Information on Deposit Guarantee System in Latvia
Logo of Deposit Guarantee Fund
In accordance with amendments to the Deposit Guarantee Law adopted by the Parliament of the Republic of Latvia (Saeima) as from December 16, 2010 compensation of EUR 100 000 (LVL 70 000) is guaranteed to the clients of the Latvian banks (both natural and legal persons) per depositor per each bank (all accounts added together, if several accounts at one bank in one name) . The government guaranteed compensation covers deposits, current account balance, salary accounts, savings accounts etc.
The Financial and Capital Market Commission (FCMC) ensures accumulation and management of the funds in the Deposit Guarantee Fund (the Fund). According to the 2010 4Qdata, LVL 133.1 million were accumulated in the Fund by the end of December.
Initially, in 1998 the Fund was made up of a single payment from the Government budget totalling 0.5 million lats and a single payment of the Bank of Latvia totalling 0.5 million lats . Currently, the funds have been accumulated from quarterly payments of deposit takers, i.e. banks and credit unions (in the amount as specified by the Deposit Guarantee Law), as well as income obtained as a result of managing the funds of the Fund.
For instance, additional income from managing the funds of Fund in 2007 amounted to 2.4 million lats that was ensured by FCMC by making investments in the Latvian treasury bonds. Moreover, the Fund has been supplemented by a single payment in the amount of 50 000 lats made by a new deposit taker when obtaining an operating licence and a single payment in the amount of 100 lats made by a credit union.
In accordance with the Deposit Guarantee Law, in the occurrence of a case of unavailability of deposits in the Fund for paying out the guaranteed compensations, such payments shall be made from the Government budget via FCMC. Since the establishment of the Fund, there has been no such case of unavailability of deposits in Latvia where compensations shall be paid from the Fund.
Regarding the deposits in the branches of foreign banks, the deposit guarantee system of the foreign country where the bank is registered applies to these deposits.