Changes Ahead for Statutory Deposit Insurance: Aiming for Greater Comfort for Clients

Prague, 5 November 2025: Almost four years after the Financial Market Guarantee System’s largest-ever payout of insured deposits, a package of reforms is coming that will modernize and strengthen the deposit guarantee framework. The goal is to make it more efficient for clients of financial institutions and to offer more flexible tools for managing financial institution crises.

Most of the upcoming changes stem from the EU’s reform package on Crisis Management and Deposit Insurance (CMDI). However, one uniquely Czech initiative — introduced by the Financial Market Guarantee System — is the digitalisation of payout processes. Clients of failed institutions will now be able to verify their identity using Bank Identity and handle the necessary steps electronically. “This will expand the available options for clients — they will still be able to visit the paying bank’s branch in person, submit a request by post, or authorise a third person, but now they will also be able to receive compensation online,” explained Renata Kadlecova, Executive Director of the Financial Market Guarantee System.

New Measures Introduced under the CMDI Reform

Further changes are brought by the CMDI reform package presented by the European Commission in April 2023, expected to be published in the Official Journal of the EU around the turn of the first and second quarters of next year. The main updates include:

Higher Limits and Extended Coverage Period for Temporary High Balances

One of the most significant changes is the increase of insurance coverage for Temporary High Balances — funds temporarily held in an account, for example, after selling a residential property, receiving an inheritance, or other situations defined by law. Currently, the limit for THB protection is €200,000 (twice the standard insurance limit) for three months from the date the funds are credited, provided the depositor does not use them during that period. “After the CMDI Directive is transposed into Czech law, the limit will rise to at least €500,000, and the protection period will be extended to six months. This is a welcome change — during the Sberbank CZ payout we saw that the current €200,000 limit no longer reflects real-life situations,” explained Renata Kadlecova.

Separate Insurance Limit for Client Accounts Held by Non-bank Financial Institutions

Another innovation introduces a separate insurance limit for accounts held by non-bank financial institutions on behalf of their clients. This applies to cases where clients invest through such institutions, which in turn deposit client funds into a bank account under the clients’ names. Until now, if a client also had their own deposits in the same bank, the two amounts were aggregated under one €100,000 insurance limit. “Clients cannot control in which bank the non-bank institution deposits their money. For example, if someone had €90,000 in their own account and the non-bank institution deposited €50,000 in the same bank on their behalf, the total insured amount was capped at €100,000 — meaning €40,000 exceeded the limit. Under the new rules, these amounts will be insured separately,” said Renata Kadlecova.

Longer Period to Claim Compensation

The deadline for claiming compensation will also be extended — from the current three years to five years from the start of the payout period. This will now be harmonised across the EU.

What Stays the Same:

The basic insurance limit for deposits held in financial institutions remains €100,000. This level is considered sufficient — according to the European Banking Authority, it covers 96% of all depositors in the EU and 98% in the Czech Republic.
The payout of compensation continues to begin within seven working days from the moment the Czech National Bank determines that a financial institution is unable to meet its obligations.

Revision of the Crisis Management Framework

When a financial institution faces difficulties, it does not necessarily have to fail — nor must depositors automatically receive compensation. In some cases, other measures defined under the Crisis Management Framework can be applied. This framework allows, in cases of public interest, for a bank’s critical functions to be maintained, avoiding broader negative impacts on the financial system. Its main goals are to prevent contagion, minimise the need for extraordinary public support, and protect both public funds and depositors.

At the EU level, there is consensus on broadening the use of the crisis management framework, which will allow for more flexible use not only of funds from the Crisis Resolution Fund but also of resources from the Deposit Insurance Fund in crisis situations. The decision to apply resolution tools will rest with the Czech National Bank, while clear limits will ensure that moral hazard is avoided and that losses are borne first by shareholders and unsecured creditors. The overarching goal remains the protection of public money and ensuring that both Financial Market Guarantee System funds — the Crisis Resolution Fund and the Deposit Insurance Fund — can contribute to crisis resolution even for small and medium-sized banks, when their resolution is deemed to be in the public interest.

With unified EU rules, the Czech National Bank will have various options for responding to a bank’s crisis, protecting clients and their deposits, and preventing spillover effects to the wider financial system. The strong guiding principle remains that the costs of resolving banking crises should be borne primarily by banks, shareholders, and investors — not taxpayers.

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