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Changes to the Norwegian deposit guarantee scheme for banks

News | 18.01.19

Banking and Finance
EU/EEA and Competition Law
On January 1, 2019, changes to the Norwegian Financial Institutions Act (Finansforetaksloven) concerning the deposit guarantee scheme for banks came into effect. The changes implement a revised EU Directive (2014/49/EU) that aims to harmonize the guarantee schemes across the EU and enhance the consumer protection of bank deposits.

Changes to the Norwegian deposit guarantee scheme for banks

The level of Norwegian deposit protection will remain at NOK 2 million per depositor per member bank, despite the EU Directive mandating that the maximum deposit guarantee is EURO 100 000. It is currently somewhat unclear whether the EU will permit Norway to continue this level of deposit protection. The Norwegian government is currently in talks with the EU to resolve this issue.

The deadline for reimbursing the depositor is now, as a rule, seven working days after the bank being placed under public administration.

The changes also entail that deposits resulting from certain extraordinary life events, and which have been made no earlier than 12 months prior to the bank being placed under public administration,  will be fully protected (i.e. no limitation on the deposit guarantee). Examples of deposits to which this exemption apply are deposits as a result of residential real estate transactions (including holiday homes), deposits associated with particular life events of the depositor, such as marriage, divorce (samlivsbrudd) and termination of employment, and deposits as a result of the settlement of insurance claims. Such deposits will be reimbursed within three months of the bank being placed under public administration.

As pertains to the branches of Norwegian banks in other EU jurisdictions, the level of deposit protection for the customers of such branches is EURO 100 000. The same applies to customers of Norwegian banks offering their services cross-border into other EU jurisdictions.

More than under the previous regime, the obligatory annual contributions to the Banks' Guarantee Fund will be contingent on the business model of the bank in question. A bank operating under a risky business model will have to pay more than a bank operating under a less risky business model.