EBA · 2016_2908 Archive

Cost of living of legal persons

Regulation
Directive 2014/49/EU (DGSD)
Article
8, para. 4
Topic
Rights of depositors (Eligibility, coverage level, repayable amount, repayment, claim against DGS, depositor information)
Submitted by
Resolution authority
Submitted
2016-09-15
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Do legal persons (for instance businesses like SMEs) have a “cost of living”?

Background

Article 8(4) DGSD states that during the transitional period, where DGSs cannot make the repayable amount available within seven working days, DGSs shall ensure that depositors have access to an appropriate amount of their covered deposits to cover the cost of living within five working days of a request. This Article does not distinguish the depositors on the basis of their nature (natural or legal person). Therefore, pursuant to Article 2, paragraph 1, point 6, DGSD "depositor" means "the holder (...) of a deposit", including legal persons, excepted those mentioned in Article 5(1) DGSD; Recital 39 DGSD clarifies that the aim of Article 8(4) is "to ensure that, during the transitional period, depositors do not encounter financial difficulties in the event of failure of their credit institution". The financial difficulties may also relate to legal persons.

Answer

No, from the regular meaning of "cost of living" follows that only natural persons can have a cost of living. Therefore, DGSs, on the basis of their own data or the data provided by the corresponding credit institution, must ensure that depositors have access to an appropriate amount of their covered deposits with the aim to cover their cost of living as natural persons. This may also include those cases where a natural person cannot be legally differentiated from a deposit holding undertaking he owns.

Original source: European Banking Authority, Q&A ID 2016_2908

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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