Luxembourg changes deposit guarantee and investor compensation schemes

Chris Hamblin

29 February 2016

The law of 18 December 2015 was passed to give effect to European Union directives. It has transformed the private ex post financed deposit guarantee scheme into a public ex ante financed scheme. In this context, the new public deposit guarantee scheme “Fonds de garantie des dépôts Luxembourg” (“FGDL”) has replaced the non-profit association “Association pour la Garantie des Dépôts, Luxembourg” (“AGDL”) and has taken over the functions exercised in the past by the AGDL. The FGDL is a public institution which collects the contributions due from the credit institutions, manages the collected assets and compensates depositors in case of a bank failure or substitutes itself to covered depositors in case the bail-in tool is used in a bank resolution. The body of the FGDL is the board of directors whose composition is laid down in the law of 18 December 2015.