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Characteristics of Deposit Insurance Systems in Latin
America and Spain
LARC-IADI
November, 2006
Presented by:
Oscar Armando Pérez, Chairman
Instituto de Garantía de Depósitos
(El Salvador)
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Table of Contents
I. BackgroundII. ObjectivesIII. MethodologyIV. ResultsV. ConclusionsVI. Next Steps
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I. Background
June 1st, 2005: In Cartagena, Colombia, the Latin America Regional Committee (LARC) requested the Instituto de Garantía de Depósitos of El Salvador (IGD) to coordinate a survey of Deposit Insurance Systems in Latin America and Spain.
Special thanks to the Instituto para la Protección al Ahorro Bancario of Mexico (IPAB) for its cooperation.
I will go over the regional experience in this respect in the following slides.
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Financial Safety NetCountry Central Bank Deposit Insurance Agency Bank Supervisor
ArgentinaBanco Central de la República Argentina
(BCRA)
Seguro de Depósitos SA(SEDESA)
Superintendencia de Entidades Financieras y de Cambios (BCRA)
Bolivia Banco Central de Bolivia -[1] Superintendencia de Bancos y Entidades Financieras (SBEF)
BrasilBanco Central do Brasil
(BCB)Fundo Garantidor de Créditos
(FGC)BCB: Departamento de Supervisão de Bancos e de Conglomerados Bancários
Chile Banco Central de Chile Estado de ChileSuperintendencia de Bancos e
Instituciones Financieras
Colombia Banco de la RepúblicaFondo de Garantías de Instituciones
Financieras(FOGAFIN)
Superintendencia Financiera de Colombia
Costa RicaBanco Central de Costa
Rica(BCCR)
Fondo de Garantías para los inversionistas de los Bancos Privados[2]
Superintendencia General de Instituciones Financieras
(SUGEF)
EcuadorBanco Central del
EcuadorAgencia de Garantía de Depósitos
(AGD)Superintendencia de Bancos
El SalvadorBanco Central de
Reserva de El SalvadorInstituto de Garantías de Depósito
(IGD)Superintendencia del Sistema
Financiero
GuatemalaBanco Central de
GuatemalaBCG: Fondo para la Protección del Ahorro
(FOPA)Superintendencia de Bancos
HondurasBanco Central de
Honduras(BCH)
BCH: Fondo de Seguro de Depósitos(FOSEDE)
Comisión Nacional de Bancos y Seguros(CNBS)
[1] In Bolivia there is no explicit Deposit Insurance Fund. Although, there is a Financial Reactivation Fund (FRF) whose objective is to support financial institution resolutions. [2] There is no explicit deposit insurance system in Costa Rica, though there is a private banks deposit insurance fund which is managed by the Costa Rican Banks Association.
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Financial Safety Net
Country Central Bank Deposit Insurance Agency Bank Supervisor
Mexico Banco de MéxicoInstituto para la Protección al Ahorro
Bancario(IPAB)
Comisión Nacional Bancaria y de Valores(CNBV)
NicaraguaBanco Central de
Nicaragua
Fondo de Garantía de Depósitos de las Instituciones Financieras
(FOGADE)
Superintendencia de Bancos y Otras Instituciones Financieras
(SIBOIF)
Panama -[1] - Superintendencia de Bancos
ParaguayBanco Central del
Paraguay(BCP)
BCP: Fondo de Garantía de Depósitos BCP: Superintendencia de Bancos
PeruBanco Central de Reserva del Perú
(BCRP)
Fondo de Seguro de Depósitos(FSD)
Superintendencia de Banca y Seguros(SBS)
Dominican Republic
Banco Central de la República Dominicana
(BCRD)BCRD: Fondo de Contingencia Superintendencia de Bancos
UruguayBanco Central del
Uruguay (BCU)
BCU: Superintendencia de Protección al Ahorro Bancario por medio de Comisión de
Protección del Ahorro Bancario (COPAB)
BCU: Superintendencia de Instituciones de Intermediación Financiera
VenezuelaBanco Central de Venezuela (BCV)
Fondo de Garantía de Depósitos y Protección Bancaria
(FOGADE)
Superintendencia de Bancos y Otras Instituciones Financieras
(SUDEBAN)
Spain Banco de EspañaFondo de Garantía de Depósitos en
Establecimientos Bancarios[2] Banco de España
[1] There is no Central Bank in Panamá. [2] Spanish Deposit Insurance System includes three separate funds to cover the following institutions: Banks, Saving Banks and Credit Cooperatives
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II. Objectives
To compile basic information about the Deposit Insurance Systems in order to share it at a regional and international level.To build a quantitative and qualitative data base that will be periodically updated, so the practices developed in different countries will be available. To serve as a reference for the development of effective deposit insurance systems.
