Annual deposit insurance premium to decrease from 2025: a sign of sector stability or a challenge to fund resilience?

As of 1 July 2025, a new annual deposit insurance premium has come into effect in Lithuania – it is being reduced from 0.20% to 0.14% of the amount of insured deposits. This decision by the Ministry of Finance marks an important change not only in the cost structure of the financial sector, but also in the strategic position of the Deposit Insurance Fund.

Why has the premium been reduced?

The reduction of the deposit insurance premium was primarily determined by the fact that Lithuania has already accumulated a sufficient insurance fund, the volume of which exceeds the minimum level of 0.8% of insured deposits set by European Union legislation. Currently, the Lithuanian Deposit Insurance Fund accounts for about 0.96% of insured deposits, therefore the regulator assessed that in the current period it is possible to reduce the periodic financial burden on credit institutions, while ensuring sufficient system resilience.

Such a decision also indicates a positive state of the financial system – credit institutions operate stably, the risk of insolvency is controlled, and the need for fund funds for extreme cases is currently not great.

„European Union legislation stipulates that each country’s deposit insurance fund must reach at least 0.8% of the insured deposits. Lithuania has already exceeded this indicator, therefore the reduction of the contribution is in line with EU directives and is a legitimate decision. However, Lithuania must be prepared to increase the contribution again if macroeconomic circumstances change or if there is a need to respond to European Union initiatives to strengthen the integration of insurance systems. For example, there is currently active discussion on the implementation of a single European Deposit Insurance Scheme (EDIS),” commented Aurelija Mažintienė, Director of the Public Institution „Deposit and Investment Insurance”.

What does this mean for credit institutions and customers?

This is good news for credit institutions – a lower fee will directly reduce operating costs. Although the difference between 0.20% and 0.14% may seem small, in the general context of credit institutions this means tens or even hundreds of thousands of euros in annual savings, depending on the size of the customer deposit portfolio.

Credit unions, which usually have a smaller capital reserve, see this decision as an opportunity to invest the savings more efficiently – for example, in digitalization or service development.

A reasonable question arises for residents and businesses – will the reduced contribution affect the safety of their funds? The reduced contribution is a signal that the country’s financial sector is stable and reliable. It is predicted that the level of funds in the Deposit Insurance Fund will continue to exceed the minimum requirements of the European Union, therefore there is no direct threat to the protection of customer deposits.

However, it remains important to constantly assess risks, and in a specific case – whether the fund is able to adequately respond to the simultaneous insolvency of several credit institutions, especially as the intensity of systemic risks grows (e.g., geopolitical or the expansion of digital banks).

How does this relate to the public interest?

Financial stability is one of the most important aspects of the public interest. The deposit insurance system ensures the protection of citizens’ and companies’ funds up to EUR 100,000 in each credit institution. The decision to reduce the deposit insurance premium rate without compromising the stability of the fund shows that the state is able to ensure a balance between security and efficiency.

It is important to emphasize that a lower premium does not mean less protection. On the contrary, it is a sign that the system is sufficiently sustainable and strong to ensure protection even with a reduction in annual premiums.

We remind you that „Deposit and Investment Insurance” in Lithuania takes care of your deposits held in banks and credit unions and is the guarantor of the financial stability of the entire country. The deposit insurance mechanism works simply: if a participant in the deposit insurance system goes bankrupt, „Deposit and Investment Insurance” would calculate the insurance benefits due to the depositor and compensate the insured funds within 7 business days directly or through the selected credit institution. According to the Law on Insurance of Deposits and Investor Liabilities, if your deposits were eligible for insurance, you would recover up to EUR 100,000 held in one credit institution.

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