The financial institution will therefore be a case for deposit insurance, as the authority announced in a press release on Wednesday. She justified the step with inadequate plans for the planned self-winding. According to the deposit insurance (ESA), 37.6 million deposits totaling 276.3 million euros are covered.
The comparatively low level of coverage is due to the bank’s focus on private banking, the ESA explained in a press release. So few depositors hold relatively large amounts. It is assumed that a total of 757 customers need to be compensated. “ESA will ensure rapid compensation for depositors,” assured ESA Managing Director Stefan Tacke.
Capital increase or self-winding
After months of turbulence, the FMA presented the bank’s owners with two alternatives: to carry out a capital increase of 25 million euros or to decide on an orderly self-winding. As late as Wednesday morning it was said that the bank should be liquidated. But nothing will come of this because success was not presented in a “conclusive and plausible” manner, writes the FMA. The forced closure results in a stop in payments for covered deposits: deposits, withdrawals or transfers are no longer possible.
Deposit insurance protects investors from losses, for example in the event of bankruptcy. The system provides that deposits are protected up to a maximum of 100,000 euros per person and credit institution, in certain cases up to 500,000 euros. If a security event occurs, compensation must be paid out within a maximum of seven days.
This is the fifth security case since the system was reorganized in 2019. However, Euram is likely to be the cheapest of the previous cases in terms of the covered deposits and expected payouts.
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