I would like to draw your attention to an issue which is of great importance for Norway, namely the ongoing review of the Deposit Guarantee Scheme directive which might be entering the final stage.
The crucial issue for Norway is that the directive allows us to maintain our present level of coverage of 2 million NOK per depositor per bank (about 250 000 euro), which has remained unchanged in Norway since 1996.
On 16 Februar 2012, the European Parliament successfully voted on the ECON Committee report on the recast of the Deposit Guarantee Scheme directive, including a provision (Article 5.3a (enclosed)), which will allow Norway to maintain this important part of Norwegian financial regulation. The ECON proposal was approved with 506 votes in favour and 44 votes against.
The proposed Article 5.3a will ensure that deposits from depositors resident in Norway are covered up to the equvivialent of 250 000 euro per depositor per bank. I underline that article 5.3a will not have any distortive effects on competition, as foreign banks operating in Norway will be allowed to offer the same level of coverage to Norwegian depositors as Norwegian banks, through topping-up membership in the Norwegian deposit guarantee scheme. Since the higher coverage level may only apply to depositors resident in Norway, it will not be possible for Norwegian banks to attract deposits from depositors abroad through a high deposit guarantee.
Article 5.3a is given a general wording, but Norway is the only country that meets the conditions in the article. The Norwegian deposit guarantee scheme is a vital part of our financial regulation, and and to financial stability. If included in the EEA Agreement, Norway would be the only country in the EU/EEA to reduce the guarantee level. We would then have to reduce the guarantee level by 60 pct. (from around 250.000 euro to 100.000 euro).
I therefore hope that you will support that Article 5.3a becomes part of the final directive. If so, I would appreciate if this is communicated to the Danish presidency as soon as possible with a view to change the Council position on this issue
Please find enclosed a non-paper which outlines the Norwegian position and arguments with regard to maintaining the coverage level for the Norwegian deposit guarantee. Similar letters have been sent to all Finance Ministers in the European Union.
Yours sincerely,
Sigbjørn Johnsen
Enclosure