Information on Deposit Guarantee System in Latvia
In accordance with amendments to the Deposit Guarantee Law adopted by the Parliament of the Republic of Latvia (Saeima) as from October 16, compensation of EUR 50 000 (LVL 35 000) 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 above amendments to the Deposit Guarantee Law were passed in accordance with an agreement reached at the meeting of the Council of Economic and Finance Ministers (ECOFIN) on 7 October 2008 to increase minimum guaranteed deposits in the European Union (EU) member states to 50 000 euros.
The Financial and Capital Market Commission (FCMC) ensures accumulation and management of the funds in the Deposit Guarantee Fund (the Fund). According to the 2008 semi-annual data, LVL 77.7 million were accumulated in the Fund by the end of July.
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. The decision of the Council of Economic and Finance Ministers (ECOFIN) to increase minimum guaranteed deposits to 50 000 euros is binding also to other EU member states where that threshold is not yet reached .
At present, there are 26 banks in Latvia five of which are branches of foreign banks.
Information prepared by FCMC, if any further information required regarding the deposit guarantee system in Latvia please contact FCMC (phone: +371 67774800 or +371 67774807; e-mail: email@example.com)