Deposit insurance in
Montenegro
Predrag Marković
Managing Board President
Deposit Protection Fund
Deposit Protection Law
• Law was adopted in 2003 (amendments in 2005);
• A protected event occurs in case of bankruptcy of a
bank
• The amount of the guaranteed deposit is 5,000 €
per depositor;
• Deposits of legal and physical entities are
guaranteed;
• All the banks are obliged to provide deposit
protection.
Excluded deposits:
• Deposits of legal entities engaged in insurance;
• Deposits of the budget of Montenegro and local
government budgets;
• Deposits of Off-budgets;
• Deposits of pension funds;
• Deposits of banks;
• deposits of persons holding a bank’s shares
entitled to more than 5% of votes at the bank
shareholders’ meeting,
Excluded deposits
• deposits of bank general managers, members of
bank management boards and persons who
hold offices of director, deputy director and
heads of the departments or other organizational
entities in the bank, deposits of legal entities in
which such persons have 10% or more
participation in capital or voting shares, as well
as deposits of their spouses or relatives in the
straight or lateral lines of kinship, up to the
second degree of kinship,
Excluded deposits
• deposits of persons responsible for audit,
• deposits of persons established in the report on
control provided by the Central Bank of
Montenegro as the persons that contributed to
deterioration of the bank’s financial situation and
• deposits for which a procedure has been
initiated for establishing their connections with
the transactions or actions representing “money
laundering” or financing terrorism
Protected deposit
• The total amount of all protected deposits
of a depositor including the accrued
interest on such deposits up to the date of
the occurrence of a protected event.
• Such amount is reduced by the amount
due by the depositor to the bank
Guaranteed deposit
• Guaranteed deposit amounts to 5.000 €
per depositor, regardless of the number
and amount of deposits possessed by that
depositor at a bank.
• The amount of the guaranteed deposit
may be changed (increased) by
amendments to the Law
Deposit Protection Fund
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Deposit Protection Fund is a legal entity;
Registered office of the Fund is in Podgorica;
In its activities of deposit protection the Fund is
exempted from paying duties and fees;
The Fund is authorized to:
Determine the rate of the annual premium
Collect initial and annual premiums;
Invest funds;
Pay guaranteed deposits
Managing Board of the Deposit
Protection Fund
• The Fund is managed by the Managing
Board of 5 (five) members;
• Managing Board is appointed by the
Central Bank of Montenegro;
• Term of office of the Managing Board
members is 4 years, except for the
President and one member that have the
term of office of 6 years
Resources of the Fund
Provided from:
• Initial premium;
• Annual premiums;
• Extraordinary premiums;
• Revenues from investment of the Fund’s
resources;
• Donations;
• Other sources.
The Fund may issue securities
Initial premium
• Amounts to 0,3% of the total deposits but not
less than 10.000 € (this provision is in effect for
the banks, that automatically became members
of the Fund on the day of coming into force of
the Law on Deposit Protection);
• Banks that on the day of coming into force of the
Law were subjected to the measures of the
Central Bank became the members of the Fund
in October 2007 and paid the initial premium in
the amount of 0,3%;
• For new banks the initial premium amounts to
10.000 €;
Annual premium
• Paid in quarterly installments;
• calculation base is the average of the total
deposits determined on the last day of
every month for the previous quarter;
• Managing Board establishes the amount
of the rate of the annual premium for every
year in advance (current rate is 0.25%);
• A differential premium may be introduced.
• Premiums cannot be recovered.
Fund Financing in Case of Insufficient
Resources
• Charging extraordinary premium which,
together with the annual premium may
amount to 1,5% of the total deposit of the
bank;
• Loan from domestic and foreign banks
• Loan from the budget of the Republic
• Issuing securities
Utilization of the Fund’s Resources
• Payment of the guaranteed deposits:
• Payment of the principal and interests of loans;
• Fund’s operating costs.
In line with the Investment policy of the Fund the
resources may be invested in:
1. Securities issued by the Republic of
Montenegro or banks, financial institutions or
high ranking state;
2. Deposits in the high ranking banks.
Payment of guaranteed deposits
• Payment has to start at latest within 60 days and
it has to be completed within 90 days from the
day of the “protected event”;
• Bankruptcy Administrator submits the data on
protected deposits and depositors of the bank in
bankruptcy within 15 days from the day of
bankruptcy;
• Managing Board passes the Decision on terms,
conditions and procedure of payment of the
guaranteed deposits;
Payment
• Decision on the choice of the bank and term of
payment is published in the media;
• Fund has provided a software for establishing
the amounts of the guaranteed deposits of the
deponents of a bank in bankruptcy;
• Fund passes individual decision on excluded
deposits;
• The bank submits to the Fund the data on the
payments of guaranteed deposits.
Claims of the Fund from a bank in
bankruptcy
• Fund submits to the Bankruptcy Administrator a
report on the paid guaranteed deposits;
• Such report is the basis for claims of the Fund from
the banks in bankruptcy;
• Fund is in the fifth line of priority in payment of
claims of a bank in bankruptcy.
• Depositors keep the position in the order of
payment, as if there was no payment of the
guaranteed deposit
Current situation
• All the banks (11) are included in the
deposit insurance scheme;
• Fund has been providing deposit
protection according to the Law since
January 1st 2006 god;
• Resources of the Fund amount to
approximately 11.5 million €, 2.5 million of
which are the funds of the German
Government donation.
Marketing
• The banks are obliged to disclose the Fund’s logo in general terms
of operation, in individual contracts and in a visible place in the
business premises with an information sign that reads: “The Bank is
a member of the Fund for Deposit Protection and the bank
depositors’ deposits are protected in compliance with Law on
Deposit Protection up to the amount of EUR 5,000”.
• Fund made flyers with the basic data on deposit
protection and distributed them to the banks members of
the Fund,
• Fund has prepared and it broadcasts the TV spot,
promoting deposit protection;
• Fund is the member of the European Forum of Deposit
Insurers- EFDI.
Fond za zatitu depozita Montenego Podgorica Miljana Vukova bb. Tel. +382 30 210465 htp//www.fzdcg.org [email protected]
TV spot of the Fonda
Fund
• The Fund has 3 employees and the President of
the Managing Board of the Fund;
• Assets of the Fund are given to the Central Bank
of Montenegro for management on the basis of
the international tender for selection of Asset
manager;
• In the current situation of the operation of the
banks no “protected case” occurrence is
envisaged.