(ii) Use of DGS funds for failure prevention

Where a Member State allows a DGS, including an IPS officially recognised as a DGS, to use the available financial means for alternative measures in order to prevent the failure of a credit institution, this DGS may include an additional factor in its own risk-based calculation based on the total risk exposure amount of the institution. In this case, The DGS should apply the following modified calculation formula:

𝐶 𝑖 = 𝐶𝑅∗𝐴𝑅𝑊 𝑖 ∗(𝐶𝐷 𝑖 +𝑇𝑅𝐸𝐴 𝑖 )∗µ ∗∗

Where:

𝑇𝑅𝐸𝐴 𝑖 = amount of total risk exposure amount of institution ‘i’ ; and

µ ∗∗ = ∑ 𝑛 𝑖=1 (𝐴𝑅𝑊 ∑ 𝑖 𝑛 𝑖=1 ∗(𝐶𝐷 (𝐶𝐷 𝑖 𝑖 +𝑇𝑅𝐸𝐴 ) 𝑖 ))

Before the DGS may implement the additional factor, the competent authority in cooperation with the designated authority should assess, as part of the approval of the calculation method, whether its introduction is commensurate with the risk of having to intervene in order to prevent the failure of institutions beyond the protection of covered deposits.