Deposit insurance

By whom, how and within what period insurance claims are disbursed?
Insurance claims are disbursed within 20 business days from the day of insurable event. Council of the insurance company is entitled to extend the said term in maximum 10 business days.

The insurance company receives information required to calculate insurance claims from the bankrupt insurer and calculates insurance claim amount pertaining to each depositor. A bank to disburse insurance claims is selected and insurance claim data is submitted to the bank. The bank begins disbursement of insurance claims to depositors of the bankrupt insurer. The insurance company informs society on where and how the insurance claims are disbursed through public media.

The said disbursement method of insurance claims is common worldwide. Important thing is that a depositor does not have to take any actions in regard of his/her insurance claim, i.e. he/she does not have to contact any institution, launch any application, etc.

Insurance claims of natural persons shall be disbursed by AB SEB bank.

Insurance claims of legal entities shall be disbursed by the following banks: in Vilnius circuit by AB SEB bank, in Kaunas circuit by AB Ūkio bank, in Klaipėda circuit by Danske bank, in Šiauliai circuit by AB Šiaulių bank, in Panevėžys circuit by Nordea bank, in Alytus and Marijampolė circuit by AB bank “Swedbank”, in Telšiai and Utena circuits by AB DNB bank and in Tauragė circuit by UAB Medicinos bank.

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What kind of deposits can be insured?
Deposit is the amount of money (including interest counted in) of a depositor kept in a bank, bank branch or credit union on the basis of a bank deposit and/or bank account agreement and other moneys the depositor is entitled to claim for on the basis of liabilities of the credit institution to operate with money of the depositor or provide investment services. In case a group of depositors has the right of claim the deposit is divided in equal shares for each of the depositors unless agreements providing their right of claim or court judgements prescribe otherwise.

What are currencies of the insurable deposits?
Banks and credit unions insure deposits in Litas and foreign currencies like US dollars, Euros and national currencies of European Union member states as well as states of the European Economic Area (see list of currencies of insurable deposits).

Whose deposits are not insurable?
Debt securities (deposit certificates) issued by the insurer himself, liabilities due to accepted or general bills of exchange of the insurer, hypothec bonds issued under the Law on Hypothec Bonds and Hypothec Crediting of the Republic of Lithuania as well as deposits of or liabilities to the below entities cannot be objects of insurance:
1) the Bank of Lithuania;
2) SE “Indėlių ir investicijų draudimas”;
3) credit institutions;
4) finance broker companies;
5) insurance companies acting on the basis of the Law on Insurance;
6) pension funds;
7) administrator companies;
8) leasing companies;
9) collective investment subjects.

Who is entitled to receive an insurance claim?
It is considered that an insurer has insured his deposits, if he pays insurance contributions duly. In case an insurable event is declared to the insurer, depositor gains the right to receive an insurance claim. However, if legal institutions have been contacted to ascertain legality of acquiring deposit funds by the depositor and no resolution has been made on the issue, disbursement of insurance claims to such depositor is suspended.

Insurance claims are not disbursed:
1) to depositors, deposits of who are acknowledged by court as acquired illegally;
2) to depositors, deposits of who have been transferred on the basis of agreements or otherwise (less by inheritance) after the day of the insurable event;
3) to administrative managers of a bank or credit union or managers, board (supervisory board) and council members; persons who own minimum 5 percent of share capital of a bank or persons who own over 50 percent of capital of companies who own minimum 5 percent of share capital of a bank; persons who carry out an independent audit of a bank or credit union; children, adopted children, spouses, cohabitants with registered partnership, parents and adoptive parents of persons enumerated in the paragraph hereto;
4) to loan recipients of a bank or credit union, if insurance claims do not exceed their liabilities (outstanding loans including interest). In case deposits of such loan recipients of a bank or credit institution exceed their liabilities (outstanding loans including interest), the insurance claim amount is calculated by deducing liabilities of the recipient from the deposit amount and the result cannot exceed amount prescribed by Article 9 par. 3 of the Law;
5) for deposits in anonymous or encoded accounts;
6) for deposits with the interest rate set by the insurer twice exceeding the interest rate of adequate deposits applied by the same credit institution.

What is the amount of insurance claim?

It is 100 percent of a deposit, if the amount in LTL is correspondent to an amount under EUR 100,000.

Who and how calculates insurance claims?

Insurance claims to be disbursed to depositors of a bankrupt insurer are calculated by the insurance company, that is, the State Enterprise “Indėlių ir investicijų draudimas”. The insurance company calculates insurance claims on the basis of data available to the insurer. Administrator of the bankrupt insurer must give exact information on depositors and deposits to the insurance company within 5 business days from the day the bankruptcy case is initiated.

How are insurance claims calculated?

Insurance claims are calculated and disbursed in Litas.
Insurance claim of a depositor is calculated in the below method:
1) funds of the depositor kept in the bank or credit union on the basis of bank deposit and/or bank account agreements, other moneys the depositor is entitled to claim for on the basis of financial deposit operations assumed by the credit institution (less the claims on the basis of deposit custody agreements) as well as a share of money appurtenant to the depositor on the basis of claim of a group of depositors are summarized. The sum comprises of funds of the depositor kept in all departments (branches) of the insurer.
2) if the amount in LTL is correspondent to an amount under EUR 100,000, such amount is compensated 100 percent.
For example:
Maximum insurance amount is EUR 100,000 or LTL 345,280
1. A client owns a deposit of LTL 15,000 and EUR 10,000. Thus, the deposit amount is:
LTL 15,000 + EUR 10,000 x 3.4528 = LTL 49,528
Amount (K) of insurance claim appurtenant to the client is:
K = 49,528 x 100 percent
or K = LTL 49,528
2. A client owns a deposit of LTL 250,000 and EUR 30,000
Deposit amount: LTL 250,000 + EUR 30,000 x 3.4528 = LTL 353,584
Amount (K) of insurance claim is maximal:
K = LTL 345,280.

