Depositor Compensation Scheme


What is it?

The Depositor Compensation Scheme is a rescue fund for depositors of failed banks which are licensed by the Malta Financial Services Authority (MFSA). It can only pay compensation if a bank is unable to meet its obligations towards depositors or has otherwise suspended payment.

The Scheme is managed by a committee appointed by the MFSA and is made up of persons representing the MFSA, the Central Bank, licensed investment firms, the banks and consumers.

The Scheme is intended to promote confidence in licensed institutions and in the financial system by being financed by the banks licensed by the MFSA.  This means that you will not be asked to contribute towards the scheme.

What does the Scheme cover?

Deposits made with banks licensed under the Banking Act incorporated in Malta including their branches operating anywhere in the European Economic Area (“EEA”).

Deposits placed with a branch in Malta of a bank incorporated outside the EEA are not covered by the Scheme in Malta. Neither does the Scheme in Malta cover deposits held in branches located outside the EEA of banks established in Malta.

You should read your bank’s information brochures to know if your bank is covered by the scheme.

Which types of accounts are covered by the Scheme?

All deposit accounts are covered by the Scheme. This includes all savings, current and fixed deposit accounts, as well as any accounts which, at the time of the banks’ failure, may be in credit (such as credit card accounts and overdrafts).

Deposits which may be evidenced by way of a certificate or which might be linked to an investment (such as products where the principal is not repayable in full upon maturity) are not considered to be deposits and therefore not covered by the Scheme. However, certificates of deposit made out to named persons and which existed in Malta on 2 July 2014 are covered by the Scheme.

Which currencies are covered?

The Scheme covers all currencies without distinction. However, in the event that the Scheme pays compensation, it will pay such compensation in euro. Therefore if your account is in any currency which is not the euro, the Scheme will exchange the amount in your account (with any accrued interest) into euro at the official exchange rate of the European Central Bank (ECB) when the Scheme is required to make such compensation.

How much will I receive?

All your deposits at the same credit institution are added up and the total compensation is subject to the limit of EUR 100,000 per depositor. This limit applies to the total amount of deposits held by you with the failed bank, irrespective of the number of accounts, the currencies of such accounts as well as the location of the bank/branch within the EEA.

In addition to the above, there may be instances where the depositor is entitled to receive additional compensation (up to EUR 500,000) for specific balances held in the respective accounts. For that, you would have to show evidence that any possible amount over EUR 100,000 qualifies as a temporary high balance.

More information about the Scheme is available from www.compensationschemes.org.mt