Information on deposit insurance
CSOB and the deposit insurance system
Ceskoslovenska obchodni banka, a. s. (“CSOB“) is involved in the deposit insurance system pursuant to Section 41a – Section 41o of Law No. 21/1992 Coll. on Banks as subsequently amended (hereinafter referred to as the “Law on Banks“), and thus it is registered in the list of participants providing insurance for client deposits with the Deposit Insurance Fund (Fond pojisteni vkladu) (hereinafter referred to as the “DIF“).
The information in this document is based on the version of the Law on Banks, which is effective from January 1, 2011 and contains only basic information about deposit insurance. Full details can be found in the above-mentioned Sections of the Law on Banks.
Which deposits are insured?
With regard to Ceskoslovenska obchodni banka, a. s. all claims arising from deposits, including interest, denominated in the Czech currency or a foreign currency of both citizens (private individuals) and companies (legal persons) that are registered as credit balances on accounts or savings books or recorded as a certificate of deposit, deposit certificate or another similar document are insured provided the client is duly identified to the amount pursuant to the Law on Banks (see below).
On the contrary insurance does not apply to the deposits below:
- of banks (so-called interbank deposits),
- of foreign banks,
- of financial institutions (e.g. investment companies, pension funds, unit trusts),
- health insurance companies,
- state funds,
- and also subordinated debt (i.e. claims arising from deposits, which the bank is entitled to include in its capital).
The system of deposit insurance pursuant to the Law on Banks does not apply to bills of exchange and other securities (e.g. stocks, bonds, units).
Data necessary for deposit insurance
As for account management and acceptance of a deposit for an account CSOB is obliged to verify the identity of the depositor and record the depositor’s identification data, amounts as well as the reason for the insured deposit.
The identification data must be stipulated in the deposit insurance contract (i.e. about the account, savings book, certificate of deposit, deposit certificate or another similar document to confirm the receipt of a deposit); this means:
- for private individuals: name, surname, birth number, date of birth (especially foreigners with no allocated birth number), or an identification number,
- for legal entities: business name or name of the legal entity, registered office and ID No. (local companies).
When establishing a joint account (account for two or more co-holders) or when subsequently using an existing account the account holder is obliged to inform CSOB in writing about this fact, give proof of each such person’s share, disclose the identification data and prove the veracity of the data. A similar procedure applies if the true owner of the funds differs from the account holder, except that the account holder is obliged to identify the real owner of the funds.
The compensation payment process
Compensation for insured deposits, i.e. claims arising from insured deposits, is paid to the beneficiary in the Czech currency in the amount calculated as below, but not exceeding the equivalent of EUR 100,000 for a beneficiary at one bank (i.e. the bank with the same prefix; CSOB’s code is 0300) no later than within 20 working days of the specified date. The equivalent of the limit, EUR 100 000, is converted into Czech crowns by the market exchange rate notified by the Czech National Bank on the specified day.
To calculate the compensation for an insured deposit all the claims arising from deposits of a beneficiary against the bank, including his share in joint accounts i.e. accounts established for 2 and more co-owners, including interest accrued as of the specified date will be put together on the specified day (the date when the bank receives a written notification of the Czech National Bank about a bank’s incapacity to meet its obligations to beneficiaries, i.e. insolvency notice). The share of a co-owner of an account is equal to a fraction (in the records of the bank) whose numerator is the total amount deposited in the account and the denominator is the number of co-owners unless beneficiaries determine another proportion before the specified day.
The calculation is made in the Czech currency; for claims for deposits denominated in a foreign currency they are converted into the Czech currency by an exchange rate notified by the Czech National Bank on the specified day. Also the amounts denominated in a foreign currency are disbursed in CZK.
If the compensation for an insured deposit claim:
- is lower or identical to the equivalent of EUR 100,000 the calculated amount will be paid to the beneficiary from the Deposit Insurance Fund in full,
- is higher than the equivalent of EUR 100,000 the beneficiary will receive from the Deposit Insurance Fund only the equivalent of EUR 100,000.
Deadlines for paying compensation
Compensation for an insured claim from a deposit will be paid to the beneficiary from the Deposit Insurance Fund.
The Deposit Insurance Fund and banks receive a notice from the Czech National Bank informing them that a bank can not meet its obligations to beneficiaries (of a specified fact). From January 1, 2011 this notice must be issued within 5 business days after the specified fact has been identified. The day when the Deposit Insurance Fund receives this notice is deemed to be the specified day.
If CSOB or another bank becomes incapable of meeting its obligations to beneficiaries it must provide the Deposit Insurance Fund with the identification data of the respective beneficiaries, amounts and the reason for their insurance claims.
Subsequently the Deposit Insurance Fund will determine the date, place and method of paying compensation within 12 business days of the specified day. The compensation must be paid to beneficiaries within 20 business days of the specified day; the deadline can be extended by a maximum of 10 business days under extraordinary circumstances.