Central Bank's compensation fund contains just €526 million (Sunday Business Post)
The Central Bank’s emergency fund to compensate customers whose savings are threatened by a bank collapse contains just €526 million - enough to cover the claims of just 26,000 savers - according to figures provided by the bank.
The figures also show that Irish banks contributed just over €60 million last year to the deposit protection scheme fund, which was set up in 1995. Banks are required to hand over 0.2 per cent of the deposits held with them each year.
A Central Bank spokeswoman said that, while the bank administered the scheme, the level of bank contributions and compensation payable to customers in the event of a bank collapse had been set by the government.
The scheme aims to provide a guarantee that, in the event of a bank failure, customers with money on deposit will receive 90 per cent of their money. An individual with €10,000 on deposit with a bank that collapses will receive €9,000.
The scheme rules also state, however, that payouts are subject to a ceiling of €20,000.This means that a customer who has a €100,000 on deposit with a failed institution would lose €80,000 of his or her money.
Officials in the Department of Finance are at present taking part in an EU-wide review aimed at establishing whether the compensation limits attached to the Irish scheme are too low. These limits were put in place when the scheme was first set up and have not been increased in line with inflation.
Linking the ceiling to changes in the Consumer Price Index since 1995 would result in a revised limit of approximately €30,000.
The bank spokeswoman also said that individual country schemes varied across the EU.
Some countries had yet to establish any dedicated fund for handling compensation payouts, she said, while in other countries, payouts would be drawn from funds put in place by the banks themselves.