Frequently asked questions (FAQ) for bank clients
All natural persons and legal entities that, as clients, have deposits and investor claims with licensed banks and other financial service providers that are active EAS participants as of the occurrence of a compensation case. However, only clients that are eligible for compensation within the scope of the provisions (Articles of Association, participation contract including General Terms and Conditions) are entitled.
By concluding a participation contract, EAS may admit the following entities of the financial service industry with a licence to operate in Liechtenstein to the protection schemes:
- Investment firms
- Asset management companies
- Public fund management companies (UCITS) with additional licence for individual portfolio management with discretionary mandate
- Alternative investment fund managers (AIFMs) with additional licence for individual portfolio management with discretionary mandate
If the Financial Market Authority (FMA) or a Liechtenstein court comes to the conclusion that a bank or other financial service provider is no longer able to operate (insolvent) or bankruptcy proceedings are instituted (event of default). At this moment, the system will be activated and a compensation case is on hand.
For EAS to become active, an FMA or court decision must always be on hand.
Regardless of any compensation by EAS, covered deposits with banks are treated preferentially up to a maximum of CHF 100,000.00 per depositor and bank. The preferential treatment results in the classification of these preferential deposits as second-class claims in the event of bankruptcy and represents an advantage for the depositor when the bankruptcy assets are distributed.
Furthermore, eligible deposits of small and medium-sized companies (SMEs) over CHF 100,000.00 are treated preferentially as well. They would be classified as third-class claims. Additionally, vested benefits kept with a bank (vested benefits accounts) up to CHF 100,000.00 are also classified as third-class claims, regardless of the other deposits of the individual client.
Actually, securities kept in a custody account do not require any preferential treatment under bankruptcy law, as they remain property of the client and are not included in the bankruptcy assets (separation in the event of bankruptcy). In this case, the client can request his securities from the bank or investment firm or have them transferred to another institution.
Other licensed EAS participants are not permitted to accept securities under their licence.
Coverage applies to account balances held in a name, especially of individual private clients, asset structures and commercial enterprises in the form of private, savings, investment, salary, numbered, deposit and current accounts up to a maximum cover amount of CHF 100,000.00 per depositor.
As a matter of principle, deposits of enterprises of the financial service industry and of investment funds are not eligible for compensation. Further exceptions are listed in Article 18a of the Liechtenstein Banking Ordinance (BankV).
In a compensation event, depositors may in certain cases apply to the EAS within 6 months of the occurrence of the compensation event to cover a temporary high balance in excess of the general maximum payout amount of CHF 100,000 up to a total of CHF 750,000. For this purpose, the depositor must prove in writing to the EAS that the temporary high balance are either
- from real estate transactions in connection with privately used residential properties;
- fulfil statutory social purposes and are linked to particular life events of the depositor, such as marriage, divorce, retirement, dismissal, redundancy, invalidity or death; or
- are based on the payment of insurance benefits or compensation for criminal injuries or wrongful conviction.
In all cases and in accordance with Article 9 EAG, the compensation event must occur within six (6) months after the amount has been credited or after the date on which such deposits become legally transferable.
The following custody account assets are eligible for compensation according to the EAS provisions (list is not exhaustive):
- Transferable securities of all kinds that are traded on the capital market;
- Fund units;
- Money market instruments and
- Derivatives of the above-mentioned securities
Further information on financial instruments is provided in Appendix 2 Section C BankG.
Also eligible are blockchain-based securities which have been issued by means of distributed ledger technology (DLT) and correspond to the characteristics of a traditional financial instrument (so-called 'security token').
Foundations and similar asset structures with independent legal personality are granted the same coverage as an individual private client, irrespective of the number of beneficial owners. Asset structures in the form of trusts are treated like foundations.
To participate in EAS, it is necessary to conclude a participation contract. Only after the contract is signed and FMA approval is granted, EAS can definitively confirm the participation.
The following table lists all active EAS participants.
Deposits and investor claims kept with a dependent branch of a participating bank in an EU/EEA member state or in a third-party country are also covered within the scope of the EAS provisions. It does not matter what citizenship the client has or in which country he is domiciled.
EAS grants individual coverage for deposits/investor claims up to the applicable coverage limit for each eligible client. For joint accounts/joint investments, the respective share of the individual client is authoritative for the determination of the compensation claim. Unless special provisions apply, the eligible deposits and investor claims will be attributed to the individual client in equal shares. For example, it makes no difference whether a married couple holds a joint account or two individual accounts with a bank.
