From 01.04.2014, Nordea Group will be operating in Estonia as a branch office of Nordea Bank AB Estonia. Funds deposited in Nordea Bank AB Estonia are guaranteed with the Swedish deposit guarantee scheme. The deposit guarantee scheme protects both deposits and funds on bank accounts.
The deposit guarantee scheme was established with the aim of managing banks` financial risk. The deposit guarantee scheme guarantees payment of compensation for finances kept in banks, if the bank is not able to pay out the finances customers have deposited with them due to insolvency or if the bank`s supervisory institution cancels the bank`s license.
The deposits guarantee scheme covers both private and legal persons` deposits (see exclusions for legal persons below).
How the deposit guarantee scheme works
Customers have the right to compensation if the bank is unable to fulfil its obligations due to insolvency. Customers have the right to compensation also in case the Swedish Financial Inspectorate Finansinspektionen decides to cancel Nordea Bank AB`s license and an order is given to use the funds in the Guarantee Fund.
The maximum size of the compensation is 100 000 euros per customer. If the total amount of deposits belonging to the customer is below 100 000 euros, the actual value of the deposits is compensated. If the account has been opened in two or more people`s name, then the maximum sum of compensation applies to each person separately.
In exceptional cases, additional protection of up to 5 million Swedish kronas applies, e.g. on the sum a private person received from sale of real estate, redundancy compensation, insurance compensation.
If many customers` money is kept on an account (e.g. law offices, asset management companies), then according to the general rule of the Swedish deposit guarantee scheme, deposits are guaranteed to the actual owners of the funds i.e. to each customer separately, to the maximum compensation extent.
Payment of compensation takes place through the Estonian deposit guarantee sub-fund. The Swedish National Debt Office pays the compensation to the Estonian deposit guarantee sub-fund within 7 days from the date when the bank was declared bankrupt or when the Swedish Financial Inspectorate gave the order to use the guarantee fund means.
Additional information about the Swedish deposit guarantee scheme is available from the Swedish National Debt Office`s Riksgälden homepage and the Guarantee Fund`s homepage.
QUESTIONS AND ANSWERS
1. How are the sums to be compensated to customers calculated?
Deposits protected under the deposit guarantee scheme are compensated with the interest accrued by the date the bankruptcy decision or the Swedish Financial Inspectorate`s decision is announced. The maximum limit of 100 000 euros is applied to the total sum deposited by a single depositor in one bank, but not to each opened deposit separately.
2. Which legal persons does the deposit guarantee scheme not cover?
- National authorities and local municipality units
- Credit institutions
- Creditors and credit intermediaries
- Financing institutions
- Insurance providers and reinsurance undertakings
- Investment funds and fund managers
- Investment firms
3. If the customer has both a loan and deposits at the same bank, then does the loan balance reduce on account of the guaranteed deposits in case of a compensation case?
The right to compensation is not off-set with debts that the customer has at the bank.
4. What currency is the compensation calculated and paid in?
The compensation is calculated and paid in euros.
In exceptional cases when additional protection is applied, the guaranteed sums are calculated in Swedish kronas, by using the euro and Swedish krona exchange rate published on the Nasdaq OMX Stockholm webpage on the date the guarantee is applied. The payment of guaranteed sums takes place within 7 days after the guarantee is applied. During this time, the exchange rate of Swedish krona to euro may change, leading to payment of higher or lower sums in euros. The depositor bears the currency risk.