All participant banks are required to contribute funds into the Scheme for the eventuality that a bank defaults and is unable to repay funds to its depositors.
The Scheme will be funded by annual contributions payable by member banks and such funds may not be used for any other purpose except for paying compensation to depositors in the event of a default.
Each bank will be risk-assessed and required to pay annual contributions in accordance with its risk-assessment. Over a period time, the Scheme will be obliged to build a minimum target fund of 1.3% of the banks’ covered deposits. Part of the Scheme’s funds may be limitedly held in low-risk assets by the banks as collateral in favour of the Scheme.
Banking Rules will be issued to supplement parts of the Regulation. Such Rules will be based on guidelines issued by the European Banking Authority.
The Financial Statements of the Depositor Compensation Scheme provide a detailed account of the amounts which have been paid to the Scheme to date.