EU sets new deposit reclaim guarantee

A maximum figure of £83,650 has been set as the bank deposit guarantee for European savers in a bid to protect account holders.

The European Commission said the figure - equivalent to 100,000 euros - is the most individual investors can reclaim if their bank collapses.

Seven days will be the maximum time frame for paying out compensation, rather than the three months some schemes in the EU allow, and the new limit is set to be enforced in the UK.

The Commission said the increase means 95% of bank account holders in the EU will get all their savings back if their bank fails. Compensation coverage will extend to companies, and all currencies, although deposits held by "financial institutions and public authorities" are not included.

The UK depositor guarantee was raised from £35,000 to £50,000 by the Financial Services Authority in October 2008 in the midst of the banking crisis. Customers with joint accounts became eligible to reclaim to £100,000 if their bank or building society failed.

EU internal market and financial services commissioner Michel Barnier said his plans, which need approval from MEPs and EU finance ministers, marked the Commission's latest step towards bringing transparency and responsibility to Europe's financial system.

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