Depositor Compensation Scheme

The Depositor Compensation Scheme is a rescue fund for depositors of failed banks which are licensed by the MFSA. The Scheme, which has been in force since 2003, can only pay compensation if a bank is unable to meet its obligations towards depositors or has otherwise suspended payment.

The Scheme is managed by a committee appointed by the MFSA and is made up of persons representing the MFSA, the Central Bank, licensed investment firms, the banks and consumers.

The regulations (Legal Notice 383 of 2015) which transpose the EU Directive on Depositor Guarantee Schemes (2014/49/EU) obliges the committee to compensate depositors within 20 working days.The Scheme covers deposits made with banks licensed under the Banking Act incorporated in Malta including their branches operating anywhere in the European Economic Area (“EEA”).

Deposits placed with a branch in Malta of a bank incorporated outside the EEA are not covered by the Scheme in Malta.  Neither does the Scheme in Malta cover deposits held in branches located outside the EEA of banks established in Malta.

All deposit accounts are covered by the Scheme. This includes all savings, current and fixed deposit accounts, as well as any accounts which, at the time of the banks’ failure, may be in credit (such as credit card accounts and overdrafts).

All your deposits at the same credit institution are added up and the total compensation is subject to the limit of EUR100, 000 per depositor. This limit applies to the total amount of deposits held by the depositor with the failed bank, irrespective of the number of accounts, the currencies of such accounts as well as the location of the bank/branch within the EEA.

The Scheme will not deduct or take into account any amounts due by the depositor to that failed bank. These amounts may include, for example, amounts due in respect to loans and overdrafts.

The share of each depositor of a joint account shall be considered separately in calculating compensation. In the absence of contrary provisions, the joint account shall be divided equally among the depositors.

Deposits in an account with two or more persons are entitled as members of a business partnership, association or grouping of a similar nature, without legal personality, shall be aggregated and treated as if made by a single depositor for the purpose of calculating compensation.

Where a depositor is not absolutely entitled to the sums held in an account and another person is absolutely entitled to such sums, the person who is absolutely entitled shall be entitled to compensation in respect of the deposit.

In respect of deposits held by a person acting as trustee or nominee for one or more persons, the deposit making up the claim shall be deemed to belong to the beneficial owners equally unless there exists specific information which may otherwise determine the beneficial interests of such persons. It is up to the trustee or nominee to provide the Scheme with information about the names and amounts due to such beneficial owners. Indeed, such types of accounts would not be paid by the Scheme within the time limits explained to above. When a bank fails, the Scheme will invite account holders operating such accounts to provide it with a detailed list of the beneficial owners of such accounts to enable the Scheme to pay such compensation that may be due to such beneficial owners.

The Scheme covers all currencies without distinction. However, in the event that the Scheme pays compensation, it will pay such compensation in euro. Therefore if your account is in any currency which is not the euro, the Scheme will exchange the amount in your account (with any accrued interest) into euro at the official exchange rate of the European Central Bank (ECB) when the Scheme is required to make such compensation.  In the unlikely event of a bank failure and the Scheme needs to compensate depositors, the payout period is 20 working days that are reckoned from the date when the competent authorities determine that a credit institution is unable to repay its deposit liabilities – with a possible extension of 10 working days in exceptional circumstances.

Credit institutions are also required to be more transparent with regard to the information that they are obliged to provide to current or prospective depositors in connection with the scheme.  The information on the scheme contained in advertising by participants will be subject to certain restrictions in order to prevent adverse repercussions on the stability of the banking system or on depositor confidence.

More information about the Scheme is available from