Deposit Insurance Database
  • 1 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund
  • | 2 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund

Contributor Notes

This paper provides a comprehensive, global database of deposit insurance arrangements as of 2013. We extend our earlier dataset by including recent adopters of deposit insurance and information on the use of government guarantees on banks’ assets and liabilities, including during the recent global financial crisis. We also create a Safety Net Index capturing the generosity of the deposit insurance scheme and government guarantees on banks’ balance sheets. The data show that deposit insurance has become more widespread and more extensive in coverage since the global financial crisis, which also triggered a temporary increase in the government protection of non-deposit liabilities and bank assets. In most cases, these guarantees have since been formally removed but coverage of deposit insurance remains above pre-crisis levels, raising concerns about implicit coverage and moral hazard going forward.

Abstract

This paper provides a comprehensive, global database of deposit insurance arrangements as of 2013. We extend our earlier dataset by including recent adopters of deposit insurance and information on the use of government guarantees on banks’ assets and liabilities, including during the recent global financial crisis. We also create a Safety Net Index capturing the generosity of the deposit insurance scheme and government guarantees on banks’ balance sheets. The data show that deposit insurance has become more widespread and more extensive in coverage since the global financial crisis, which also triggered a temporary increase in the government protection of non-deposit liabilities and bank assets. In most cases, these guarantees have since been formally removed but coverage of deposit insurance remains above pre-crisis levels, raising concerns about implicit coverage and moral hazard going forward.

I. Introduction

The recent global crisis tested and tried deposit insurance schemes (DIS), and their ability to protect household savings in banks. Country authorities and financial regulators reacted to the extraordinary circumstances of the crisis by expanding the coverage offered in existing deposit insurance arrangements or adopting deposit insurance where it was not already in place. This pattern of policy response exposed the adverse distributional effects of generous schemes and underscored the strengths and weaknesses of different DIS features.

This paper presents a comprehensive database of deposit insurance arrangements through the end of 2013, covering the IMF membership of 188 countries plus Liechtenstein. For countries with an explicit deposit insurance scheme, information is provided on the characteristics of the DIS (such as type, management, coverage, funding, and payouts). For recent years, we add information on deposit coverage increases, government guarantees on deposits and non-deposit liabilities, as well as whether a country experienced a significant nationalization of banks. To assess a country’s ability to honor its deposit insurance (and other safety net) obligations, we supplement these data with information on the size of potential deposit liabilities, the amount of DIS funds, and government indebtedness.

While it is too early to draw definitive conclusions about the adequacy of DIS during the recent global financial crisis, our preliminary assessment is that, by and large, DIS fulfilled its foremost purpose of preventing open runs on bank deposits. In the face of large shocks to the global financial system, as well as concerted and protracted concerns about the solvency of practically every large financial institution in the world, we did not observe widespread bank runs. There were some notable exceptions (such as Northern Rock in the UK) and there were protracted withdrawals by uninsured depositors, but the world did not experience systemic bank runs by insured depositors. From this perspective, DIS delivered on its narrow objective. However, as we look to what we hope are many post-crisis years, the expansion of the financial safety net (both through an extended coverage of deposit insurance and increased reliance on government guarantees and demonstrated rescue propensities to support the financial sector) is something to worry about. The expansion of national safety nets raises questions about (i) whether government finances are adequate to support the promises of existing DIS in future periods of stress (the more so given that governments will likely face renewed pressures to further increase DIS promises in future crises) and (ii) how to balance the objective of preventing bank runs with the potentially negative effects of DIS in the form of moral hazard and the threat to financial stability from incentives for aggressive risk-taking.

The rest of the paper is organized as follows. Section 2 describes the main database, with a description of each variable included. Section 3 surveys the current state of DIS worldwide. Section 4 reviews policies undertaken during the financial crisis period to protect depositors against the loss of value of their deposit savings. Section 5 concludes.

II. The Database

The database builds upon earlier work by Demirgüç-Kunt, Karacaovali, and Laeven (2005). The original dataset covered deposit insurance schemes through 2003. It was constructed through a combination of country sources, as well as earlier studies by Garcia (1999), Kyei (1995), and Talley and Mas (1990), among others.

