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|
Although the considered territories provide offshore financial services which contribute significantly to their GDP, not all of them have deposit guarantee schemes (DGS), namely:
|British Virgin Islands||in progress|
|Isle of Man||yes|
|Turks and Caicos Islands||no|
 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.
 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.
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:
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.
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|
|Bermuda|| ||25 000 USD|
|Gibraltar|| ||100 000 EUR|
|Guernsey|| ||50 000 GBP|
|Isle of Man|| ||50 000 GBP for natural persons|
20 000 GBP for legal entities
|Jersey|| ||50 000 GBP|
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:
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 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.
|RON||Romanian new leu|