Information is prepared in line with Lithuanian Law on Deposit and Liabilities to Investors Insurance (the Law).
- What is the object of deposit insurance?
Deposit insurance object is an insurance eligible deposits owned by a depositor held in banks and credit unions in all currencies. Deposit – in account, which is opened in credit institution under bank deposit or bank account agreement, deposited money or due to temporary situations when credit institution provides financial services, money, that financial institution must return under the Law or agreement, but excluding money that:
- It’s existence can be proved only by financial instrument;
- It’s main sum is not returned in nominal value;
- It’s main sum is returned in nominal value only under credit institutions’ or third party’s special guarantee or agreement. Insurance eligible deposit is a deposit, to which Law article 3 part 2 deposit insurance exceptions do not apply.
2. Whose deposits are insured?
According to the Law deposits of natural and legal persons are insured, except certain category deposits, named in Law article 3 part 2 and Law article 8. Deposit insurance principle is that single persons’ deposit insurance is differentiated across DGS members. This means that single persons deposits, kept with different banks and credit unions are insured separately in line with the Law. Deposit insurance provisions are applied to a depositor, not a deposit. This means that all deposits by a single depositor, in a single bank or credit union are summed and single insurance payout is calculated for all deposits kept in a single bank or credit union. Please note that deposits kept in all branches and departments established in the Republic of Lithuania of a single bank are summed up.
- Who participates in the deposit insurance system?
Bank and credit unions are participants of Lithuanian DGS:
1) Banks established in Republic of Lithuania, including their branches, established in Republic of Lithuania and other member states;
2) Third country banks branches established in Republic of Lithuania, in which deposits are not insured or their security is not ensured otherwise in line with third country’s, to which jurisdiction the bank that established the branch, belongs to, legal acts.
3) third country banks branches established in Republic of Lithuania, in which deposits are insured (compensated) or their security is ensured otherwise in line with third country’s to which jurisdiction the bank that established the branch, belongs to, legal acts, but council of the insurance company determines, that deposit insurance (compensation) or other security measures are worse than set by the Law.
4) Credit unions and Central credit union established in Republic of Lithuania.
- When the insured event is declared?
Deposit insured event is considered as filing for a bankruptcy by member of deposit guarantee scheme (the DGS) or a decision by supervisory authority to declare the DGS member insolvent, when DGS member due to its financial situation cannot honor its liabilities in returning the deposits and there is reason to believe that it will not be able to do so in near future.
- What are the depositor’s rights if deposit insurance is withdrawn?
If DGS member whose deposit insurance was withdrawn files for a bankruptcy proceedings, the Company only pays insurance compensations to depositors whose deposits were accepted and not returned before the day of insured event.
- In which cases insurance compensations are not paid?
The deposit insurance object is not and deposit insurance compensations are not paid for:
1) deposits by other credit institutions, held in own account and name;
2) own capital;
3) deposits, regarding which a money legal conviction is made for money laundering.
4) deposits by financial institutions;
5) deposits by management firms;
6) deposits by brokerage firms;
7) deposits by unidentified persons (deposits in anonymous and coded accounts);
8) deposits by insurance and reinsurance companies acting in line with Law of Insurance of Republic of Lithuania.
9) deposits by collective investment subjects;
10) deposits by pension funds;
11) deposits by central or local government institutions and offices, as defined by Law of State service of Republic of Lithuania, except money kept in such institution’s depository accounts, owned by other persons.
12) Deposits by Bank of Lithuania;
13) debt value papers issued by DGS member and it’s liabilities, related to it’s acceptances and promissory notes;
14) electronic money and money received by electronic money office from electronic money owners in exchange for electronic money. Insurance compensations are also not paid to depositors for deposits held in account, in which no transactions related to deposit took place over last 24 months until the insured event and deposit size is less than 10 euro.
- What is the size of insurance payout?
Insurance compensation amount is equal to eligible for insurance deposits sum owned by depositor, that was in credit institution on the day of insured event, however it cannot be larger than 100 000 euro. Larger than 100 000 euro insurance compensation to depositor (natural person only) is calculated and paid in line with order and conditions set by the Law, when no more than 6 months before the day of the insured event money was included in the account on the following basis:
- For a sold or otherwise transferred rights of ownership of housing (including related land), to which depositor had rights of ownership, however this sum cannot exceed 300 000 euro.
- For money inherited by depositor, by testament or by Law, however this sum cannot exceed 200 000 euro;
- For depositor’s money received as beneficiary for life insurance agreement or agreement that meets its’ nature in instance of death, however this sum cannot exceed 200 000 euro.
