Deposit Guarantee Scheme (DGS) in Cyprus

Overview

The Central Bank of Cyprus (CBC) has established a Deposit Guarantee Scheme (DGS) to provide protection for deposits held in banks licensed in Cyprus. The scheme plays a crucial role in maintaining confidence in the banking system by ensuring that depositors’ funds are protected up to a certain limit.

Key Features of the DGS

• Structure: The DGS consists of two funds:
  • Deposits Guarantee Fund: provides compensation for deposits in case of bank insolvency.
  • Resolution Fund: facilitates the resolution of banks in difficulty.
• Membership: All banks licensed in Cyprus, including branches of Cypriot banks operating in other Member States, are required to be members of the DGS.
• Eligible Deposits: The following deposits are eligible for compensation from the DGS:
  • Deposits held in euro or other currency
  • Deposits made by individuals and companies (except those excluded by regulation)
• Excluded Deposits: The following types of deposits are excluded from the DGS:
  • Deposits made by other banks
  • Own funds
  • Deposits arising out of money laundering convictions
  • Financial institutions, investment firms, and insurance undertakings
  • Unidentified depositors
  • Collective investment undertakings and pension and retirement funds (except certain exceptions)
  • Public authorities with an annual budget exceeding EUR500,000
  • Debt securities issued by a bank

Compensation Limits

• The maximum amount of compensation for each depositor per bank is EUR100,000.
• Deposits resulting from real estate transactions relating to private residential properties and deposits that serve social purposes are covered up to EUR300,000 for a maximum period of 12 months.

Funding and Management

• The DGS is primarily funded through contributions from its members.
• A management committee consisting of five members oversees the DGS.