Other retail deposits subject to higher outflow rates: treatment of joint accounts

According to Article 25(2) (a) of Delegated Act 2015/61 “Retail deposits with total deposits balance, including all the client’s deposit accounts at that credit institution or group, exceeding € 500.000” are subject to higher outflows. How should this threshold be tested in case of joint accounts?

Suppose there are three deposits: a joint account shared by counterparty A and by counterparty B of € 600.000 (account “A+B”); another joint account, shared by counterparty A and by counterparty C, of €300.000 (account “A+C”); Counterparty C has also a € 450.000 current account on its own (account “C”). Counterparties A, B and C are classified as retail. We identified two alternative approaches to test the € 500.000 threshold: 1. “Splitting approach” Since there are two joint accounts, in order to “include all the client’s deposits accounts at that credit institution or group”, it is first of all necessary to split them equally among each holder (a treatment in line with the relevant Deposit Guarantee Scheme – DGS application) and then to aggregate the positions of each single holder with its other deposits. Following this approach, counterparty A holds € 450.000 (€300.000 from the first account plus €150.000 from the second one), counterparty B €300.000 and counterparty C €600.000 (€150.000 from the A+C account and €450.000 from its own account). As a result, under the proposed approach, only the share of deposits of counterparty C exceed the threshold and would be subject to the higher outflows treatment. 2. “Joint accounts headings treated as single clients” Under this approach counterparty “A+B” and counterparty “A+C” are considered as single clients. Accordingly joint accounts are not split among joint-account holders. The first deposit “A+B” of €600.000 shall be subject to the "higher outflows" treatment because its total balance exceeds the threshold. The second joint account “A+C” of € 300.000 and the third account “C” of €450.000 do not exceed the threshold. For sake of clarity if there was another joint account of counterparty “A+C” of €400.000, the client “A+C” would reach €700.000 (the first € 300.000 “A+C” account and the additional €400.000 account) and all the deposits of A+C would be subject to higher outflows treatment.