In October 2008 the Cyprus government announced its intention to improve protection for bank depositors by increasing the deposit guarantee from €20,000 to €100,000. The necessary legislation has now been enacted and the Regulations on the Establishment and Operation of the Deposit Protection Scheme were amended on 24 July 2009 to put into effect the following changes:
- The maximum amount of compensation per depositor per bank has been increased from €20.000 to €100.000, well above the European norm of €50,000 agreed by finance ministers in 2008.
- The scheme now covers deposits in any currency, whereas it previously only covered deposits denominated in currencies of member states of the EU.
- The co-insurance element has been abolished and claims up to €100.000 are fully reimbursed (prior to the change, only 90% of the claim was reimbursed).
- Reimbursement should take place within 20 days, in line with the relevant EU directive.
Both the government and the banking industry have been at pains to stress that, while the new protection scheme offers invaluable reassurance, it is unlikely to be called upon in practice, as Cyprus banks have adopted conservative business practices and have avoided investing in toxic assets.
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