Deposit Guarantee Scheme Malta

The Maltese financial services sector is one of the core pillars of the economy. The functioning of the financial system is important for the local market and to attract foreign direct investment. With over 2.300 licensed legal entities and financial institutions, the MFSA closely monitors the well-being of the financial industry. It has a pro-active approach towards companies in distress and intervenes where possible as early as possible to manage risk and mitigate adverse effects to the stakeholders. This includes the protection of bank deposits by deposit insurance and the compensation of investors via the investor compensation scheme. As a result, the integrity and stability of the financial system is maintained. More information on Deposit Protection in Malta is available here.

Deposit Guarantee Scheme (Malta): The Depositor Compensation Scheme is responsible for the administration and management of the local bank deposit insurance program and the investor compensation scheme. The rescue fund protects eligible bank account holders of supervised credit institutions in Malta with a standard coverage for their account balance. The fund is triggered by the MFSA or the applicable court when a licensed and supervised credit institution is unable to meet its obligations towards its creditors or when the credit institution otherwise has suspended payments.

Secured Deposit Limit: €100.000 per (eligible) account holder and bank according to EU laws.

Temporary High Balances: Additional coverage of € 500.000 potential for retail creditors whose deposits serve life or social purposes such as sums paid to a depositor in respect of family matters (separation or divorce, inheritance), retirement, unfair dismissal, redundancy, wrongful conviction, or whose account balance is derived from residential and private real estate transactions (applications for temporary high balances are examined by the DGS administration on a case by case basis).

Claim Filing Procedure: Even though a request to the scheme is not required, claim eligibility must be confirmed. Therefore, a claim form complemented with claim evidence must be submitted to the DCS administration.

Claim Submission Timeframe: The time frame for claim submission is maximized at two years after the activation of the scheme.

Repayment Timeframe: Seven working days unless further examination of the claim is required or repayment cannot be executed for administrative reasons.

Repayment Conditions: The term Deposit Guarantee Scheme (Malta) is somewhat broad since not all bank deposits qualify for DGS compensation. Exclusions of DGS coverage are laid down in national laws, based on the European Directive on Deposit Guarantee Schemes (2014/49/EU). Extensive information on Deposit Protection in Malta is available here.

Malta DCS Claim Eligibility: Eligible account holders who are absolutely entitled shall be paid compensation via the DCS. The scheme provides a single guarantee for creditors of licensed and supervised financial instantiations incorporated under the Banking Act in Malta. This does not include branches of financial institutions incorporated outside the European Economic Area.

Rejections of a DGS Claim: Most creditors and account balances are eligible for repayment under the DCS framework. Yet, deposits held by account holders who are convicted of crimes that involve money laundering, deposits held by investment firms, financial institutions, pension and retirement schemes, and deposits held by public authorities, are not covered. Also, deposits whose owner cannot be identified are not eligible for DCS compensation. To ensure repayment to the correct and qualified creditors, claims must be verified. The verification procedure may lead to a rejection. Therefore, account holders must submit the correct information to the DCS administration for review.

DCS Membership and Contributions: Credit institutions licensed by the MFSA must participate in the DCS. The scheme is financed by membership fees, ordinary contributions and risk-based premiums of the members. Account holders do not contribute to the scheme.

Funding Protocols and Reserves: The DCS has 135 Million Euro available for direct distribution in case a credit institution in Malta fails and account balances must be repaid to eligible creditors.

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