This version updates the earlier database and extends it to 2013. Whenever possible, we relied on official sources. Our starting point was a comprehensive survey on financial sector regulations conducted by the World Bank in 2010. This survey asked national officials for information on capital requirements, ownership and governance, activity restrictions, bank supervision, as well as on the specifics of their deposit insurance arrangements. These data were combined with the deposit insurance surveys conducted by the International Association of Deposit Insurers in 2008, 2010, and 2011, and in the case of European countries with detailed information on deposit insurance arrangements obtained from the European Commission (2011). Discrepancies and data gaps were checked against national sources, including deposit insurance laws and regulations, and IMF staff reports. Information on government actions undertaken during the financial crisis was collected from Laeven and Valencia (2012), FSB (2010, 2012), Schich (2008, 2009), Schich and Kim (2011), and IMF staff reports.

Our focus is on deposit insurance for commercial banks. For countries with multiple DIS, the data provided relate only to the national statutory scheme. This means that stated coverage levels may understate actual coverage. For example, the complex voluntary DIS for commercial banks in Germany provides insurance of up to 30 percent of bank capital per depositor, essentially offering unlimited coverage for most depositors.

The full database, including information on arrangements other than the national statutory scheme, is available in spreadsheet format as an online Appendix to this paper. The source of the data is indicated in the appendix. The following section describes the variables used in the remainder of the paper.

A. Variable Definitions

Type of deposit insurance

We follow Demirgüç-Kunt, Kane, and Laeven (2006) in arguing that a country may be assumed to offer implicit deposit insurance, given the strength of governmental pressures to provide relief in the event of a widespread banking insolvency, unless the country has passed formal legislation or regulation outlining explicit deposit coverage. Indeed, implicit coverage always exists, regardless of the level of explicit coverage. Countries may have an explicit deposit insurance scheme without specifying an institution or fund to carry out powers laid out in statutes or regulation, but the issuance of temporary blanket guarantees by the government is not sufficient to qualify as having explicit deposit insurance. Hence, we assume that any country that lacks an explicit deposit insurance scheme has implicit deposit insurance. Explicit takes a value of one if the country has explicit deposit insurance, and zero if implicit. Table 1 lists all countries with explicit deposit insurance.

Table 1.

Explicit Deposit Insurance Schemes Around the World, end-2013

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Notes:

Explicit deposit insurance scheme introduced since previous release of the deposit insurance database in 2004.

Covered by the deposit insurance scheme of the United States (FDIC).

Insurance product tailored to small retail depositors provided to private banks by a state-run insurance company. Several large banks, including Kanbawza and Co-operative Bank, have participated as of 2011.

New Zealand introduced an opt-in retail deposit guarantee scheme in October 2008 and closed it in December 2010. Deposits held in New Zealand branches of Australian branches were covered under the Australian deposit insurance scheme from 2008 - 2010, but current legislation will limit coverage to Australian dollar-denominated deposits only.

Bolivia has a bank resolution fund with funding provided by member banks, but no explicit deposit insurance.

The Dominican Republic has no deposit insurance for commercial banks, but there is a scheme (established in 1962) insuring the savings and term deposits in savings and loan associations. In the past, the Central Bank has guaranteed deposits at Bancomercio (1996) and Baninter (2003) when these large banks failed.

In 2009, Cameroon, Central African Rep., Chad, Congo (Rep), Equatorial Guinea, and Gabon, which share a regional central bank, established the Fonds de Garantie des Depots en Afrique Centrale (FOGADAC), a regional deposit insurance scheme that became operational in 2011.

The Sri Lanka Deposit Insurance Scheme (SLDIS) became effective on January 1, 2012, although member banks and finance companies participating in this scheme already started contributing on a mandatory basis starting on October 1, 2010.

Taiwan (ROC) has deposit insurance but is not an IMF member.

A deposit guarantee fund (Fonds de Garantie des Dépôts) exists on the basis of the deposit guarantee law of 2008 but has not become operational yet as of end-2013.

Sources: World Bank Survey, IADI, Laeven and Valencia (2012), FSB (2010, 2012), IMF staff reports, and national deposit insurance agencies.

Coverage

Explicit deposit insurance schemes typically insure deposits up to a statutory coverage limit. Particularly during banking crises, countries often issue guarantees on top of pre-announced, statutory limits. We provide information on both the statutory limits, and the limits taking into account additional government guarantees. Coverage is the coverage limit in local currency. It takes on a numerical value or “unlimited” if a full guarantee is in place. Coverage / GDP per Capita is the ratio of the coverage limit to per capita GDP, expressed as a percentage, and based on the statutory coverage limit. Table 2 reports these coverage limits both in reported (typically local) currency and translated in US dollars (using end-of-year exchange rates). Data on GDP per capita is taken from the April 2014 IMF WEO database, unless otherwise noted. Footnotes accompanying Table 2 specify the coverage limits for individual countries. For countries with coinsurance, coinsurance rules are also described.

