Deposit insurance scheme

On December 2, 2004, The EVROPEISKY Investment Commercial Bank private corporation was issued a certificate as to its inclusion in the register of the member banks of the system of statutory deposit insurance of the State Deposit Insurance Agency corporation.

Beginning the moment a bank joins the statutory deposit insurance system, funds deposited by individuals with the EVROPEISKY Investment Commercial Bank under agreements for the opening of bank deposits or card accounts must be insured in the way, for amounts and under conditions established by the Federal Law No. 177 FZ dated 23.12.2003 "On Insuring Deposits Made by Individuals with the Banks of the Russian Federation".

The statutory deposit insurance system was created under a special state program implemented in compliance with the Federal Law No. 177 FZ dated 23.12.2003 "On Insuring Deposits Made by Individuals with the Banks of the Russian Federation". It is intended to protect citizen's savings deposited with banks functioning in the Russian Federation, which is among important social programs in dozens of countries across the world. Such systems are a must throughout the European Union, in the US, Japan, Brazil and in such neighbour countries as Ukraine, Kazakhstan and Armenia.

It works in the following way: if a member bank ceases its operations or its license is revoked, its depositors immediately receive fixed-size payments. To have their deposits insured, depositors need not sign an agreement because the insurance is provided for in Law. The Deposit Insurance Agency, a purposely created governmental organization repays depositors their money on behalf of their banks, takes depositor's place in the line of creditors and further sorts the debts out with the banks. Deposits of up to RUR 100,000.00 are repaid in full. Anything above that, the total repayment not exceeding RUR 400.000.00, is repaid to 90%. If an insured event concerning bank deposits occurred before August 9, 2006, the full amount is returned to the depositor, the total repayment not to exceed RUR 100.000.00. The total compensation may not exceed RUR 400,000.00 even when a depositor keeps his or her money in several accounts with the same bank. Yet if the funds are deposited with several banks, a depositor is repaid equally at each one.

All funds deposited by individuals are insured with the following exceptions:

funds deposited by individual entrepreneurs who are not legal entities;

deposits payable to the bearer;

funds under trust management;

funds deposited with foreign branches of Russian banks.

In order to have his or her deposit repaid, a depositor must fill in an application and produce a personal identification for the Deposit Insurance Agency (its agent bank). This may be done at any time after the occurrence of an insured event and before the completion of the bank's bankruptcy proceedings normally lasting for up to 2 years. Any late claim will be satisfied as an exception in cases, for instance, of serious illness or lengthy foreign business travel.

The Agency repays deposits in accordance with the time schedule of the obligations of a bankrupted bank, formed by the bank within three days after a depositor makes a claim, producing the needed documents but not earlier than 14 days after the occurrence of an insured event. This period is necessary to receive information about deposits from the bank and determine the organization of repayment. Compensation is paid out within three days after the receipt of a depositor's consent to receive a certain amount as a compensation for his or her deposits.

Membership in the deposit insurance system is prescribed by the Law to all banks licensed to accept individual deposits. Deposits are insured from the period the bank is included in the roster of member banks. The system is financially based on the statutory deposit insurance fund, which is mostly formed by the following:

the initial payment of RUR 2 billion made by the Russian Federation,

insurance premiums paid by banks and penalties for late premium payments;

income generated by the investment of the money placed in the fund.

Insurance premiums, in the amounts which are the same for all banks, are paid; quarterly. The premium rate, which may not exceed 0.15% of the average quarterly amount of deposits, is established by the Board of Directors of the Agency. In case of the shortage of funds, the Agency may increase premiums rate to 0.3% of that. The money placed in the deposit insurance fund may be invested as follows:

in government-issued securities of the Russian Federation;

deposited with the Bank of Russia or invested in securities it issues;

in government-issued securities of the Russian Federation;

in government-issued securities of the regions and territories of the Russian Federation, the bonds of Russian issuers and Russian hypothec bonds;

in the shares of indexed investment funds investing in foreign governmental securities and stocks and bonds of other foreign issuers;

in the security of well developed economically foreign states.

In order to preserve the financial stability of the deposit insurance system, the Government of Russia has the right to allot federal funds to the Agency when the money in the fund is insufficient.

More details are available at www.asv.org.ru