3. A client owns a deposit of LTL 500,000
Amount (K) of insurance claim is maximal:
K = LTL 345,280.

However, in case the depositor has taken a bank loan or has other financial liabilities to the credit institution,

His/her deposit amount is reduced in the amount of his/her liabilities. In case the deposit exceeds the amount of liabilities, the insurance claim is the difference between the amounts of deposit and liabilities; in case the deposit amount is smaller, the depositor is not entitled to receive an insurance claim.

For example:

1. Deposit amount is LTL 50,000 and the amount of loan and other liabilities to the credit institution is LTL 20,000; thus, the insurance claim is the difference between the said amounts, namely, LTL 30,000.

2. Deposit amount is LTL 50,000 and the amount of loan and other liabilities to the credit institution is LTL 60,000; thus the depositor is not entitled to receive an insurance claim.

Who insures deposits?
Deposits are insured by insurers, i.e. banks and credit unions. Deposit insurance is administered by the insurance company, that is, the State Enterprise “Indėlių ir investicijų draudimas”.

What is the object of deposit insurance?
It is deposits in Litas, US dollars, Euros and national currencies of the states of the European Economic Area kept by depositors (natural persons and legal entities) in banks and credit unions.

Whose deposits are insured?
On the basis of Lithuanian deposit insurance system deposits of natural persons and legal entities are insured. The principle of deposit insurance is that different insurers insure deposits of the same person separately. This means that deposits of a person kept in different banks are assured separately on the basis of the Law on Insurance of Deposits and Liabilities to Investors of the republic of Lithuania. Provisions of deposit insurance apply to depositors rather than deposits. That is, all insurable deposits of a depositor kept in the same bank are summarized and the insurance claim is calculated on the basis of summarization result. Please pay attention to the fact that all deposits of a depositor kept in departments and branches of the same bank in the Republic of Lithuania are summarized.

Who participates in the deposit insurance system?
Banks and credit union insure deposits. In case deposits or assumed liabilities to investors kept in a foreign bank beyond jurisdiction of a member of the European Economic Area or its branch in the Republic of Lithuania are insured (compensated) or otherwise secured on the basis of legal acts of a foreign state and the council of the insurance company ascertains that provisions of such insurance (compensation) or other protection compare unfavourably to the ones prescribed by the above Law, such foreign bank or company that incorporated the branch must additionally insure deposits kept by depositors in the branch and liabilities to investors assumed in the branch of the foreign bank or company in the manner set out by the council of the insurance company and published in “Valstybės žinios”. A foreign bank or company within jurisdiction of a member of the European Economic Area and with a branch in the Republic of Lithuania are thus entitled to insure deposits kept in the branch and liabilities to investors assumed in the branch additionally. Currently commerce banks and credit unions insure deposits in the deposit insurance system.

How much and in what way banks and credit unions pay for the insurance system?
Commerce banks pay annual insurance contributions to the insurance company in the amount equal to 0.45 percent of the amount of all insured deposits, while credit union pay the amount equal to 0.2 percent of the amount of all insured deposits.
The council of the insurance company is entitled to reduce insurance contribution norms with regard to ratio of the Deposit Insurance Fund and all insured deposits.

Who and when can terminate the deposit insurance?
In case supervisory institution of an insurer revokes or suspends the right of the insurer to accept deposits, the council of the insurance company accordingly revokes or suspends deposit insurance of such insurer without a prior notice. Supervisory institution must immediately inform the council of the insurance company on revocation or suspension of the right to accept deposits.
In case an insurer violates insurance policy and/or activity of such insurer endangers ability of the insurance company to fulfil its liabilities, the council of the insurance company informs supervisory institution of the insurer and warns the insurer on possible termination of insurance minimum 12 months before the planned termination. In case the insurer fails to eliminate violations of insurance policy within 12 months after such warning, insurance of deposits accepted and liabilities to investors assumed by the insurer can be terminated by resolution of the council of the insurance company coordinated with supervisory institution of the insurer.
The insurance company publishes information on termination of insurance in the “Informaciniai pranešimai” supplement of “Valstybės žinios”.

What are the rights of depositors after deposit insurance is terminated?
In case the insurer with terminated deposit insurance undergoes an insurable event, the insurance company disburses insurance claims only to those depositors, deposits of who have been accepted before termination of insurance.

Lithuanian deposits insurance scheme insures deposits of natural and legal persons holding with commercial banks and credit unions. The liability limit for one depositor is 345 280 LT (100 000 EUR). 
In 1997, Lithuanian deposit insurance scheme started the activity like deposit insurance of natural persons holding with banks. Since midyear of 2002, Since midyear of 2002, the State Undertaking „Insurance of Deposits and Investments“ started to insure deposits of natural and legal persons holding with commercial banks and credit unions. At this moment Lithuanian deposits and liabilities to investor’s insurance scheme is harmonized with European Union legal basis and is in accordance with the main provisions of deposit insurance schemes of European Union countries.
Deposit insurance is the scheme which guarantees the safety of deposits holding with banks and credit unions in case of financial embarrassment or bankruptcy. Insurance contributions compulsory paid by banks and credit unions are accumulated in Deposit Insurance Fund. In case of bankruptcy action it is used for insurance compensations for depositors.