How Long Does DGS Claim Verification Take and When is Repayment Formalized?

Deposit Guarantee Schemes (DGS) protect the bank account deposits of specific creditors when a licensed financial institution fails or is likely to fail. The intent is to ensure a smooth transition of the troubled bank into clear waters again. This can mean a capital injection, restructuring of the bank or even eventually dissolution. Creditors are waiting in line until the matter is resolved. The DGS provides retail customers with often hard needed liquidity against their insured deposits.

The announcement of the activation of a DGS is made in the national gazette, on the website of the failed bank and the DGS administrator. Local media often pick up the news as well. Creditors are responsible to file their claim in time and supported by the correct evidence of deposit ownership. Verification is an interplay between the information presented by the creditor and the available data in the records of the bank.

The submission of a DGS claim is done in person or by affidavit. It contains a claim form completed by the account holder and supported by documented evidence of account ownership. Verification of the identity of the account holder is done by presenting a government issued identity card or passport. Account ownership for individuals is proven by the account opening confirmation of the bank and a recent bank statement. For corporate account holders, corporate documents that show the company structure and ownership must be presented. International Business Corporations and offshore companies often have distinct documents to present these. Original company documents and a certificate of incumbency often supported by a recent apostile can further prove account ownership.

DGS claim verification and payment is easy and straightforward for local private account holders. International creditors and corporate accounts require more information to verify and approve the DGS claim. Claim approval and repayment of the account balance is the result of the claim submission and verification of presented documents. For corporate account holders and international creditors this often means, if not mandatory, that a personal visit to the DGS administrator is recommended.

Several checks are made prior to payment of a DGS claim can happen. Most deposit protection funds have a timeframe for claim submission. Claims submitted outside this timeframe do not qualify for the deposit protection fund and their claims are instantly rejected. The funds also include in their terms and conditions a timeframe for verification and repayment. Depending on the complexity of the claim, repayment can happen between a week and several months. An appeal, or resubmission of a claim and reinspection after a rejection can often only happen once. This article explains more on claim resubmission. Claim repayment depends on the information provided and therefore creditors must pay close attention to their filing.