Table 2.

Coverage of Explicit Deposit Insurance Schemes Around the World, end-2013

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Notes: Coverage is all member countries with explicit deposit insurance schemes. Mauritania, Turkmenistan, and Uzbekistan are not included because of missing data. Marshall Islands and Micronesia are covered by the United States.

On October 12, 2008, Australia announced an unlimited guarantee scheme for deposits in excess of A$1 million, the Australian Government Guarantee Scheme for Large Deposits and Wholesale Funding (the Guarantee Scheme). The Guarantee Scheme was to remain in place for a period of three years, and was voluntary and subject to a fee (for deposits exceeding A$ 1 million per person and bank). The Scheme formally commenced on 28 November 2008, and closed for new liabilities at the end of March 2010. Large deposits and wholesale liabilities guaranteed under the Scheme as at 31 March 2010 remained guaranteed, for a fee, for the relevant term. Separate deposit insurance arrangements continued to apply for deposit balances totaling up to and including A$1 million per customer per institution, and were lowered to A$250,000 from 1 February 2012 onwards. Such deposits are guaranteed without charge.

Blanket guarantee introduced in 2008 expired at the end of 2010.

Indonesia introduced explicit deposit insurance in 2004. The 2003 coverage limit refers to blanket guarantee in place.

Malaysia introduced explicit deposit insurance in 2005. The 2003 coverage limit refers to blanket guarantee in place.

Singapore announced on October 16, 2008 a blanket guarantee on deposits of individuals and non-bank customers of banks licensed in Singapore. The guarantee expired on December 31, 2010.

An explicit guarantee system was introduced in August 2008 with the formation of the Deposit Protection Agency, replacing a blanket guarantee. The blanket guarantee is being gradually phased out with a limit of Baht 50 mln from Aug 11, 2012 - 10 Aug 10, 2015; Baht 25 million from Aug 11, 2015 - Aug 10, 2016; and Baht 1 mln for the period Aug 11, 2016 - onwards.

10% coinsurance for non-private persons.

State-owned banks Belarusbank and Belagroprombank benefit from a full government guarantee on all their deposits, and do not make contributions to the Guarantee Fund. By Presidential decree of November 4, 2008. Belarus subsequently extended a full guarantee on all household deposits in all banks.

On October 8, 2008, the Slovak government announced a blanket guarantee on deposits, which became effective as of November 1, 2009. Blanket guarantee expired at the end of 2010.

Jordanian government issued a blanket guarantee on deposits in 2008, which expired end-2010.

The President of the Republic of Uzbekistan issued a decree announcing a blanket guarantee on deposits on November 28, 2008. Blanket guarantee officially in place since October 12, 2009. Guarantee replaced statutory limit of 250 times the minimum wage. Guarantee still in place.

Coverage limit in Chile refers to coverage of time deposits. Demand deposits are covered in full. Maximum coverage is equivalent to a maximum of 1,827,360 pesos in 2003, 2,317,199 pesos in 2010, and 2,466,801 pesos in 2013.

Full guarantee for noninterest-bearing transaction accounts until December 31, 2012.

Deposit insurance coverage increased from HKN400,000 to EUR100,000 on July 1, 2013 when Croatia joined the EU.

Blanket guarantee on deposits in Mongolia expired on November 2012.

A blanket guarantee on deposits was in place in Honduras from 1999 until September 2003. It was reduced to 50% coverage for October-November 2003 and increased back to 100% for December-September 2004, until the additioal guarantee was phased out in September 2004. Between April and September 2004 there was a guarantee ceiling of 5 million Lempiras.

The equivalent of 250 times minimum wage, which equaled UZS5,440 at end-2003.

Coverage limit in Mexico is equivalent to 33,520,000 pesos in 2003, 2,023,492.40 pesos in 2010, and 2,023,492.40 pesos in 2013.

Equivalent of 75 times monthly minimum wage.

Equivalent of 62000 FSD.

Equivalent of 250,000 UI for domestic currency deposits; US$ 2500 for foreign currency deposits.

Sources: World Bank Survey, IADI, Laeven and Valencia (2012), FSB (2010, 2012), IMF staff reports, and national deposit insurance agencies.

Organization and administration

The organizational and administrative structures of DIS vary markedly, and this can have an important bearing on its independence and efficacy. DIS can be organized as a separate legal entity, or may be placed within a country’s supervisory structure or under the jurisdiction of the national central bank, or other government ministry such as the Ministry of Finance or Department of Treasury. These categories are mutually exclusive – any DIS must be legally separate or located within the central bank, banking supervisor, or government ministry. Some DIS are organized as separate legal entities but are hosted within and supported by the central bank. We code such DIS as legally separate. . The variable Type is coded one if the DIS is legally separate, and two if it is contained within the central bank, banking supervisor, or government ministry.