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III. Methodology
•Countries included in the survey•Questionnaire Format•Data Collection
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Countries included in the survey
Survey was originally oriented to IADI members countries and Spain (invited country). (9)Afterward the scope was enlarged to all the countries under LARC jurisdiction and Spain. (19)Schemes under consideration or planned: Bolivia, Costa Rica and Panama.In operation: Argentina, Brazil, Chile, Colombia, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Paraguay, Peru, Dominican Republic, Uruguay and Venezuela.
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Questionnaire Format
Original questionnaire was formulated using the proposal made by the Fondo de Garantía Financiera (FOGAFIN) of Colombia.In order to facilitate responses, a reduced version of the questionnaire (38 questions), proposed by IPAB (Mexico) was adopted.
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Data Collection
Information gathering started on August 2005 and ended on September 2006.The questionnaire requested the latest information available, which generated a disparity in the dates of the information.13 countries answered the questionnaire.For the rest of the countries, the following sources were used:– Official internet sites of deposit insurance
agencies– Surveys conducted by the IADI.– Other surveys.
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IV. Results
1. General Characteristics.2. Legal Nature.3. Characteristics of the Deposit
Insurance Fund or Reserve. 4. Coverage and Premiums
structure. 5. Payment of obligations covered
by Deposit Insurance.
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1. General Characteristics: IADI Membership
IADI Members Non Members
1 Argentina 1 Bolivia
2 Brazil 2 Chile
3 Colombia 3 Costa Rica
4 El Salvador 4 Ecuador
5 Mexico 5 Guatemala
6 Nicaragua 6 Honduras
7 Peru 7 Panama
8 Venezuela 8 Paraguay
9Dominican Republic
10 Uruguay
11 Spain
IADI Members
Non Members11
Members8
Of the 19 countries, 8 are members of the IADI.
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1. General Characteristics: Deposits Insurance Schemes
16 countries have an explicit and limited DIS Panama: In case of a bank liquidation, deposits under US$5,000 have priority over other obligations.Bolivia: deposits are ranked first and second in priority; but in case of a bank resolution, there is no limit to the preferential treatment.Costa Rica: most important banks are owned by the State. It is assumed that there is an implicit and unlimited guarantee. The oldest operating DIS in the region is the FOGADE of Venezuela (1985).The newest DIS in the region is the Comisión de Protección del Ahorro Bancario or COPAB of Uruguay (August 2005).The majority of systems were created in the last decade.In Mexico, Paraguay, Colombia and Spain, other financial intermediaries different from banks have their own DIS.
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1. General Characteristics: Membership
Explicit Deposit Insurance Systems:– Membership is compulsory in 16
countries with explicit schemes. – Even Chile: Exclusion is not an option.
Implicit Deposit Insurance Systems: – Bolivia: Financing of the Financial
Reactivation Fund is mandatory for financial institutions.
– Costa Rica and Panama: not available.
