EU ministers agree to increase bank deposit guarantees

December 2nd, 2008 - 8:31 pm ICT by IANS  

Brussels, Dec 2 (DPA) European Union (EU) finance ministers agreed Tuesday to raise the minimum level of bank deposit guarantees for their citizens, from 20,000 euros ($25,000) to 100,000 euros by the end of 2011.In the meantime, the safety net is to be raised to 50,000 euros at the end of June 2009.

Individual member states will be free to raise these minimum levels, while the pay-out period in the event of a bank going bankrupt will be reduced, from three months to three days.

The move, which must now be approved by the European Parliament, is part of a series of EU initiatives designed to restore confidence in its financial sector in the wake of the global credit crunch.

At their meeting in Brussels, finance ministers also endorsed plans to limit inter-bank exposures and to force banks to set aside a certain percentage of capital against their loans.

The revised directive also aims to give national supervisory authorities a better overview of the activities of cross-border banking groups operating within the EU.

A third decision being considered by ministers involves strengthening the supervision of large insurance groups.

However, EU diplomats said ahead of Tuesday’s meeting that unbridgeable divisions remained over how such groups should be treated.

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