Information on compensation payments

The emergence of the bank’s inability to pay out deposits

The Deposit Protection Fund pays compensation for inaccessible deposits in the event that the bank is unable to meet its obligations towards depositors. The National Bank of Slovakia may declare the bank incapable of paying out deposits, or the relevant court may issue a decision suspending the handling of deposits in the bank under bankruptcy proceedings.

Other effects of the bank’s inability to pay out deposits

On the day of the bank’s inability to pay deposits, the payment of deposits, payment transactions with deposits and other handling of deposits in the bank is suspended until the end of the compensation payouts, furthermore the transfer of receivables against the bank and the offsetting of mutual receivables between the bank and other entities, except as provided for by special legislation, for example Act no. 7/2005 Coll., on bankruptcy and restructuring, as amended is also suspended.

The Bank is also prohibited from accepting deposits, providing loans, bank guarantees and documentary credits, and executing other transactions; the acceptance of instalments of loans granted by the bank or associated interest and charges is not suspended. As of this day, the Bank is also obliged to suspend operations involving payment cards issued for bank accounts.

Protected deposit

According to records in the bank or in the depositor’s proof of the deposit relationship, the protected deposit for which the Deposit Protection Fund will provide compensation must be maintained within the scope of the following information prior to the date on which the deposits became unavailable: depositor’s name, surname, personal ID number or date of birth and permanent address, if the depositor is a private individual; name, identification number, address of the depositor’s registered office, if the depositor is a legal entity, as well as the designation of the official register in which this legal entity is registered, including the entry number in this register.

A depositor who is entitled to compensation for an inaccessible deposit

In general, deposits of private individuals and legal entities are protected by a deposit protection scheme. Deposits and those depositors whose deposits are not protected under Act no. 118/1996 Coll., on Deposit Protection, as amended (the Deposit Protection Act), are listed in § 3 par. 4 of the Deposit Protection Act. Information on which deposits are protected or unprotected shall be provided by the bank to the depositor upon request.

The Bank regularly informs depositors about the deposit protection terms and conditions through the Information Form for the Depositor, which is published on the Bank’s website (a sample form is provided here). The bank will provide the form to the depositor at the time when the deposit is being made, then informs the depositor about the deposit protection terms and conditions once per year. The bank will provide the depositor with information clearly and intelligibly in the Slovak language or in the language agreed upon by the depositor with the bank when the deposit was established.

Amount of the depositor’s compensation

Compensation for inaccessible deposit in one bank for one depositor is in the amount of an inaccessible protected deposit, but not more than EUR 100,000 (upper limit of deposit coverage). The calculated compensation amount shall be rounded up to the nearest euro cent.

Compensation for inaccessible deposit is paid in euros. The amount of compensation for a foreign currency deposit is calculated in euros according to the reference exchange rate determined or announced by the European Central Bank or the National Bank of Slovakia, which is valid on the day of the bank’s insolvency announcement.

The Deposit Protection Fund provides compensation in the full amount of the protected deposit, which exceeds the maximum compensation limit of EUR 100,000 to the depositor to whom the deposit was credited to the account, e.g. for the sale of real estate, or was obtained from inheritance proceedings, from donations, payment of life insurance, pension, etc. (specially protected deposits are listed in § 9 paragraph 6 of the Deposit Protection Act). The depositor is entitled to payment of compensation above the limit of EUR 100,000 for a period of 12 months only if he/she has notified the crediting of such specially protected deposit to the bank upon the crediting or immediately after the amount was credited to the deposit.

If a depositor has several inaccessible protected deposits in the same bank or in a bank and its branch abroad, the status of all protected deposits, including shares in joint deposits and notarial custody, shall be calculated according to the entries in the depositor’s deposit slip document, interest or other property benefits associated with the deposit are also added. The amount thus determined shall by reduced by all the liabilities of the depositor due to the bank on the date of the bank’s inability to pay deposit , whereby the depositor shall be reimbursed for up to a maximum of EUR 100,000. For example, if a depositor has a savings account with EUR 90,000 and a current account of EUR 20,000, he will be paid a maximum compensation of EUR 100,000.

In the event that the depositor does not credibly prove the amount of the deposit or liability to the bank, the entry in the bank’s records is decisive.

Deposits in an account to which two or more persons have access rights shall be treated for the purposes of calculating the limit of EUR 100,000 as if they had been made by a single depositor, to whom the deposit was established.