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1. General Characteristics: Board of Directors and Management Control
Board of Directors appointment– 12 countries: named by the Presidency of the
Republic, Finance or Economy Ministry, Central Bank, Bank Supervisor Agency, or even the institutions covered by the Deposit Insurance System.
– Brazil: Brazilian Banks Confederation (private)– Rest of the countries: not available or not applicable.
Board Members:– Mexico: financial institutions covered by the Deposit
Insurance Agency have no representation.– Rest of the countries: financial institutions covered
have representation at the Board.
Number of directors: – Between 3 (Argentina and Uruguay) and 8 (Spain). – Most frequent: 5 members.
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1. General Characteristics: Board of Directors and Management Control
Board Directors Period– Between 3 (Argentina, Peru and Brazil) and 8
(Uruguay) years.– Most Frequent: 4 years.
Management Control– Most of the countries (12): State Controller and/or
other type of control such as internal or external auditors, etc.
– Guatemala, El Salvador and Venezuela (3): Bank Supervisor only, or in conjunction with other controller agencies.
– Argentina, Brazil and Peru (3): External Auditors are the main control.
– Spain (1): State Controller in addition to the external auditor.
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1. General Characteristics: Staffing
Number of employees depends on: mandate (broad or narrow) and type of regime (public or private).– Private Regime:
Larger number of employees with a broad mandate: Argentina
Smallest number of employees: Spain
– Public Regime:Larger number of employees: VenezuelaSmallest number of employees:
Paraguay
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1. General Characteristics: Staffing
Total Deposits per employee:– Private Regime
Highest: Spain (US$43,946 millions)Lowest: Argentina (US$693 millions)
– Public RegimeHighest: El Salvador (US$1,029
millions)Lowest: Venezuela (US$74 millions)
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1. General Characteristics: Staffing
[1] Some figures were reported as of December of 2004 and others as of December of 2005.In the case of Mexico, total liabilities were used instead of total deposits.
Country
Number of
Employees
Total Deposits in US$
Millions [1]
Total Deposits per employee
(millions)Peru 4 10,605 2,651
Paraguay 5 1,050 210
Brazil 6 176,944 29,491
El Salvador 7 7,200 1,029
Nicaragua 9 1,852 206
Uruguay 9 8,314 924
Spain 12 521,946 43,496
Argentina 49 33,940 693
Ecuador 71 8,882 125
Colombia 100 33,517 335
Mexico 556 128,675 231
Venezuela 615 45,330 74
Information not available: Bolivia, Chile, Costa Rica, Guatemala, Panama, Dominican Republic and Honduras.
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1. General Characteristics: Coordination and Interrelation among the Financial Safety
Net members.
Coordination tools:– Most countries: in the boards of directors
there are representatives of the Central Bank, Bank Supervisor, Ministry of Finance, and insured financial institutions.
– Others: notifications, consultations or special committees that are settled by Law or inter institutional agreements.
– Exceptional cases: a dependency of the Central Bank (as a lender of last resort or as a supervisor).
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2. Legal Nature
Public and Explicit Systems: 12 countries.– 8 have their own form (independent or as
departments of other financial safety net institutions)
– 3 (Guatemala, Paraguay and Dominican Republic) have the form of a trust or fund managed by the Central Bank.
– Chile: explicit government guarantee.3 Public and Implicit Systems (government guarantee): Bolivia, Costa Rica and Panama.3 Private regime systems, incorporated companies: Argentina, Brazil and Peru.1 system under private law regime for their acts: Spain.
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3. Characteristics of the Deposit Insurance Fund or Reserve
Major source of funds– Ex ante funding: premiums paid by
insured institutions. – Chile: government resources. There is no
special institution or fund.
Back-Up funding– There is no back-up source in the case of
Guatemala and Bolivia
Indebtedness Limits– 9 countries: no limit.– 7 countries: some kind of limit.
