91999E2561

WRITTEN QUESTION E-2561/99

by Christopher Huhne (ELDR) to the Commission

(11 January 2000)

Subject: Jurisdiction of deposit insurance

Would the Commission please state what deposit insurance arrangements would apply to a UK depositor who placed sterling deposits via the internet with a bank currently advertised as First-e Bank, apparently the trading name of the Banque d'Escompte in Paris?

Answer given by Mr Bolkestein on behalf of the Commission

(14 February 2000)

In order to give a precise answer to the question, the Commission would need to have some additional information about the facts of the case. However, on a general basis Directive 94/19/EC of the Parliament and of the Council of 30 May 1994, on deposit- guarantee schemes(1) stipulates that Member States shall ensure that there is a guarantee scheme within their territory and that the Member State's scheme also covers the depositors at branches set up by credit institutions in other Member States. The Directive is also valid, by special agreement, in the three other European economic area (EEA) states; Iceland, Liechtenstein and Norway.

If deposits were placed within e.g. a French institution, situated in France, the French deposit guarantee scheme would apply regardless of whether the deposits were transferred via Internet, the nationality of the depositor or the currency of the deposits (as long as deposits are in euros or one of the currencies of Member States). The French deposit guarantee amounts to 60 000 per depositor. It is subject to a number of possible exemptions, e.g. as regards the type of depositor, as mentioned in the Directive.

From 1 January 2000, branches of Community credit institutions situated in other Member States (and the three EEA states) are also obliged to offer the same deposit guarantee as their parent credit institutions. The credit institution and its Community branches are thus regarded as one legal entity. If one takes the example of a French branch situated in the United Kingdom, it must thus offer a deposit guarantee of 60 000, just as in France. This is a new provision. Previously, according to Article 4(1) of the Directive, such branches were not allowed to offer a higher guarantee than the

prevailing level in the host country. However, this clause expired at the end of 1999 and the Commission has not proposed any further prolongation in its recent report(2) to the Council and the Parliament.

The Directive is only applicable in Member States (and by special agreement in the EEA states). This means that deposits which are placed in a branch of a Community credit institution situated outside the Community (or the EEA), are not normally covered by the national deposit guarantee schemes. Instead, credit institution branches in third countries are submitted to host country rules.

(1) OJ L 135, 31.5.1994.

(2) Report from the Commission on the application of the export prohibition clause, Article 4(1) of the Directive on deposit guarantee schemes (94/19/EC); COM(99) 722 final.