseas Territory
 Curacao Caribbean Sea Netherlands Constituent country
 Gibraltar Southwestern Europe United Kingdom British Overseas Territory
 Guernsey Europe United Kingdom British Crown Dependency
 Isle of Man Europe United Kingdom British Crown Dependency
 Jersey Europe United Kingdom British Crown Dependency
 Turks and Caicos Islands Caribbean Sea United Kingdom British Overseas Territory

Existence of Deposit Guarantee Schemes

Although the considered territories provide offshore financial services which contribute significantly to their GDP, not all of them have deposit guarantee schemes (DGS), namely:

Territory DGS Status
 British Virgin Islandsin progress[1]
 Cayman Islandsno
 Curacaoin progress[2]
 Isle of Manyes
 Turks and Caicos Islandsno

[1] The British Virgin Islands does not currently have a deposit guarantee scheme, however, the Government of the BVI has drafted legislation for the introduction of such a scheme.

[2] A Deposit Guarantee Scheme has not yet been introduced for Curacao and Sint Maarten. However, efforts to introduce such a system are being undertaken in consultation with the respective relevant parties.

Deposit Guarantee Schemes Characteristics

Because Anguilla, British Virgin Islands, Cayman Islands, Curacao and Turks and Caicos Islands currently do not have deposit guarantee schemes, only the territories having deposit guarantee schemes are considered further: Bermuda, Gibraltar, Guernsey, Isle of Man and Jersey.

From a depositor's point of view it is important to know:

Participating Credit Institutions

In all of the considered territories (Bermuda, Gibraltar, Guernsey, Isle of Man and Jersey) all credit institutions operating in these countries are obliged to participate in the deposit guarantee scheme of the territory they operate in (host territory). The only exception is Gibraltar: branches of EEA-banks participate in deposit guarantee schemes of their home countries.

A credit institution is not necessarily a bank, but any financial institution that takes deposits: it can also be a credit union, a building society, a savings and loan association.

Eligible Depositors

Not all depositors are eligible to receive a compensation in the case of a bank's failure. Eligible depositors and maximum covered amount (per depositor per bank) are summarized at the table below.

Territory Eligible Depositors Maximum Covered Amount
  • natural persons
  • small businesses
25 000 USD
  • natural persons
  • legal entities
100 000 EUR
  • natural persons
50 000 GBP
 Isle of Man
  • natural persons
  • legal entities
50 000 GBP for natural persons
20 000 GBP for legal entities
  • private individuals
  • charities
50 000 GBP

Covered Account Types

In the considered territories deposits in all types of accounts are covered. Exclusions from the coverage are made at the level of:

Examples of the most commonly used deposit accounts covered by deposit protection schemes are given below:

Covered Account Currencies

In all of the territories except for Gibraltar, deposits made in all currencies are covered by Deposit Guarantee Schemes.

In Gibraltar only EEA currencies are covered, the deposits in non-EEA currencies (for example, USD and JPY) are not covered by the deposit guarantee scheme of Gibraltar.

EEA Countries and Currencies

EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.

EEA currencies are all official currencies of EEA members. Switzerland is not a EEA member, but because CHF is the official currency of Liechtenstein, CHF also belongs to EEA currencies.

 BGNBulgarian lev
 HRKCroatian kuna
 CZKCzech koruna
 DKKDanish krone
 HUFHungarian forint
 ISKIcelandic króna
 CHFSwiss franc
 NOKNorwegian krone
 PLNPolish złoty
 RONRomanian new leu
 SEKSwedish krona/kronor
 GBPPound sterling

See Also