Deposit guarantee
Presentation
The Fonds de garantie des dépôts Luxembourg (FGDL, Luxembourg Deposit Guarantee Fund) covers eligible deposits with member banks and POST Luxembourg. Eligible deposits made through branches of Luxembourg banks located in a Member State of the European Union are also covered by the FGDL. However, deposits with branches in a third (non-EU) country are not covered by the FGDL. Eligibility for the deposit guarantee does not depend on the currency of the deposit or on the origin or the place of residence of the depositor. In principle, all natural and legal persons, excluding entities in the financial sector, are eligible. The exclusions are listed in Article 172 of the Law of 18 December 2015, as amended.
The FGDL guarantee is triggered when an FGDL member institution is unable to repay eligible deposits to its customers. Typically, this situation arises in the event of bankruptcy of a bank. The guarantee offered by the FGDL is limited to EUR 100,000 per person and per bank. In some cases, the guarantee may be higher. Depositors retain their rights to the portion that is not repaid by the FGDL and deposits that are not eligible for deposit guarantee. They must assert these rights with the liquidator of the failed bank.
EUR 100,000 are protected, regardless of the currency of the deposits. The repayment for depositors of Luxembourg banks and their European branches is always made in euros. For joint accounts, each co-holder is entitled to a EUR 100,000 deposit guarantee.
Generally, the FGDL is required to make repayments via bank transfer within seven working days following the activation of the deposit guarantee, provided that the depositor has informed the FGDL of its new bank account number and that the right to compensation has been established and validated. In some specific cases, deadlines may be longer. In the event of a loss, the FGDL will inform depositors by mail and via its website of the exact procedure to follow in order to provide the FGDL with the necessary information, such as e.g. the new account number. More details on how the deposit guarantee works can be found on the Compensation process page.
Temporary high balances
Where depositors have deposits resulting from the following situations referred to as “temporary high balances”, the standard EUR 100,000 protection is increased to EUR 2,500,000, provided that said amounts have been credited or may have been legally transferred less than 12 months prior to the unavailability of the deposits:
1. Deposits arising from real estate transactions in respect of private residential property, as well as compensation for claims incurred in respect of private residential property.
Covered are real estate transactions on primary or secondary residences. Moreover, the Luxembourg legislator has decided to include coverage of compensation received by an insurer as a result of a loss suffered regarding a private residential property. This targets, e.g. the case of a person receiving compensation following a fire or a flooding of his/her dwelling.
2. Deposits that fulfill a social purpose and are related to a particular life event of a depositor, such as wedding, divorce, retirement, individual or collective dismissal, disability or death.
The aforementioned list of life events is non-exhaustive. This includes, e.g. the bank account that young spouses have opened on the occasion of their wedding, the proceeds of the liquidation of the community property in the event of divorce, the allowances payable on retirement, the indemnities resulting from the individual or collective dismissal, disability benefits, as well as inheritance.
3. Deposits resulting from the payment of insurance benefits or compensation for victims of criminal offences or wrongful convictions.
The FGDL will at first repay deposits up to the standard limit of EUR 100,000. The depositor who deems to be entitled to a higher refund must subsequently apply to the FGDL, by transmitting any documents needed by the FGDL to verify the merit of the application. A simple copy of documents issued by a Luxembourg administrative authority or by an administrative authority of another Member State of the European Union is deemed sufficient for that purpose. For any other document, a certified copy is required. The additional repayment deadline is three months from the date the FGDL receives all the necessary documents. Total compensation by the FGDL may not exceed EUR 2,500,000 for all of the depositor’s accounts with a failed bank. The repayment of deposits which do not fulfill any of the above conditions remains limited to EUR 100,000.
The procedures for calculating the repayment and the eligibility criteria for the above-mentioned deposits still need to be specified by a grand-ducal regulation in accordance with Article 171(2) of the Law of 18 December 2015, as amended.
Coverage of branches
Luxembourg branches of banks having their registered office in another Member State of the European Union
The size and scope of the deposit guarantee offered to clients of Luxembourg branches of banks established in another Member State shall be determined by the legislation of the home country. However, the limit of the guarantee is at least EUR 100,000 or the equivalent in the currency of the home country. In case of failure of a foreign bank, the FGDL will take care of the communication and the repayment of depositors using funds received from the home country.
Luxembourg branches of banks with their headquarters in a third (non-EU) country
Most Luxembourg branches of third-country (non-EU) banks are members of the FGDL and their depositors enjoy the same deposit guarantee as customers of Luxembourg banks. Please consult the list of members of the FGDL to check whether your institution is a member of the FGDL.
EU branches of Luxembourg banks
Branches of Luxembourg banks established in a Member State of the European Union shall be regarded as an integral part of the Luxembourg bank. Their customers benefit from the same guarantee as those who have opened their account directly with the bank in Luxembourg, the difference being that the communication and the repayment procedure are managed by the competent guarantee system of the host country of the branch.