I am satisfied that there are adequate measures in place to protect depositors in the institutions covered by the Deposit Guarantee Scheme (DGS), which is funded by the credit institutions covered by the scheme and is backed by the Exchequer. The Financial Services (Deposit Guarantee Scheme) Act 2009 provides for the operation of the Deposit Protection Account (DPA). Credit Institutions are required to maintain a balance in the DPA equivalent to 0.2% of their total deposits (subject to a minimum of €50,000 for each bank or building society). The total balance in the DPA was €388m at end December 2012 and has reduced to €379m following compensation payments to IBRC depositors.
In the event of a credit institution being unable to repay deposits, the Central Bank is authorised to make compensation payments to eligible depositors to a maximum of €100,000 per person per institution. The cost of compensation payments is charged against the balances in the DPA. In the event that the cost of compensation exceeds the balances in the DPA, the 2009 Act provides for the Central Bank to be reimbursed from the Central Fund within 3 months, subject to my approval.
Subsequently, credit institutions would be required to replenish the DPA and to repay the government for amounts advanced to cover the immediate cost of compensation. I am authorised to specify the period for repayments and the interest rate chargeable.