Joan Burton (Dublin West, Labour)
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Question 196: To ask the Minister for Finance the period for which bank depositors would have to wait for payment in the event that the deposit guarantee scheme was invoked arising out of the dissolution of a financial institution; and if he will make a statement on the matter. [3367/09]

Joan Burton (Dublin West, Labour)
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Question 197: To ask the Minister for Finance if the payout delay period for depositors in the deposit guarantee scheme for banks and building societies has been reduced from three months to three days in line with the proposals of the EU Commission on 15 October, 2008; and if he will make a statement on the matter. [3368/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 196 and 197 together.

The Deposit Guarantee Scheme in Ireland is set out in the European Communities (Deposit Guarantee Scheme) Regulations 1995 (S.I. No. 168 of 1995). Under the current legal framework, which is the same throughout the European Economic Area (EEA), the payment of compensation under the deposit guarantee scheme is to be made within 3 months from the date a bank is deemed by the Financial Regulator or a court of law not to be able to meet its obligations to its depositors. In exceptional circumstances, the period may be extended by up to 9 months if it is required.

As the Deputy states in her question, a new proposal to amend Directive 94/19/EC was published by the European Commission on 15 October 2008. While the proposal has yet to be adopted by the European Parliament, following initial consultation by the European Parliament and European Council, its main elements are: increased coverage level to a minimum of €50,000 from the entry into force date and to be set at a harmonised level of €100,000 across the Community by 31 December 2010, subject to a Commission impact assessment; expedited payment of compensation under the deposit protection scheme from the date a bank is deemed not to be able to meet its obligations to its depositors to 20 working days with a possible extension of 10 working days. The Commission must submit a report within two years of coming into force of the Directive on the effectiveness and delays of the payout procedures assessing whether further reduction to ten working days would be appropriate; and removal of the optional co-insurance provision whereby the depositor can be required to bear 10% of the loss up to the coverage limit.

The Deputy will be aware that two of the main elements in this proposal were articulated by the Government, in its decision of 20 September 2008, to increase the statutory limit for the Deposit Guarantee Scheme from €20,000 to €100,000 per depositor per institution and to disapply the 10% co-insurance requirement. Legislation to give effect to the Government decision is being finalised. My Department will also ensure that legislation to give effect to the amended Directive will be enacted as soon as practicable after its adoption.

In conclusion, the Government's objective is to ensure the long-term sustainability of the banking sector in Ireland to pre-empt any requirement that the Deposit Guarantee Scheme would have to be invoked in any circumstances.