Example: As of the occurrence of the compensation case, bank client "A" has an individual client relationship with an eligible deposit balance of CHF 80,000.00 and, together with his wife "B", a joint client relationship with an eligible deposit balance of CHF 60,000.00. EAS grants bank client "A" maximum coverage of CHF 100,000.00 and his wife "B" maximum coverage of CHF 30,000.00.
Banks are obliged by law to hold, at any given time, cash in the scope of the maximum contribution obligations, in addition to the liquidity prescribed by law. Compliance with this obligation is monitored by the supervisory authority (FMA) and EAS at quarterly intervals.
It describes a particular view in a compensation case of a bank. The maximum coverage usually applies to the depositor as an individual or legal entity as the contracting partner.
The failing bank must be able to send EAS the determined depositor information as soon as possible.
Except for the banking cell, the individual cells are fed by regular contribution payments by the participating financial service providers until the target level is reached.
In the banking cell, however, the required liability assets are currently financed upon occurrence of a compensation case (so-called ex-post system) through prompt collection of contributions from the other cell participants.
EAS covers deposits and investor claims regardless of the currency in which they are held. For the payment, however, the total claim is converted to Swiss francs. The exchange takes place as of the occurrence of the compensation case.
Yes, the applicable statutory and contractual provisions for offsetting and counterclaims are applied for the calculation of the compensation amount.
According to Article 55 of the Deposit Guarantee and Investor Compensation Act (EAG), EAS is subject to FMA supervision. Its Articles of Association and regulations are reviewed and approved by the FMA. Moreover, EAS is required to submit annual reports to FMA.
Depositors are clients of banks with which they hold balances that result from amounts remaining on an account or intermediate positions within the scope of normal banking transactions and claims securitised through the issue of a certificate.
Investors are clients of banks and other financial service providers with which they hold balances that result from amounts remaining on an account or intermediate positions within the scope of investment services and claims securitised through the issue of a certificate.
If the FMA or a court comes to the conclusion that the bank or other financial service provider is no longer capable of carrying on its business, it imposes the so-called compensation case (Art. 18 paragraphs 2 to 4 of the Liechtenstein Banking Ordinance (BankV)). Only then can EAS become active and start reviewing and compensating the covered deposits and investor claims.
The occurrence of a compensation case of an EAS participant will be publicly announced at www.eas-liechtenstein.li www.eas-liechtenstein.li and other media to be designated by the foundation board without delay after learning of such.
EAS will pay out compensation claims of depositors that are duly reviewed within 10 banking days, compensation claims of investors that are filed in time and duly reviewed within three months from the occurrence of the compensation case by way of electronic transfer in Swiss francs to an account to be specified by the client.
In both cases it is required that the client has specified relevant account information in time for the electronic transfer. EAS will provide the necessary registration form.
Compensation claims of depositors have not to be filed. On request, the necessary data of depositors and deposits would be transmitted by the bank to EAS.
For EAS to make a compensation payment within the statutory period, investor claims must be fully and correctly filed within one month of the occurrence of the compensation case. EAS will provide the necessary registration form and further information is made available at www.eas-liechtenstein.li.
The compensation volume is jointly made available by the EAS participants according to the EAS requirements of the cells intended for them.
In accordance with the respective model participation contracts, the basic obligations of the cell participants are as follows:
- Payment of fees and contributions
- Reporting of the number and amount of the coverd deposits and investor claims (including external auditor's confirmation)
- Confirmation of adequate liquidity of participating banks
- Free-of-charge support of the EAS for processing a compensation case
The following enterprises of the financial service industry are under the statutory obligation to join a protection scheme:
- Investment firms
- Asset management companies
- Public fund management companies (UCITS) with additional licence for individual portfolio management
- Alternative investment fund managers (AIFMs) with additional licence for individual portfolio management
No. Institutions, which are not authorised by the FMA, could not participate in the EAS. Therefore, the EAS grants basically no coverage to clients of unauthorised institutions.
Only banks and other financial service providers with a FMA authorisation are allowed to accept deposits or offer investment and ancillary services for financial instruments.
More detailed information is available at www.fma-li.li/en/.