Membership and contributions to the funds
Following the implementation of the EU Deposit Guarantee Scheme Directive and Bank Recovery and Resolution Directive in Norwegian law January 1, 2019, two new funds have been established; the Deposit Guarantee Fund and the Resolution Fund.
The Deposit Guarantee Fund
The new Deposit Guarantee Fund is in fact a continuation of the Norwegian Banks' Guarantee Fund and will guarantee for the deposits in the member banks. The Deposit Guarantee Fund receives 45 per cent of existing funds in the Norwegian Banks' Guarantee Fund. This corresponds to just over NOK 15 billion, equivalent to 1.2 percent of guaranteed deposits. Further capitalization of the fund will take place through annual contributions from member banks.
All Norwegian banks, including Norwegian subsidiaries of foreign banks, are members of the Deposit Guarantee Fund and will pay annual contributions. The calculation methodology of annual contributions is described here.
The Resolution Fund
The principle behind the new Resolution Fund is that the financial sector itself, not the taxpayers, should bear the costs of dealing with failing banks. 55 percent of existing funds in the Norwegian Banks’ Guarantee Fund are transferred to the new resolution fund. This corresponds to just over NOK 18 billion, equivalent to 1.5 percent of guaranteed deposits. Further capitalization of the fund will take place through annual contribution from the financial institutions.
The law specifies that banks and mortgage institutions, as well as investment firms subject to the minimum requirement for initial capital in the Securities Trading Act, shall pay annual contributions to the resolution fund. The calculation methodology of annual contributions is described here.
