The Luxembourg Deposit Guarantee Fund (FGDL) is a financial reserve that ensures depositors are reimbursed up to €100,000 within seven working days in case of a bank insolvency in the grand duchy. Member banks finance the scheme in advance. Since its establishment in 2015, the FGDL collects contributions from participating banks, manages financial resources and disburses repayments according to directives from the Council for the Protection of Depositors and Investors (CPDI), an internal executive body of the Luxembourg Financial Sector Supervisory Commission (CSSF).

According to European legislation, every national deposit guarantee scheme must reach a capitalisation equivalent to 0.8% of the deposits it covers by 3 July 2024. In a written reply to Delano, the FGDL stated, “We can confirm that the FGDL reached the target level of 0.8% of covered deposits at the end of 2018 and in line with the growth of guaranteed deposits.”

The FGDL representative also noted, “In addition, article 180(1) of the Law of 2015 states that when the target level set in article 179(1) is reached, the member institutions shall continue their contributions to build up a buffer of additional financial means of 0.8% of the covered deposits within eight years.”

Consequently, between 2019 and 2026, Luxembourg intends to reach an additional 0.8%, totalling 1.6% of covered deposits by 2026. The latest data from the European Banking Authority shows that, as of 31 December 2023, the total deposits covered under the guaranteed deposits mandate in Luxembourg reached €37.327bn, with the FGDL holding financial means of €516.446m, representing 1.38%, well above the minimum 0.8%.

As of June 2024, there are a total of 86 banks and credit institutions covered in Luxembourg under this scheme.

This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. .