4.4.2.4 To protect depositors and investors

The fourth resolution objective concerns the protection of depositors of which the deposits are covered by a deposit guarantee scheme of a Member State and investors of which the securities are covered by an investor compensation scheme of a Member State. Under the deposit guarantee schemes of Member States deposits are covered up to an amount of EUR 100,000 per depositor.1 Deposits are basically credit balances which result from funds left in an account or from temporary situations deriving from normal banking transactions.2 All deposits maintained with banks authorized in a Member State, including – in principal – branches of third country banks, are covered by the deposit guarantee schemes, with the exception of certain deposits.3

The investor compensation schemes of Member States protect investors by providing compensation if an investment firm (or a bank providing investment services) fails to return the investor's assets. Claims typically arise if there is fraud or other administrative malpractice or when an investment firm is unable to fulfil its obligations as a result of operational errors. Under the investor compensation schemes, a minimum level of compensation per investor of EUR 20,000 should be ensured.4 Member States may provide that certain investors are excluded from coverage.5

Resolution does not constitute grounds for the activation of the procedure for compensating depositors and investors under the deposit guarantee scheme or investor compensation scheme.6 Deposit guarantee schemes can however be used for resolution financing.7