Cyprus Mail

House approves bills regulating deposit guarantees

The House on Thursday passed two of six bills regulating the failure of banks and investment firms.

The batch of bills comprises legislation to harmonise with the European Union’s Bank Recovery and Resolution Directive (BRRD).

The island should have harmonised its legislation with the European directive by mid-2015. The delay had already resulted in the European Commission launching a reasoned-opinion procedure against Cyprus.

The finance ministry had urged MPs to pass the relevant legislation before Friday, when the EU’s Economic and Financial Affairs Council (ECOFIN) is scheduled to meet.

Earlier this week, MP were informed by finance ministry officials that the fund to protect insured depositors – up to €100,000 – through contributions by banks on their insured deposits has met its 0.8 per cent target.

A separate deposit-guarantee fund has been created for the co-operative group.

Total deposits under €100,000 in Cypriot banks are currently €24 billion.

The EU directive also calls for the creation of a second fund, designed to facilitate the orderly resolution of banks or investment firms – the target for which has been set at 1 per cent of total insured deposits by 2024.

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