#52026AG0005(02)Position (EU) No 5/2026 on Amendments to the Deposit Guarantee Schemes Directive
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This law amends the Deposit Guarantee Schemes Directive to improve the framework for resolving small and medium-sized banks. It allows for the use of deposit guarantee scheme (DGS) funds under strict conditions to facilitate bank resolutions. Additionally, it aims to enhance cross-border coordination among supervisory and resolution authorities and sets clear rules on the use of DGS funds for preventive measures.
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Key Changes
- Enables use of DGS funds for bank resolutions under strict conditions
- Harmonizes treatment of alternative measures and improves cross-border coordination
- Introduces provisions for governance safeguards and conditions on DGS fund use
Obligations
What this law requires
Resolution authorities must apply the simplified least cost test (LCT) uniformly to all crisis-management measures to ensure DGS interventions do not exceed the cost of reimbursing covered deposits
Member States must implement detailed conditions on the use of DGS funds for alternative and preventive measures, including requirements for recovery plans, governance safeguards, and restrictions on dividends and variable remuneration
Resolution authorities may draw on DGS funds under strict conditions and in exceptional cases only to finance the implementation of a bank's transfer resolution strategy when internal loss-absorbing capacity is insufficient
Institutional Protection Schemes (IPS) recognised as DGSs must meet strict safeguards when making temporary transfers to support affiliated institutions' liquidity and solvency
Supervisory and resolution authorities must enhance cross-border coordination mechanisms to reduce fragmentation across the Union