Haris Ashley
Greece is the birthplace of democracy, Western philosophy, and the Olympic Games. It has a population of around 10 million people and its economy is based on services, industry, and tourism. The Greek economy is recovering from a deep recession that lasted from 2008 to 2018, and while positive economic growth is visible, the economy remains fragile. In the context of this economic fragility, it is important to understand the protections in place for Greek citizens, including the insurance of bank deposits. This insurance protects bank account holders in the event of bank failure, with eligible account holders contacted by TEKE and reimbursed by the Hellenic Deposit and Investment Guarantee Fund.
| Characteristics | Values |
|---|---|
| Deposit Insurance in Greece | Deposit Guarantee Claim |
| Account Balance Protection | Reimbursement of insured amounts to account holders in the event of bank failure |
| Eligible Accounts | Contacted by TEKE for compensation |
| Temporary High Balances | Creditors must submit applications to TEKE |
| Claims Above Insurance Limits | Subject to bank liquidation procedures and statutory rules |
| Bank Liquidation | Hellenic Deposit and Investment Guarantee Fund compensates depositors and investors |
| Resolution Measures | Financed by the Hellenic Fund to prevent systemic financial crisis |
| Greek Economy | Recovering from a deep recession (2008-2018) |
| External Aid | Dependent on the European Union, International Monetary Fund, and European Central Bank |
| EU Deposit Insurance | Up to €100,000 for 95% of account holders |
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What You'll Learn
Deposit insurance repayment
In Greece, the Hellenic Deposit and Investment Guarantee Fund (HDIGF/TEKE) provides deposit insurance and investor compensation schemes. The fund has a reserve of about 1.6 billion euros, which is financed by annual contributions and risk-based premiums from its members. In the event of a bank failure, TEKE covers insured deposits for reimbursement within 7 business days.
TEKE provides a guarantee of up to €100,000 per person, per bank account. Temporary High Balances are covered up to €300,000 but are subject to a strict claims procedure. TEKE also provides €30,000 to protect eligible investment services. All deposits held in Greek banks, including savings, current, and term deposits, are covered by the guarantee, which applies to both domestic and foreign currency deposits.
When a bank is in distress, TEKE's primary objective is to finance resolution measures to prevent the situation from escalating into a systemic financial crisis. If bank liquidation becomes unavoidable, the fund pays out compensation to depositors and investors of the affected credit institutions. This compensation is dependent on the applicable insolvency and creditor hierarchy, which separates secured creditors from unsecured bank deposits.
To receive reimbursement, creditors must confirm their identity and provide the agent bank with a proof of claim and payment instruction. TEKE contacts eligible account holders using the customer information available in the bank's records. In the case of Temporary High Balances, creditors must submit a substantiated application to TEKE. Claims that exceed the deposit insurance levels are subject to local bank liquidation procedures and statutory rules, and a write-down of a portion of the bank deposit is likely.
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The Hellenic Deposit and Investment Guarantee Fund
In Greece, bank account holders can protect their account balance and qualify for deposit insurance repayment when banks fail or stop operating. The Hellenic Deposit and Investment Guarantee Fund (HDIGF) was established on February 16, 2009, through the passage of Law 3746/2009. The fund is a successor institution to the nation's first deposit-insurance agency, the Hellenic Deposit Guarantee Fund (HDGF), which was launched in 1995.
The HDIGF was created to broaden the mandate of its predecessor to cover "all market sectors where banks are active". It also established a separate guarantee scheme for investors. The HDIGF pays compensation to depositors and investors of credit institutions that are unable to fulfil their obligations. Additionally, the fund may finance resolution measures to prevent institutional failure from escalating into a systemic financial crisis.
In response to the Global Financial Crisis (GFC), the Greek government raised the deposit insurance limit from EUR 20,000 to EUR 100,000 per depositor for three years in November 2008. This move aimed to bolster public confidence in the banking system. The HDGF was responsible for implementing this adjustment, which resulted in a significant increase in the percentages used for calculating member institutions' annual contributions.
The Deposit Guarantee and Resolution of Credit and Other Institutions Scheme (DGS) protects deposits in Hellenic Bank Public Company Ltd. This scheme ensures a limit protection of EUR 100,000 per depositor per credit institution. When bank liquidation occurs, the distribution of assets follows the applicable insolvency and creditor hierarchy. This hierarchy distinguishes between secured creditors and unsecured bank deposits.
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Greece's fragile economy
Greece is a developed country with an economy based on services, industry, and tourism. It is a member of the European Union and NATO, and its official currency is the euro. Greece has a population of around 10 million people and its capital and largest city is Athens.
