ABBL
Association des Banques et Banquiers, Luxembourg
The Luxembourg Bankers' Association
Luxemburger Bankenvereinigung
The "Association pour la Garantie des Dépôts" (AGDL) is a mutual guarantee system covering deposits in cash (deposit guarantee) and claims resulting from investment transactions (investment compensation) as defined by the law and by its statutes in favour of customers and investors with members of the association. The members of the AGDL are banks, the Financial Services of the Post Office (Services Financiers de l'Entreprise des Postes et Télécommunications) and investment firms (commission agents, private portfolio managers, …).
In the event of insolvency of a member establishment, the AGDL protects all cash depositors by guaranteeing the reimbursement of their deposits up to the amount of 100,000 euros. In the same instance, the AGDL protects all investors by guaranteeing the reimbursement of their claims arising out of investment transactions up to the amount of 20,000 euros. No claim can be covered by both guarantees simultaneously.
All currencies are protected without distinction.
When more than one person is the holder of a single account, the share accruing to each such person is taken into account in calculating the amount payable by way of guarantee.
The guarantee is established after offsetting the liabilities and claims of the same customer on the relevant AGDL member.
Frequently asked questions on the deposit guarantee:
1. Are securities held by an institution in the name of the customer (off balance sheet) covered by the guarantee?
Yes, these securities are guaranteed by investor compensation. However, these securities will not fall into the bankruptcy estate because they are the property of the customer and are kept off the balance sheet. In practice, the customer should be able to recuperate them in case of a failure.
2. What is the cover for "omnibus accounts" held by wealth managers with credit institutions?
Banks can hold either individual client accounts or assets collectively managed by a wealth manager for a set of customers grouped together on an "omnibus account" that is held in the name of the manager.
The principle is that when the customer of the bank (in this case the manager) is not the beneficiary of the guaranteed values, it is the beneficiary who benefits from the compensation, provided that the customer informed the bank that he acts on account of third parties and communicated the number of beneficiaries as well as the share due to each in the account.
In case of a failure, the payment by the AGDL of a compensation in conformance with the guarantee is subordinated to the communication of the identity of the beneficiaries (see article 62-12 (6) of the law of 5 April 1993 on the financial sector).
If this is not the case, the assets of the beneficiaries grouped on the “omnibus account" of the manager are not covered against a failure of the bank. No reimbursement is due given that the accounts of the manager are excluded from the guarantee (article 7-1 of the statutes).
3. What is the cover for lawyers and notaries?
The accounts held by lawyers and notaries for third parties fall under the general rules of the aforementioned "omnibus accounts". The principle here being that when the lawyer or the notary is not the beneficiary of the guaranteed values, it is the beneficiary who benefits from the compensation, provided that the lawyer or the notary informed the bank that he acts on account of third parties and communicated the number of beneficiaries as well as the share due to each in the account.
In case of a failure, the payment by the AGDL of a compensation in conformance with the guarantee is subordinated to the communication of the identity of the beneficiaries. If this is not the case, the assets of the beneficiaries grouped on the “omnibus account" of the lawyer or the notary are not covered against a failure of the bank.
4. Are the deposits with credit institutions of management companies of UCIs covered by the guarantee?
Yes, if the company is an SME (Small or medium sized enterprise) in the sense of article 6 (2) of the statutes. UCIs (Undertakings for Collective Investment) themselves are not guaranteed.
5. Are assets managed by management companies of UCIs guaranteed?
Yes. To the extent that they exercise the activity of individual portfolio management, management companies of UCIs are likened to investment companies according to the law.
6. What is the cover for fiduciary agreements?
In this case, the AGDL member acts as fiduciary. The settlor is not covered by the guarantee since he is a preferential creditor who does not participate in the body of creditors.
7. What is the cover for interbank deposits of a fiduciary nature?
When the failed Luxembourg credit institution is the depositary of the deposits received by another credit institution which acts as fiduciary, then the depositing customers of this institution are covered only on condition that the Luxembourg credit institution was informed about the number of depositing customers and of the share due to each in the deposit.
8. Are trusts included in the guarantee?
Given that a trust has no legal personality, the "trustee" is considered to be the right holder. He is thus entitled to a single compensation, except in the case where he declared the number of beneficiaries and their respective parts in the trust (see the cover for “omnibus accounts” above).
9. Are swaps covered by the investor compensation?
Yes, swaps are covered by the investor compensation. The market value of the instrument in question as at December 31 is to be declared to the CSSF, and this value will be guaranteed. In case of a failure, the instrument will be reimbursed at the rate of its value at the time of the failure, with, however, a maximum of 20’000 EUR.
10. Is there a particular treatment foreseen for the deposits/claims the beneficiary of which is the company auditor of the fail
No particular treatment for deposits/claims the beneficiary of which is the company auditor (or its employees) of the failed institution is foreseen, neither by the statutes nor by the rules of procedure.
Articles
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27/05/2011
The EP Economics Committee voted on 24 May 2011 to uphold the increased bank deposit protection limit of €100,000 but chose to allow Member States more leeway over how they design their schemes. The schemes must be fully funded within fifteen years instead of the Commission's proposed ten, said MEPs, who also voted for payouts to be made within five working days rather than seven.
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12/07/2010
The European Commission has today proposed changes to existing European rules to further improve protection for bank account holders and retail investors. For bank account holders, the measures adopted today mean that in case their bank failed, they would receive their money back faster (within 7 days), increased coverage (up to € 100 000) and better information on how and when they are protected. For investors who use investment services, the Commission proposes faster compensation if an investment firm fails to return the investor's assets due to fraud, administrative malpractice or operational errors, while the level of compensation is to go up from € 20 000 to € 50 000.
More On
Amending Directive 97/9/EC on Investor Compensation Schemes (ICS) Safeguarding Investors' Interests by Ensuring Sound Financing of ICS : Compilation of Briefing Notes - April 2011
Directive 2009/14/EC on deposit guarantee schemes regarding the level of guarantee as well as the payout period.
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Last udpate January 2012
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