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3. Characteristics of the Deposit Insurance Fund or Reserve
Accumulated fund balance / total deposits:– Private Regime:
Highest: Argentina (1.27%)Lowest: Peru (0.6%)Reference: Spain (0.42%)
– Public Regime:Highest: Colombia (3.28%)Lowest: Mexico (deficit)Reference: USA (0.8%)
– There is no information about the characteristics and availability of the funds.
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3. Characteristics of the Deposit Insurance Fund or Reserve: Accumulated Fund available/
Total Deposits
[1] Some figures were reported as December/2004 and others as December/ 2005.In the case of Mexico, total obligations were used instead of total deposits.
00.07
0.230.42
0.6
0.671.03
1.27
1.322.26
2.57
2.653.28
0 0.5 1 1.5 2 2.5 3 3.5
Percentage
MexicoUruguayEcuadorEspaña
PeruParaguay
El SalvadorArgentina
BrazilGuatemalaVenezuelaNicaragua
Colombia
Fund / Total Deposits
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4. Coverage and Premiums structure
Obligations covered– Most of the countries: deposits.– Spain: deposits and other obligations such as
securities. – Colombia: deposits, unemployment insurances
and other obligations .
Premium Structure– Risk Adjustment
Flat rate: 11 countries Risk based premiums: 5 countries
– Base of Calculation Total Deposits (except Mexico: total liabilities)
– Rate Lowest: Spain ( 0.06% annual) Highest: : Ecuador (0.65 annual)
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4. Coverage and Premiums structure
Country Premium (annual percentage)
Argentina 0.18
Spain 0.06
Dominican Republic 0.1
El Salvador 0.100-0.150
Guatemala 0.100-0.200
Honduras 0.100-0.250
Bolivia 0.125
Brazil 0.3
Mexico 0.4
Nicaragua 0.43
Peru 0.450-1.450
Paraguay 0.48
Colombia 0.5
Venezuela 0.5
Ecuador 0.65
Uruguay 0.10-0.20
Chile, Costa Rica, Panama NA
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5. Payment of obligations covered by the Deposit Insurance
Calculation of coverage– Coverage per depositor: 16 countries – Coinsurance: Brazil, Colombia and
Chile.
Period to pay out insured obligations varies between 30 and 90 days. Amount of coverage
– Highest: México (US$ 133,000)– Lowest: Guatemala (US$ 2,630)
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5. Payment of obligations covered by the Deposit Insurance
2,6304,0004,6515,0005,0007,5007,8907,940 8,36810,00010,00810,207
15,150 18,000
22,00025,000
133,000
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000
US$ Dollars
GuatemalaChile
VenezuelaPanamaUruguay
BrazilEl Salvador
HondurasColombia
NicaraguaEcuador
ArgentinaDominican Rep.
ParaguayPeru
SpainMexico
Amount of coverage
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V. Conclusions
Main similarities among Deposit Insurance Systems in Latin America and Spain:
– Fundamental pillar in the Financial Safety Net.
– Explicit systems and limited coverage.– Compulsory membership. – Ex ante funding through premiums paid
by covered institutions.– Accountability
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V. Conclusions
Main differences among Deposit Insurance Systems in Latin America and Spain:
– Insured amount and coverage.– Premiums calculation: risk adjustment or
flat rates.– Corporate government: Board of
Directors.– Mechanisms of participation in depositors
protection.– Origin.
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V. Conclusions
Deposit Insurance Systems in the region are here to stay and are playing an increasingly credible role in their home countries.Deposit Insurance Systems contribute to regional and global financial stability.
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VI. Next Steps
Periodic updates of information– Cooperation of countries to provide
timely information.
Close coordination with other IADI committees. – Research and Guidance Committee
Subcommittee on Establishment of IADI Database for DIS.
Results available to Deposit Insurers.
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Characteristics of Deposit Insurance Systems in Latin
America and Spain
LARC-IADI
November, 2006
Presented by:
Oscar Armando Pérez, Chairman
Instituto de Garantía de Depósitos
(El Salvador)