At the end of 2022, the Portuguese Deposit Guarantee Fund (FGD) had the capacity to save or cover €178.5 billion in “qualifying deposits” (69% of the total) — savings parked at national banks — in case of a crisis that would force one or more banks into bankruptcy, the Bank of Portugal (BdP) revealed this Tuesday.
This fund has several own resources, highlighting, for example, the mandatory contributions paid by the banks themselves, guarantees provided by holding government debt and the fund’s own income such as fines and fines imposed on financial entities .
As is known, each holder of a deposit can be reimbursed up to EUR 100,000 if, for example, his bank goes bankrupt and he cannot repay the savings he has in his possession.
According to the report, “the purpose of the FGD is to guarantee the repayment of deposits made with the credit institutions participating in it, up to a limit of 100 thousand euros of the total value of each depositor’s cash balances, per credit institution”
As mentioned, according to the same report and accounts of the Deposit Guarantee Fund from last year, “based on the information reported to the fund by the participating credit institutions as of December 31, 2022 the total amount of deposits covered by the FGD Repayment Guarantee – that is, deposits from eligible holders, accounted for only up to a limit of 100 thousand euros – amounted to approx. 178.483 million euros”.
Now, according to the BdP, this figure represents 69% of total eligible deposits (about 259.2 billion euros), savings of 17,897 holders.
That “deposit coverage ratio of holders eligible for the Fund’s guarantee (i.e. ratio between the value of the deposits up to the guarantee limit and the total value of those same deposits) was 69% (representing a reduction of one percentage point compared with at the value recorded on 31 December of the previous year).
In contrast, the BdP indicates that “the proportion of deposits that, although held by eligible depositors, are not covered by the Fund’s guarantee, as they exceed the limit of that guarantee, was 31%” at the end of 2022.
And “for approximately 98% of depositors eligible for the Fund’s guarantee, FGD coverage covered all their deposits as they held a balance of less than EUR 100,000 (balance attributable to each depositor, by each setting).
According to the document prepared by the Portuguese central bank, the FGD received in cumulative terms 1.2 billion euros in annual periodic contributions from credit institutions.
At the end of 2022, the Fund was called upon to save EUR 105 million in savings, the vast majority of which was related to the collapse of Banco Privado Português (BPP), founded and led by João Rendeiro, who was found dead in May 2022 in the Westville Prison, Durban, South Africa.
The report rightly recalls the gap that BPP’s bankruptcy left in the fund. “With regard to the repayment of deposits, it recalls that in April 2010 the activation of the deposit guarantee with Banco Privado Português, SA (BPP) under legal conditions, following the withdrawal of the authorization to exercise of activity, by determination of the Bank of Portugal, and given the unavailability of the deposits verified at that time”.
“Between 2010 and December 31, 2022, the FGD recognized a reduction in its own resources due to the responsibility to reimburse BPP depositors for the cumulative amount of EUR 105.009 million,” says the document from the Fund, an entity chaired by by Luís Máximo dos Santos, Deputy Governor of the Bank of Portugal.
Dinheiro Vivo journalist
Source: DN
