For banks

Contribution payments

On 1st January 2016, the rules for determining the contributions from financial institutions to the Deposit Insurance Fund were changed. The contribution amount is no longer defined as a flat rate given by the Act, but by the Czech National Bank in the line with the guidelines of the European Banking Authority. This method newly considers not only the volume of insured deposits but also the risk profile of the relevant insured institution. The Czech National Bank sets the contribution amount for financial institutions by 31 May of each year. A financial institution can appeal against this decision but the appeal does not have a suspensory effect.

The annual contribution rate and the coefficient adjusting the total amount of annual contributions are published annually on the Czech National Bank website.

The methodology for calculation of the risk-weights is published as an official information of the Czech National Bank in the Czech National Bank bulletin.

If the amount of funds in the Deposit Insurance Fund reaches 0.8% of the insured deposits, the value of whose does not exceed an amount equivalent to EUR 100,000 per entitled person per bank, or branch of a bank from a non-EU Member State (“covered deposits”), the Czech National Bank will set the contribution rate in such a way that their total amount in the relevant year is equal to 0.045% of the amount of covered deposits of all credit institutions.

After the Czech National Bank announces the contribution amounts to the Guarantee System, the Guarantee System can decide to apply partial contribution payments in the form of irrevocable payment commitments. In such a case, the conditions defined by law have to be met, including the necessity of a payment commitment fully collateralised by a debt security that is unencumbered by any third-party rights, that is at the disposal of the DGS and that according to Article 336 of Regulation No 575/2013 of the European Parliament and of the Council would obtain a risk weighting of up to 50%.

If the amount of funds in the Deposit Insurance Fund decreases below 0.8% of the covered deposits, the Czech National Bank will set the annual contribution rate and the coefficient adjusting the total amount of annual contributions in such a way that the amount of funds in the DIF equivalent to 0.8% of covered deposits is reached within a reasonable time, at the latest within 5 years from the end of the calendar year in which the decrease occurred, depending on the amount of funds missing in the Deposit Insurance Fund. If the amount of funds in the Deposit Insurance Fund drops below 2/3 of 0.8% of the covered deposits, the Czech National Bank will set the annual contribution rate and the coefficient adjusting the total amount of annual contributions in such a way that the amount of funds in the Deposit Insurance Fund equivalent to 0.8% of covered deposits is reached within 6 years from the end of the calendar year in which the decrease occurred.

Banks, branches of banks from non-EU Member States, building societies and credit cooperatives are obliged to pay the contribution by 30 June of the relevant year.

Contributions to the Deposit Insurance Fund must be paid in Czech crowns to the account of the Guarantee System held at the Czech National Bank No 706011/0710.

At the beginning of 2016, new legislation defined the right of the Czech National Bank to set - in cooperation with the Guarantee System – an obligation for financial institutions to pay extraordinary contributions. This decision can be made by the Czech National Bank in situations where the financial resources in the Deposit Insurance Fund are insufficient for payout of legally defined compensations. A financial institution is then obliged to pay this extraordinary contribution within 3 business days from the delivery of the extraordinary contribution decision. A financial institution can appeal against this decision, but the appeal does not have a suspensory effect. The extraordinary contribution rate must be set in such a way that the whole amount of extraordinary contributions does not exceed 0.5% of the volume of covered deposits in a calendar year. A higher rate can only be set in exceptional cases.

You can find methodological guidelines for determining the contribution to the Deposit Insurance Fund from 1.1.2016 here and here.

Maintaining information about the insured deposits and presenting that information to the Guarantee System

Banks, branches of banks from non-EU Member States, building societies, and credit cooperatives are obliged to ensure that the depositor is identified when they keep his/her account or accept a deposit in another form, and to maintain records of depositors’ identification information.

The form, structure, and method of maintaining and presenting the information to the Guarantee System is prescribed by Ministry of Finance Decree No 71/2011 Coll (text available in Czech only).

Under article 3(5) of Decree No 71/2011 Coll., banks and branches of banks from non-EU Member States are obliged to provide information about entitled persons to the Guarantee System. Authorised employee contacts have to be provided to the Guarantee System. This authorisation form, can be used to provide contact details. Authorised employee who fills out this form explicitly declares that the contact details are complete and correct, and confirms with his/her signature. In accordance with the decree, banks and branches of banks from non-EU Member States are obliged to nominate authorised employee within 1 month from the start of participation in the deposit guarantee system, and every change should be communicated to the Guarantee System without undue delay.