Protection of Depositors or Deposit Guarantee Fund

Deposits of private individuals and legal entities at the Bank are protected by the funds accumulated in the Deposit Guarantee Fund. 

The Deposit Guarantee Fund is managed by the Bank of Latvia and governed by the Deposit Guarantee Law.

The Deposit Guarantee Fund is a monetary fund formed by state budget funds and statutory contributions made by fund members

The Deposit Guarantee Fund is a monetary fund formed by state budget funds and statutory contributions made by fund members to ensure the protection of depositors’ interests. Fund members are credit institutions and, in cases stipulated in the Deposit Guarantee Law, by Latvian branches of EU Member State banks, as well as branches of foreign banks and savings and loan associations.

The Deposit Guarantee Law determines:

Bank’s customers are entitled to the state-guaranteed compensation for all types of deposits in all currencies, but not exceeding the amount of 100,000 euros, if at least one of the following conditions is met:

• when an organisation attracting deposits is unable to pay out deposits,
• due to the declaration of insolvency,
• annulment of licence or other circumstances stipulated by law.

The guaranteed compensation is paid out in euro (EUR) only.

Payment of the guaranteed compensation in case of unavailability of deposits

The guaranteed compensation is paid out within five years after:

• the date of occurrence of unavailability of deposits, or
• the date on which the circumstances forming the basis for the refusal to disburse the guaranteed compensation cease to exist in accordance with Article 27(1) of the Deposit Guarantee Law.

The guaranteed compensation is available no later than within seven business days following the occurrence of unavailability of deposits. 
The Bank of Latvia decides on the method and time of payment of the compensation and publishes this information in Latvijas Vēstnesis, as well as posts it on the website of the Bank of Latvia.

Depositor’s obligations in case of the management of funds due to another person

If a Depositor (who is the Bank’s Customer) managers the funds due to other person, the right to receive the guaranteed compensation is granted to the person, who can prove his/her right to claim these funds, provided that the Bank or the Depositors him-/herself has identified or can identify this person prior to the date of occurrence of unavailability of deposits. 

The depositor that ensures or plans to ensure the management of funds due to other person at the Bank is obliged to inform the deposit taker that it ensures the management of funds due to other persons, the identification of these persons and the accounting of funds due thereto.

Calculation of guaranteed compensation in case of a joint deposit with other person(s)

Guaranteed compensation for a joint deposit shall be paid to each person who has made the joint deposit in the amount of up to 100,000 euro. 

The amount of the guaranteed compensation is determined according to share of the person who has made the joint deposit in the joint deposit, which has been specified in the contract entered into with the deposit taker. 

If the share of each person in the joint deposit has not been specified, the joint deposit is divided in equal shares and the amount of guaranteed compensation of each person is determined according to this equal share.

Deposits for which the guaranteed compensation is not paid:

• deposits of credit institutions and credit unions;
• deposits of financial institutions;
• deposits of local governments, whose annual budget exceeds 500,000 euros, and direct administration institutions;
• deposits related to money laundering or recognised as the proceeds from crime, if the court judgement of conviction has entered into force;
• deposits, for which a depositor as a customer has not been identified in accordance with the provisions of the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing;
• deposits, which, in accordance with law, form the equity capital of an organisation attracting deposits;
• deposits of insurance and reinsurance companies;
• deposits of investment broker companies;
• deposits of investment management companies;
• deposits of private pension funds;
• deposits of managers of alternative pension funds;
• debt securities issued by a credit institution, as well as liabilities arising from its bills, including bills of exchange;
• deposits, with which no transactions have been performed over the last two years following the date of occurrence of unavailability of deposits and the value of which is below 10 euros.

Payment of the guaranteed compensation to minor persons

The guaranteed compensation of a minor person may be transferred to an account, which is opened in favour of the minor person at other Bank and the terms of use of the funds available in which are similar to those determined by the Bank for the use of funds available in the account, for which the unavailability of deposits.

The legal representatives of minor depositors (account holders), i.e. parents or guardians, are entitled to act on behalf of a minor person and according to the property interests of minor persons pursuant to the statutory procedures. 

Upon attaining the age of 18, persons have the right to receive the guaranteed compensation in person.

This information is based on the applicable Deposit Guarantee Law and materials developed by the Bank of Latvia:

• Website of the Bank of Latvia
• Background Information on the Protection of Deposits
• Deposit Guarantee Law