Countries may choose an explicit DIS that is administered privately, publicly, or jointly through some combination of the two. For example, Germany’s two statutory guarantee schemes have a mixed private/public component where they are privately administered but established in law and with public elements such as delegated public policy functions and oversight by the supervisory agency. This choice is often based on country-specific experience with historical banking failures and on whether private actors exist to potentially administer an explicit DIS (such as, for example, bankers’ associations in Switzerland). Administration is coded one if the DIS is administered privately, two if it is administered publicly, and three if it is administered jointly. These categories are mutually exclusive.

Role

While all explicit DIS must include a “paybox” function that provides payout to depositors in the event of bank failure, countries may also decide to combine the DIS function with resolution functions or that of banking supervisor or macro-prudential regulator, referred to as “paybox plus.” Countries may also direct the DIS to minimize losses to the taxpayer, and provide it with the legal means to do so by granting DIS managers authority to create bridge banks, replace negligent bank managements, etc. Because the precise role of DIS schemes varies greatly worldwide, we classify DIS as paybox only or alternatively as a “paybox plus”, including loss or risk minimizer. These categories are mutually exclusive – DIS can either have a strict paybox role or have responsibilities beyond the paybox function. Role is coded one if the role of the DIS is paybox only, and two if it is a paybox plus, loss or risk minimizer.

Multiple systems

Some countries have multiple statutory deposit insurance schemes for different types of financial institutions. These can be of a public or private nature, and in some cases mean that effective coverage exceeds that stipulated under the national scheme. Multiple is coded one if multiple schemes exist within a country, and zero if otherwise. The footnotes to Table 3 provide details on the names of DIS active in the country, as well the institutions they cover when available. Our focus is the remainder of the paper is on the main statutory scheme in the country applying to private commercial banks.

Table 3.

Design of Explicit Deposit Insurance Schemes Around the World, end-2013

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Notes: Table excludes voluntary and contractual schemes other than the national statutory scheme. Coverage is for all countries with explicit deposit insurance schemes. Information is as of 2013.

Swedish National Debt Office.

In 2011, the Netherlands adopted a regulation to transform its ex-post DGS into an ex-ante funded scheme with risk-based contributions, to come into effect on July 1, 2013.

The Dutch Central Bank administers the scheme and pays out the depositors. The costs of the scheme are transferred (including the administrative costs) ex post to the members of the DGS, subject to an annual cap of 5% of own funds of each member. The ex post scheme will become an ex ante scheme on July 1, 2015.

In case of a bank failure, the Bank of Slovenia temporarily assumes the obligation to pay the guaranteed deposits and then calls on other banks to contribute funds needed for the paying out of insured deposits. To ensure banks have sufficient liquid assets to contribute such funds, all banks are required to invest a minimum of 2.5% of insured deposits in debt securities that are eligible for the collateralization of Eurosystem receivables as defined by Bank of Slovenia.

Initial contribution to the DGS fund provided by Banco de Portugal.

In the case of a shortfall of funds, the DGS can issue bonds/receive loans guaranteed by the government, or may access funding from the Central Bank or Ministry of Finance.

Deposit Insurance Corporation of Japan and Agricultural and Fishery Cooperative Savings Insurance Corporation.

Separate deposit insurance schemes exist for banks and cooperative financial institutions.

Einlagensicherung der Banken & Bankiers GmbH (Deposit Protection Company of the Austrian Commercial Banks Ltd), HYPO Haftungs GmbH, Sparkassen-Haftungs AG, Österr. Raiffeisen-Einlagensicherung reg GenmbH, and Schulze-Delitzsch-Haftungsgenossenschaft regGenmbH.

Deposit Protection Scheme and the Deposit Protection Scheme for Co-operative Societies.

Entschädigungseinrichtung des Bundesverbandes Öffentlicher Banken Deutschlands GmbH (Compensatory fund of the Association of German Public Sector Banks), Entschädigungseinrichtung deutscher Banken GmbH (The German Private Commercial Banks Compensation Scheme for Depositors and Investors), Sicherungseinrichtung des Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (Protection Scheme of National Association of German Cooperative Banks), Haftungsverbund der Sparkassen-Finanzgruppe (Joint Liability Scheme of the Sparkassen-Finanzgruppe).

