Banks need to contribute more to Deposit Guarantee Fund

Funding the Banking Deposit Guarantee Fund (FGDB) on the basis of stand-by agreements with lending institutions has been dropped at the beginning of this year, and banks' annual contribution quota has been raised from 0.2% to 0.3%.

As a result of this increase, the exposure coverage degree, calculated as a ratio of the Fund's resources and the total value of guaranteed deposits, is expected to rise.

At the end of September 2010, the Fund's exposure coverage degree amounted to 1.25%, one of the highest levels in the EU, according to the fund's bulletin for the third quarter of 2010.

In the spring of 2009, the Fund contracted from banks a stand-by line of credit representing the RON equivalent of 300m euros. The operation was needed to support the decision to raise the guarantee threshold from the equivalent of 20,000 euros to 50,000 euros for individuals.

Thus, the resources provided to the Fund in 2009 in form of contributions accounted for less than 20% of the total, with the rest of over 80% coming in form of the stand-by line of credit.