Since Germany is ranked among the strongest economies in the world, its financial system contains systemically important financial institutions playing an important role in a global setting. The German banking system is divided into three pillars: commercial banks, federal state banks, and cooperative banks. To ensure swift resolution procedures and repay insured account balances within a seven day timeframe, different DGS funds exist.
Deposit Guarantee Scheme (Germany): Comprehensive protection of bank account holders is provided by statutory and voluntary deposit insurance imposed on licensed and supervised deposit taking credit institutions. This level of double protection has proven to be successful since eligible creditors have been fully compensated since the inception of the current scheme.
Secured Deposit Limit: 100.000 euro per depositor and institution.
Additional Coverage: The German Deposit Guarantee Act (EinSiG) allows for temporarily covered compensation up to a total of 500.000 euro for specific life events. Alongside the standard DGS program, voluntary deposit insurance and institutional securities to prevent insolvency and liquidation are available.
Payout events: The supervisory authority determines that a credit institution is unable to repay deposits that are due and payable and the credit institution has no current prospect of being able to do so in the future.
Claim Filing Procedure: The account holder is informed by the applicable DGS that a payout event occurs. An official application to the scheme is not needed. However, not all deposits are covered under the statutory scheme and may require additional evidence to substantiate claim eligibility. This also applies to temporarily high account balances.
Claim Submission Timeframe: Claims for compensation against the DGS shall become time-barred under the statute of limitations five years after the depositor has been notified of the payout event.
Repayment Timeframe: If a payout event occurs, depositors are without delay informed by the DGS. Claims are examined within seven working days. Compensation is made available to eligible and approved creditors. Creditors are responsible for the receipt of this compensation by following the rules for repayment.
Repayment Conditions and Claim Eligibility: If a payout event occurs, the right to compensation is limited to known creditors that can be identified at the time of the payout event. Excluded from compensation are among others, deposits affiliated with a criminal conviction for money laundering, deposits held by financial institutions and investment firms, and accounts of public authorities.
Rejections of a DGS Claim: Deposit insurance is exclusively available to eligible account holders. Account balances without coverage have their claim rejected. Disputes are settled by the civil courts although reinspection of supporting evidence may be submitted to the DGS administration.
Membership and Participation: Deposit taking credit institutions are required to participate in a statutory bank-financed deposit guarantee fund that covers eligible bank deposits up to 100.000 euro. Members make financial contributions based on the level of the covered deposits and their individual institutional risk profiles.
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