According to the legal requirements, the Deposit Protection Fund may, in special cases specified in § 9 par. 8 of the Deposit Protection Act postpone the payment of compensation until the reasons for postponing the compensation payment for an inaccessible deposit ceases to exist.

The Deposit Protection Fund will pay the depositor compensation for the inaccessible deposit in the minimum amount of three euros.

Disbursing bank

In the event of the bank’s insolvency, the Deposit Protection Fund pays compensation for inaccessible deposits to depositors through branches of a disbursing bank.

Compensation payment for inaccessible deposit in the disbursing bank

After meeting the legal requirements, the depositor or other entitled person/entity has the right to pay compensation for the inaccessible protected deposit.

The depositor or another person/entity entitled to receive compensation for inaccessible deposit is not obliged to submit a written application or registration with the Deposit Protection Fund.

To claim compensation for inaccessible deposit, the depositor is obliged to present at the branch of the disbursing bank a valid proof of identity document (valid ID card, passport, diplomatic passport, service passport or residence permit in the Slovak Republic in the case of a foreigner) and proof of deposit relationship (e.g. contract, passbook, deposit certificate, etc.). In the case of inheritance, it is necessary to submit a valid decision of the court on inheritance.

If the depositor is a legal entity, it must submit, in addition to a valid proof of identity document, an extract from the official register or other official records where it is registered, not older than 1 month before exercising the right to compensation.

In the event that compensation for an inaccessible deposit is paid to another authorized person/entity, this person/entity is obliged to submit a power of attorney with a branch of the disbursing bank with an officially certified signature of the power of attorney holder.

The compensation is collected on behalf of a minor by his/her legal representative, presenting himself/herself with the child’s birth certificate.

The depositor will receive compensation for an inaccessible deposit in euros in cash or by wire transfer to another bank account in in another bank. An employee of the branch of the disbursing bank will hand over to the depositor a Depositor’s letter, which is a confirmation of the compensation payment for the inaccessible deposit. The disbursing bank’s branch staff will attach a document on the deposit relationship to the Depositor’s Letter, alternatively other documents (e.g. power of attorney, certificate of inheritance proceedings, birth certificate of a minor, etc.).

In the event that the depositor does not agree with the amount of compensation or has other objections, alternatively irregularities, he/she shall submit at the branch of the disbursing bank a Letter of complaint, or write a complaint.

The Deposit Protection Fund will examine the reasons for the depositor’s complaint and informs him/her in writing about the results of the complaint.

Deadline for compensation payment

During the transitional period from 1 January 2021 to 31 December 2023, the Deposit Protection Fund will pay compensation to the depositor within 10 working days from the announcement of the bank’s insolvency.

From 1 January 2024, the deadline for compensation payment is 7 business days from the date of announcement of the bank’s insolvency. With the prior consent of the National Bank of Slovakia, the Deposit Protection Fund may extend this period by a maximum of 10 working days.

Until 31 December 2023, the depositor may apply in writing from the Deposit Protection Fund for part of the compensation necessary to cover his/her living needs. The Deposit Protection Fund will ensure that the depositor has received at least part of the compensation within 5 business days after submission of the application. Balance of the compensation amount shall be paid to the depositor by deadline for the compensation payment.

If depositor does not collect the compensation by the given deadline, the Deposit Protection Fund may pay the compensation to the depositor also after expiry of this deadline on the basis of a written request for compensation, which the depositor delivers to the Deposit Protection Fund no later than 3 years from the date of bank insolvency announcement. Depositor’s right to payment of compensation from the Deposit Protection Fund shall expire at the end of the 3-year period from the date of announcement of the bank’s insolvency. After this deadline, the depositor’s claim against the bank to the inaccessible deposit does not expire. The depositor has the right to seek compensation for inaccessible deposit for example through the courts from the insolvent bank.

In the event of the bank’s insolvency announcement, information on the compensation payments for inaccessible deposits will be published on the website of the Fund’s headquarters, in the bank where the deposits became unavailable, in the paying bank, through the media and in other appropriate ways.

The Fund communicates with the depositor in the Slovak language or in the official language of the member state, which the bank uses in written communication in which the inaccessible deposit protected by this law is stored. If it is an unavailable deposit protected by this law deposited in a foreign bank that enjoys the benefits of a single banking license under European Union law without establishing a branch, the Fund communicates with the depositor in the language that the depositor agreed with this foreign bank when the deposit was established.