Contributions to the Financial Market Guarantee System have increased again. Financial institutions have paid over six billion crowns
Prague, 10 August 2022 – Banks, cooperative credit unions, building savings banks and selected investment firms have paid CZK 6,332.1 million in regular contributions to the Financial Market Guarantee System this year. This is more than CZK 700 million more than last year’s contributions.
Compared to last year’s total (CZK 5,616.7 million), the amount of collected contributions grew by CZK 716 million. The main reason for this was the gradual year-on-year increase in the volume of deposits from which the contribution amount is calculated. Another parameter influencing the contribution amounts is the riskiness of the financial institution in question.
The Guarantee System currently manages a total of almost CZK 41 billion after the contributions from the financial institutions. This is approximately CZK 17 billion less than last year, due to the payout of deposit compensation to clients of Sberbank CZ, a.s. The Guarantee System expects the full satisfaction of its claims in insolvency proceedings with Sberbank, where it is the largest creditor.
The Deposit Insurance Fund currently has CZK 14.3 billion in available funding, which ensures the basic readiness of the Guarantee System to commence deposit compensation payouts to clients in the event a financial institution encounters financial problems. Nevertheless, this is not the only funding to which the Guarantee System has access. Its financial resources may be promptly bolstered by additional sources of funding, e.g. by potentially imposing extraordinary contributions, generating revenue from the sale of bonds or receiving credits or loans from foreign funds or from the state budget. Compensation is currently being paid to clients of the bankrupt Československé úvěrní družstvo (commenced on 11 August 2021) and to clients of Sberbank CZ, a.s. (commenced on 9 March 2022).
The total amount available to the Guarantee System in the Crisis Resolution Fund is CZK 26.7 billion. This fund does not serve for direct disbursements of compensation for deposits. The resources collected in it may be used if there is a threat to the stability of any of the financial institutions, assuming compliance with other statutory conditions. The amounts of contributions to the Crisis Resolution Fund are set by the Czech National Bank after consultation with the Guarantee System. The Czech National Bank is obliged to take into account that the target amount in the Crisis Resolution Fund must reach 1% of the total volume of covered deposits by 31 December 2024, in other words approximately CZK 37 billion. The payout related to Československé úvěrní družstvo is one of the smallest payouts of insured deposits provided by the Guarantee System in terms of the amount paid and the number of clients. “There are a total of 541 cooperative clients, to whom a total of CZK 52.3 million is to be paid,” says Renáta Kadlecová, Financial Market Guarantee System Managing Director.
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