Belgium to seek €1.4 billion for deposit guarantee fund

Belgium to seek €1.4 billion for deposit guarantee fund
Deputy Prime Minister and Finance Minister Vincent Van Peteghem. Credit: Belga/Hatim Kaghat

Belgium’s Federal Minister of Finance, Vincent Van Peteghem, has announced that Belgian banks may need to contribute an additional €1.4 billion towards the country's deposit guarantee fund, according to Belgian newspaper De Tijd on 18 August.

In Europe, the government protects savings of up to €100,000 per person, per bank. If a bank goes into administration, the Financial Services Guarantee Fund steps in to compensate customers. Each year, this fund is replenished by an annual contribution from the banks.

Van Peteghem has prepared a bill to revise the existing system in Belgium, setting targets for protection fund deposits. The minister aims to set the target as 1.8% of all covered deposits. If passed, the Federal Government will expect the banks to contribute an extra €1.38 billion by July 2024.

Belgium’s Constitutional Court has already ruled that the Belgian authorities can request that this contribution can already exceed the minimum agreed at the European level, which is currently 0.8% of covered deposits.

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The new bill has already encountered opposition from the financial sector. Febelfin, a Belgium financial non-profit group, has said that it is opposed to the bill and the increased deposit protection contributions.

In the Belgian federal parliament, the bill has received bipartisan support. Fiscally liberal parties, such as the Mouvement Réformateur, are expected to oppose the measure.

Last year, Belgians put more than €300 billion into regulated savings accounts last year, which are protected against bank failure by the Deposit and Financial Instrument Protection Fund.

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