Greece's economy is currently recovering from a deep recession that lasted from 2008 to 2018. The country faced a sovereign debt crisis in the aftermath of the 2008 financial crisis, which resulted in a series of sudden reforms and austerity measures that led to impoverishment and loss of income and property. The Greek economy suffered the longest recession of any advanced mixed economy and became the first developed country whose stock market was downgraded to an emerging market in 2013. As a result, the Greek political system was upended, social exclusion increased, and hundreds of thousands of well-educated Greeks left the country.
The crisis was triggered by several factors, including the global financial crisis, structural weaknesses in the Greek economy, and a lack of monetary policy flexibility as a member of the eurozone. Greece had a high debt-to-GDP ratio, with the country's annual budget deficit often exceeding 3% of GDP. The government enacted multiple rounds of tax increases, spending cuts, and reforms, and required bailout loans from international organizations. Additionally, there was a significant reliance on vulnerable factors such as tourism for economic growth.
Greece's acceptance into the European Monetary Union (EMU) and the Eurozone was expected to boost the economy and help with fiscal problems. However, the use of a single currency highlighted structural differences between Greece and other member countries, particularly Germany, and exacerbated fiscal issues. Greece's entrance into the Eurozone was also based on misreported financial data, as the country's finances did not meet the required criteria.
While the Greek economy is showing signs of recovery, it remains fragile. The country has historically been highly dependent on external aid from organizations like the European Union and the International Monetary Fund. The fragile nature of Greece's economy has also been reflected in the need for deposit insurance and protection measures for bank account holders in the event of bank failures or liquidation.
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Deposit protection legal aspects
The Hellenic Deposit and Investment Guarantee Fund (HDIGF/TEKE) was established by Law 4370/2016 to protect the interests of depositors by guaranteeing the safety of their deposits. The fund provides a guarantee of up to €100,000 per person, per bank in the event of a bank failure. Temporary High Balances are covered up to €300,000 but are subject to a strict claims procedure. TEKE covers all deposits held in Greek banks, including savings, current, and term deposits.
When a bank liquidation is unavoidable, the fund pays out compensation to depositors and investors of credit institutions unable to meet their obligations. The fund is financed by contributions from the financial institutions it covers and the Bank of Greece, and it is also backed by the Greek government. The payout of compensation follows the applicable insolvency and creditor hierarchy, which separates secured creditors from unsecured bank deposits.
The procedures for bank resolution and liquidation in Greece are governed by the Bank of Greece and the EU Resolution Framework. These procedures involve identifying a failing bank, appointing a resolution authority to take control of the bank and its assets, and then assessing the bank's assets and liabilities to determine the best course of action. This could include restructuring the bank's debt, liquidating the bank, or transferring the bank's assets and liabilities to another bank.
The Hellenic Deposit Guarantee Fund (HDIFG) was established in 1995 to further protect the interests of depositors. This fund covers deposits up to €100,000 per person, per bank, in accordance with the EC Directive 94/19/EC on Deposit Guarantee Schemes.
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Insurance Guarantee Schemes
In Greece, eligible account holders are contacted by TEKE about compensation events, and creditors are requested to submit verifiable information for the reimbursement of the insured amount. The Hellenic Deposit and Investment Guarantee Fund pays compensation to depositors and investors of credit institutions unable to fulfil their obligations. Greece is a member of the European Union, and while there are specific EU directives for the banking and securities sectors, only a few EU countries have insurance guarantee schemes (IGS) in place.
IGS provide last-resort protection to consumers when insurance companies are unable to fulfil their contractual commitments. They protect against the risk that claims will not be met if an insurer becomes insolvent. The International Forum of Insurance Guarantee Schemes (IFIGS) was formed in May 2013 by a group of insurance guarantee schemes from around the world interested in sharing their experiences in providing policyholder protection in the event of an insurance company failure.
The European Parliament has called for a proposal for a directive on IGS to complement the existing Deposit Guarantee Schemes, Investor Compensation Schemes, and Solvency II Directives, applying to the banking sector. The European Insurance and Occupational Pensions Authority (EIOPA) issued a discussion paper on national insurance guarantee schemes seeking feedback from stakeholders about this topic. However, Insurance Europe, the European (re)insurance federation, was against this idea of harmonization, arguing that crafting EU-level rules concerning IGS when Solvency II has been in force for less than three years is premature. They believe that existing tools and powers should be fully used and resources adequately assigned towards their proper enforcement.
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Frequently asked questions
Yes, Greek bank deposits are insured. The Hellenic Deposit and Investment Guarantee Fund pays compensation to depositors and investors of credit institutions unable to fulfill their obligations.
If your bank closes, you will be contacted by TEKE, and you will be reimbursed by the Hellenic Deposit and Investment Guarantee Fund.
If your bank closes, you will receive up to €100,000 in compensation.
To secure your position, you can contact a Deposit Guarantee Claim service to discuss your case and determine the best way to recover your assets.