Fondo Interbancario di Tutela dei Depositi (Interbank Deposit Protection Fund), Fondo di Garanzia dei Depositanti del Credito Cooperativo (Deposit Guarantee Fund of Cooperative Credit Banks).

Bank Guarantee Fund and Polish Cooperative Savings and Credit Union Mutual Insurance Society.

Fundo de Garantia de Depósitos (Deposit Guarantee Fund) and Fundo de Garantia do Crédito Agrícola Mútuo (Mutual Agricultural Credit Guarantee Fund).

Fondo de Garantia de Depositos en Establecimientos Bancarios (Deposit Guarantee Fund For Banking Establishments), Fondo de Garantia de Depósitos en Cooperativas de Crédito (Deposit Guarantee Funds for Credit Cooperative Banks Establishment), Fondo de Garantia de Depositos en Cajas de Ahorro (Deposit Guarantee Funds for Savings Banks Establishment).

Fundo Garantidor de Crédito (FGC) cover deposits at banks, as well private deposit insurance schemes for credit unions.

Canada Deposit Insurance Corporation, Autorité des Marchés Financiers, and provincial-level funds primarily for credit unions.

Fondo de Guarantias de Instituciones Financieras and Fondo de Garantias de Entidades Cooperatives, for banks and cooperatives, respectively.

Jamaica Deposit Insurance Corporation and Jamaica Co-operative Credit Union League.

Federal Deposit Insurance Corporation, National Credit Union Share Insurance Fund, and previously the Federal Savings and Loan Insurance Corporation for commercial banks, credit unions, and savings and loans, respectively.

We consider only cases of insured depositor losses where there was explicit deposit insurance. As defined, we identify only three cases. Argentina (1989): Losses were imposed on time deposits when time deposits at BONEX were converted into long-term bonds at an exchange rate below the prevailing on the market. Argentina (2001): Dollar deposits were converted into domestic currency at ARG$1.4, which was below the prevailing market rate. Iceland (2008): Losses imposed on depositors of foreign branches of the major Icelandic banks that failed (primarily in the Netherlands and UK), even though these deposits were explicitly covered under EU directives.

In 2008, uninsured depositors of IndyMac, which entered receivership, are likely to face losses because the asset value of the receivership is insufficient to cover all uninsured deposits; so far they have received an advance dividend in the amount of 50% of their uninsured deposits from the FDIC.

In 1994, depositors at Banco Latino with more than B 10m received long-term non-negotiable bonds with interest rate below market, for the amount exceeding the 10mln threshold.

Total deposits without government deposits and interbank deposits.

The difference to the maximum insured amount is always topped-up by the Federal Minister of Finance. Furthermore, the DIS can issued bonds with repayment guaranteed by the government.

The DIS can borrow from the Reserve Bank of India.

Banks are required to make up the shortfall but this is limited in any one year to the annual contribution. Any initial shortfall beyond this would be covered by the Government but would be recouped from the banks in subsequent years.

The FDIC has a significant line of credit with the U.S. Treasury Department. In addition, in order to replenish the Deposit Insurance Fund, the FDIC can order special assessments on insured banks in addition to their regular assessments.

The amalgamation of cooperative banks is considered to be a single institution.

Deposit insurance coverage is calculated per depositor per institution and per ownership category. The ownership categories are: individual accounts, joint accounts, company/corporate accounts, trust accounts, nominee accounts.

Deposit insurance coverage is based on ownership rights and capacities at any given insured depository institution. For example, a depositor may have a Single Account, which is covered up to the deposit insurance maximum and also a Joint Account, which also is covered up to the deposit insurance maximum per co-owner.

Coverage of time deposits is per depositor and for demand deposits is per deposit account.

Average total assets minus tangible equity (since April 1, 2011; prior to that, total domestic deposits).

Total liabilities refers to the bank’s total liabilities (i.e., deposits and other liabilities). Total deposits refers to the total deposits held by the bank. Eligible deposits refers to deposits repayable by the deposit insurance scheme, before the level of coverage is applied. Covered deposits refers to deposits that are covered, obtained from eligible deposits when applying the level of coverage provided for by the deposit insurance scheme.

In addition to payout, the FSCS plays several roles in the special resolution regime, including informing decisions on the selection of tools, supporting the implementation of the bank insolvency procedure, and making contributions towards the cost of resolution.

Sources: European Commission, International Association for Deposit Insurers, Financial Stability Board (2010, 2012), FDIC, Laeven and Valencia (2012), IMF staff reports, and national deposit insurance agencies.