Licensing & Supervision
The Deposit Protection and Resolution of Credit and Other Institutions Scheme (DP & RCOIS) was established and has been operating since March 2013. The relevant legal framework is Article 34 of the Business of Credit Institutions Laws, the Laws on the Establishment and Operation of Deposit Protection and Resolution of Credit and Other Institutions Scheme of 2013 and the Establishment and Operation of the Deposit Protection and Resolution of Credit and Other Institutions Scheme Regulations of 2013 and 2014.
The Scheme constitutes a separate legal entity. For the purposes of the Scheme, including the administration of the three funds, i.e. the Deposit Protection Fund for Banks, the Deposit Protection Fund (DPF) for Cooperative Credit Institutions (CCI) and the Resolution of Credit and Other Institutions Fund, a Committee was established, consisting of representatives from the Ministry of Finance and the Central Bank of Cyprus.
The purpose of the DP & RCOIS is twofold: on the one hand it is the payment through the DPF for Banks or DPF for CCI, as the case may be, in order to compensate the depositors of covered institutions which pay contributions to the deposit protection funds, in the event that a covered institution is unable to repay its deposits; on the other hand, it is the funding of the implementation of resolution measures. The DP & RCOIS covers deposits denominated in all currencies.
Participation in the DP & RCOIS is compulsory for all credit institutions with authorisation to operate by the Central Bank of Cyprus.
As of 9 September 2013, the Cooperative Central Bank and all CCI belong to a separate fund, the DPF for CCI, but under the auspices of the Scheme. The coverage under the DPF CCI remains the same, i.e. up to €100.000 per depositor per credit institution.
The compensation payment of the DPF for banks or the DPF for CCI, as the case may be, is activated in the event a decision is reached that a member of the DP & RCOIS is unable to repay its depositors. In this case, the relevant decision is adopted either by the Central Bank of Cyprus or through an order issued by a Court of the Republic or by the judicial authority of the country where the member is established, for special liquidation of the covered or affected institution.
The maximum level of compensation, per depositor, per credit institution is €100.000, including accrued interest. This limit applies to the aggregate deposits held with a particular credit institution. When calculating the amount of compensation payable to a depositor, any loans or other credit facilities granted by the credit institution to a specific depositor are set-off against the deposits. Any counterclaims that the bank concerned may have against the depositor in respect of which a right of set-off exists, may also be set-off.
Excluded from coverage are certain categories of deposits such as bank deposits (interbank), deposits by cooperative credit institutions, insurance companies, government departments, semi-government organisations and local authorities, deposits by collective investment schemes and deposits by financial institutions. Furthermore, among the categories excluded from coverage are deposits by persons against which criminal proceedings have been instigated or for which a confiscation order has been made, under the Prevention and Suppression of Money Laundering Activities Laws or a corresponding law of another country. In addition, deposits belonging to persons who, in the opinion of the Management Committee, are responsible for the credit institution’s bankruptcy or have profited out of circumstances which led to the credit institution’s bankruptcy or any other similar situation so as the credit institution is unable to repay its depositors, are also excluded from coverage. For these categories of deposits, no compensation is paid. The Management Committee may exempt any other categories of deposits if, in its opinion, particular circumstances render such decision necessary.
In case of activation of the Scheme, an announcement is made in the Official Gazette of the Republic of Cyprus and in the local press stating the inability of the covered institution to repay its depositors. In the announcement, the manner in which claims should be submitted and the necessary documentary evidence that accompany each claim will also be included.
Latest update: 9 January 2015