Current affairs

A bank failure often activates the Deposit Guarantee Scheme. This protection scheme provides an external guarantee paid by the active banks or branches of banks in a certain jurisdiction. Participating banks pay a periodic premium based on the deposits they hold on behalf of their customers as well as the risk based pricing model used by the administrator of the Deposit Guarantee Fund.

The fund uses the premiums paid by all members to cover losses in cases of default by one of the members. If no members default during a specific period – often one year – the premiums are added to the reserve of the Deposit Guarantee Scheme.

Legal Floris LLC currently advices customers of the following financial entities and helps them to qualify for the domestic Deposit Guarantee Scheme as a first step towards total compensation:

  • FBME Bank Cyprus

FBME Bank Cyprus was placed under resolution by the central banks in Cyprus and Tanzania after US based FinCEN published a Notice of Finding and concluded that FBME Bank was a ‘foreign financial institution of primary money laundering concern’ which resulted in special measure 5 against the bank.

The American Bankers Association advised its members not to engage anymore in any transactions with FBME Bank, its affiliates or corresponding banks. To prevent a bankrun the central banks had to intervene. It resulted in a closure of the bank as of July 18th, 2014.

The 17th of April 2016 the Deposit Protection Scheme for FBME customers with deposits at the Cyprus branch was activated. This was a logical next step after the branch license of the bank got revoked the 21st of December 2015.

Read more on the procedures to file your claim at the Deposit Protection Scheme in Cyprus and how to submit a claim for additional damages here.

  • Optima Bank Belgium

After the acquisition of Ethias Bank in 2011 by Flemish insurer Optima, the banking and financial planning activities of Ethias Bank were continued by Optima in Gent under the new name Optima Bank NV. In 2014, shareholders decided to slowly extinguish the banking activities due to low interest rates and high bank levies.

In June 2016, the central bank (NBB) blocked access to customer accounts to prevent a bank run as a result of irregularities and possible criminal offences that came to light in an investigation by the FSMA and NBB.

According to  EU directive 2014/49/EU, customers of Optima Bank NV can apply for the Deposit Guarantee Scheme. This external insurance guarantee has a positive impact on the pay out towards bank’s customers with deposits that exceed 100.000 Euro. The DGS will be activated after the announcement of the central bank, de Nationale Bank van Belgie (NBB). The NBB currently waits for approval by the European Central Bank (ECB) to revoke the banking license of Optima Bank NV.

Read more on the procedures to file your claim at the Deposit Protection Scheme in Belgium and how to submit a claim for additional damages here.

  • Nemea Bank Malta

Malta based Nemea Bank is a direct bank and does not operate any physical bank branches but provides all its products and services online. On 27 April 2016 the bank was put under administration by the Malta Financial Services Authority due to “serious regulatory shortcomings” identified by the MFSA and the ECB in joint on-site inspections.

To prevent a bank run and liquidity problems, existing clients can withdraw funds from their account but withdrawls are being limited to EUR250 per day for each client until further notice.

The regulator has appointed PricewaterhouseCoopers Malta as a competent person to: [i] take charge of the assets of the Bank for the purpose of safeguarding the interests of depositors and its other clients; and [ii] to assume control of the Bank’s business and to carry on that business and such other functions as the MFSA may direct. This appointment has been effected in terms of Article 29 of the Banking Act and Article 15A of the Investment Services Act.

Read more on the procedures to file your claim at the Deposit Protection Scheme in Malta and how to submit a claim for additional damages here.

  • Banca Privada d’Andorra 

On March 10, 2015, the United States Department of the Treasury said that BPA is a “primary money laundering concern”, involving four US correspondent banks, criminal groups in Russia and China and Venezuelan money launderers. The Board of Directors and three of the Bank’s managers were suspended as of 11 March 2015 by the Insititut Nacional Andorrà de Finances. On March 13, the chief executive officer Joan Pau Miquel Prats was arrested and imprisoned: Spanish and Andorran regulators took over control of BPA and its subsidiary Banco de Madrid. On March 16, Banco de Madrid ceased operations and applied for protection from creditors after funds withdrawals.

Subsequently withdrawals for those holding accounts were capped at €2,500 per week. BPA’s assets are nominally assessed at €3 bn., far exceeding the Andorran Government’s annual budget of €400m. Should the bank fail it would be virtually impossible for the government to support it. The bank may be sold or put into administration. The situation has also raised questions about the solvency of the province’s other major banks.

PriceWaterhouseCooper (PWC) was engaged to carry out an audit of the banks depositors to separate good clients from bad.

Read more on the procedures to file your claim at the Deposit Protection Scheme in Andorra and how to submit a claim for additional damages here.