5.2 Modalities for the transfer of DGS contributions and information between DGSs

Cooperation agreements between DGSs, or where appropriate, the designated authorities, should specify the following modalities for the transfer of contributions and information from one DGS to another in the event that a credit institution ceases to be a member of one DGS and joins another DGS, including cross-border and domestic transfers, pursuant to Article 14(3) of Directive 2014/49/EU:

• m. Exchange of information

Article 14(6) in connection with Article 4(9) of Directive 2014/49/EU requires effective exchange of information between DGSs, in accordance with confidentiality and the protection of data pertaining to depositors’ accounts. It also requires processing of data to be done in accordance with Directive 95/46/EC.

While the abovementioned provision ensures a common minimum set of standards of confidentiality and data protection, it does not preclude cooperation agreements from setting more stringent standards, provided that this is agreed to in the cooperation agreements.

The provision of accurate data is a key step in ensuring an effective transfer of information from one DGS to another. Cooperation agreements should specify the deadline for the DGS which the member credit institution is leaving (transferring DGS) to notify the DGS the member credit institution in question wants to join (receiving DGS) about the intention of the member credit institution to join the receiving DGS or, where a member credit institution communicates to the receiving DGS its intention to become a member credit institution of such DGS, to notify the transferring DGS of such circumstance. The deadline referred to above should begin from the date on which:

• • the member credit institution notifies the transferring DGS of its desire to join another DGS, where the transferring DGS knows which DGS the institution intends to join; or
• • the member credit institution notifies the receiving DGS of its desire to join.

The deadline should be set before the institution formally leaves the transferring DGS and joins the receiving one.

The information to be transmitted should include anything that the transferring DGS and the receiving DGS jointly consider as relevant, including and where available:

• a. aggregate information on all the regular contributions (and related deposits) being transferred from one DGS to the other DGS, including, where relevant, aggregate information on deposit flows in the member credit institution for a period agreed to by both DGSs;
• b. any audits, assessments and tests previously done on the capability of the institution to produce SCV files and other information previously requested by the transferring DGS, particularly on the quality of data provided by the member credit institution;
• c. any other relevant information, including information on near misses related to that member credit institution.

The transferring DGS should not be required to obtain new information for the purpose of transferring it to the receiving DGS. The receiving DGS will have the power to request the most up-to-date information directly from the institution upon accepting it as a member.

The transferring DGS should be able to refuse to share information which, due to its sensitive nature, may not be shared under national or EU law.

• n. Modalities for transferring the regular contributions paid during the 12 months preceding the end of the membership and currency of payment

Any costs of raising the funds by the transferring DGS, where, for example, the transferring DGS has recently made a payout and needs to collect additional funds for the transfer to the receiving DGS, should be borne by the transferring DGS.

The receiving DGS should provide the transferring DGS with the account details and any other relevant information to allow the transfer of contributions. The chosen accounts and funds transfer method should ensure the utmost security of the funds and the timeliness of the transfer.

Cooperation agreements should acknowledge that the transferring DGS will provide funds in the currency in which the contributions have originally been provided. The receiving DGS should bear the costs of any operations related to currency exchange.

• o. Treatment of payment commitments, including potential transfer of commitments made in the last 12 months

According to paragraph 13(d) of the EBA guidelines on payment commitments to deposit guarantee schemes⁸ , where a credit institution ceases to be a member of one DGS and joins another DGS, the transferring DGS should ensure that the financial means corresponding to the 12 months preceding the end of the membership are transferred to the receiving DGS, either by:

• • enforcing the commitments and transferring the proceeds to the receiving DGS; or
• • reassigning the payment commitments arrangement to the receiving DGS in agreement with the latter and the credit institution.

⁸ EBA/GL/2015/09.

Cooperation agreements should specify the deadline by which the transferring DGS, where relevant in agreement with the credit institution, shall decide which of the two options to pursue. The agreements should not specify the option in advance, as the decision will be case-specific.

Where the transferring DGS decides to enforce the commitment and transfer the proceeds to the receiving DGS, the provisions laid down in the above section on modalities for advancing the regular contributions paid during the last 12 months preceding the end of membership should apply.

Where the transferring DGS decides not to enforce the payment commitments, it should engage with the receiving DGS to establish whether the receiving DGS is willing to accept the reassignment of those payment commitments. The reassignment may happen only when both DGSs agree. Where the receiving DGS refuses reassignment, the transferring DGS should enforce the payment commitments and transfer the proceeds to the receiving DGS.

• p. Timeline for transferring the contributions

A membership of a DGS is a necessary condition for a credit institution being allowed to take deposits. In addition, the receiving DGS must be able to meet its obligations towards the depositors of the member credit institution from the first day. Therefore, a credit institution’s transfer of membership should happen seamlessly. This implies that the transfer of contributions from one DGS to another should happen on the same day on which the member credit institution leaving one DGS joins the other DGS. Arranging the transfer on the same day also removes the risk of the transferring DGS using the funds contributed by this institution in a payout or resolution after the member credit institution has left the transferring DGS.

Where the receiving DGS is willing to take the risk of accepting the new member credit institution without receiving the transfer on the same day, it should agree the deadline for the transfer with the transferring DGS.

• q. Language used

The DGSs should communicate in English when transmitting information from one DGS to the other DGS, unless they agree bilaterally that another language will be used.

• r. Costs associated with the transfer of contributions

Cooperation agreements should specify that the receiving DGS is responsible for any costs associated with transferring the contributions (whether funds or payment commitments) from the transferring DGS, and any other costs associated with the transfer, including translations of requested information. However, where necessary, the costs of raising funds should be borne by the transferring DGS.

• s. Treatment of delays

Cooperation agreements should include a clause specifying that where delays in the provision of information or funds occur, any costs arising from the consequences of such delays should be borne by the DGS responsible for the delays.