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Deposit insurance
In a market economy, banking regulation and supervision
cannot, and should not, prevent each individual bank from
failure. The Czech Republic has a Deposit Insurance Fund to
ensure that any such termination of a bank´s activity has a
minimal impact, especially on small clients. The Fund, whose
scope of activities is laid down in the Act on Banks, has
two main functions: a preventive function for banks (by
reducing the risk of a run on the banks) and a compensatory
function for depositors.
Using contributions from banks and branches of foreign banks,
the Deposit Insurance Fund establishes financial reserves
which are used to repay deposits in the event of the failure
of a bank due to insolvency. All non-anonymous deposits of
natural persons and legal entities held in Czech korunas and
foreign currency are insured (natural persons must have
given their first name, surname, address and date of birth
or birth index number, and legal entities their commercial
name, registered address and identification number).
Deposits of banks, foreign bank branches and financial
institutions are not covered, nor are "subordinated deposits".
The level of cover is calculated by summing all the insured
deposits of each depositor with the bank. The amount paid
under the scheme is equal to 100% of this sum up to a
maximum of EUR 100,000 per depositor per bank. Persons
stated in the Act on Banks, such as persons exercising
control over the bank, persons having qualifying holdings in
those persons and members of the management of those persons,
persons having qualifying holdings in the bank and any
persons under their control, hereafter members of the
statutory body, members of the supervisory board, the bank
senior officers and persons close to the members of these
bodies, the bank senior officers and the persons exercising
control over the bank; persons over which the bank exercises
control (and persons convicted of offences relating to money
laundering are not eligible for payment of compensation.
Foreign bank branches are not obliged to participate in the
deposit-claims insurance scheme provided that they notify
the Czech National Bank of their intention and at the same
time demonstrate that the deposit-claims insurance scheme in
which they do participate ensures eligible persons a level
of protection at least the same as that required by European
Community law.
The provisions of the Act on Banks relating to insurance of
deposit claims shall apply to foreign bank branches which
enjoy the advantages of the single licence in accordance
with European Community law only if they make use of the
possibility of supplementary deposit-claims insurance with
the Deposit Insurance Fund.
Source http://www.cnb.cz/en/supervision_financial_market/conduct_of_supervision/
position_of_supervision/credit_institutions/deposit_ins.html |