- for depositor’s money received in cases set out by laws for death of other persons while performing work or service-related duties as compensation or its payout that meets its nature, however this sum cannot exceed 200 000 euro.
- money transferred in cases set out by laws as payout or compensation for damage done by violent crime or damage, that was caused by pre-trial officers, attorney, judge or court actions, however this sum cannot exceed 200 000 euro.
- Who, how and in how much time pays out the insurance payouts?
Insurance payouts are paid out within 20 business days from day of the insured event. Council of the Company can decide to extend the term by no more than 10 business days. The Company receives data required for calculation of the insurance payouts from the bankrupting DGS member and calculates insurance payout for every depositor. A bank is selected via which insurance payouts are to be paid out and insurance payout data is transmitted to the bank. The bank starts paying out payouts to bankrupting DGS member clients within 20 business days from insured event.
The Company informs the public via mass media about where and how insurance payouts are paid. This kind of payment of insurance payout is common around the world. It is important that depositor is not required to take any action to recover the deposit, address the bankrupt bank or credit union, nor the Company, write requests etc. Depositor only should come to the bank via which insurance payouts are are paid and claim the insurance payout.
Please note, that in case a depositor (natural person) claims larger deposit insurance payout than 100 000 euro in line with the Law’s article 4 part 2, depositor must submit additional request and the supporting documents.
- Who calculates insurance payouts?
Deposit insurance payouts are calculated and paid by the Company in accordance to the DGS member’s’ data on the day of the insured event. DGS member is responsible for data verity and its transmission to the Company on time.
- How insurance payout is calculated?
Insurance payouts are calculated and paid in euro.
Depositors’ insurance payout is calculated as follows:
In calculating deposit insurance payout sum for a single depositor, all deposits eligible for insurance in all currencies held by the depositor (including legal person depositor or other organization branches, representatives, other structural units) in a single credit institution, to which depositor has right of claim, including accrued but not paid interests on the day of the insured event are included. Depositor’s liabilities to the credit institution are not accounted for in calculations of deposit insurance payout. If insurance eligible deposit is held in a join account, insurance eligible deposit is divided to every co-owner in even parts, if agreements from which right of claim comes or court decisions regulate otherwise. Every person must inform the credit institution that an account is a joint account, when one opens a joint account, and provide identity confirming documents of the persons that have rights to the deposits in the joint accounts, in line with legal acts and credit institutions procedures. If insurance eligible deposit is in a depository account, insurance eligible deposit is divided for every natural or legal person or other organization to which money held in the depository account belongs, by share of the deposit that they own. Every person, when opening account at a credit institution in which money belonging to other persons’ on ownership, trust or other basis will be held, must inform credit institution that the account is depository and specify the law under which such account is opened, and at credit institutions request within 5 business days provide information about every person to whom money belongs in such account.
Deposit insurance amount is equal to the sum of depositors’ insurance eligible deposits, that was in a credit institution on the day of the insured event, however it cannot exceed a sum of 100 000 euro.
Larger than 100 000 euro insurance compensation to depositor (natural person only) is calculated and paid in line with order and conditions set by the Law, when no more than 6 months before the day of the insured event money was included in the account, acquired in cases set out by the Law article 4 part 2.
- Who can claim insurance payout in case of credit institutions’ insured event, if: 1) account was opened on behalf of a minor; 2) a joint account was opened on behalf of a minor and parents?
As defined by the Law, depositor is a person on which behalf the account was opened. Answering the question, it is important to evaluate natural person’s capacity (Civil Code articles 2.5 – 2.9). The general principle is that parents or custodians are responsible for minors, and assets that belong to the minors are managed by usufruct rights (CC article 3.185). If account agreement is signed on behalf of a minor, minor is the depositor. Therefore, if a minor (person under age of 18) has a deposit in a credit institution and insured event is declared for the credit institution, then insurance payout for the deposit would be calculated on behalf of the minor but parents would be managing (in this case – claim the payout) the money.
- How long can depositor collect the insurance payout?
Depositor’s right to claim insurance payout is valid for 5 years from the day of the insured event.
- Are all banks operating in Lithuania are members of Lithuanian DGS?
Nordea Bank AB Lithuania branch and „Danske Bank A/S“ Lietuvos branch are not members of Lithuanian DGS, however they are members of analog DGS in other European Union countries (detailed information can be found on these bank’s websites).
Please note, that state company „Indėlių ir investicijų draudimas“ is not authorized to interpret laws, therefore information provided is only an opinion of no legal consequences. Please also note, that Lithuanian courts or institutions applying legal acts can interpret them differently than above. In the event of a dispute final situation appraisal can be done by courts of Republic of Lithuania with respect to existing understanding of contents of legal acts.