The Raiffeisen Association, led by general secretary Johannes Rehulka, and bank chairman Willi Cernko are raising concerns about the future of the deposit protection system. They worry about how failing banks will be handled in the event of bankruptcy and who will ultimately bear the costs. They urge that the current deposit insurance amount of 100,000 euros per customer and bank should be maintained to protect savers and preserve financial stability.
In response, the Ministry of Finance is working to reassure the public that efforts at the EU level are being made to strengthen the banking sector. They emphasize the importance of maintaining strict bail-in regulations that require creditors and owners of failing banks to cover losses and costs. The Austrian deposit insurance system has been successful in the past, and they believe it should continue to protect secured savings deposits in the future.
One concern raised by domestic bank representatives is a potential expansion in the use of deposit insurance funds as proposed by the EU Parliament. This could weaken owner and creditor participation in bank failures and leave the deposit insurance pot vulnerable. Additionally, preferential treatment for deposit protection in insolvency cases could be eliminated, resulting in banks having to contribute more to the deposit insurance fund.
The debate stems from a need to improve planned resolutions for large banks in Europe, particularly in contrast to liquidations of smaller or medium-sized banks. The EU resolution law is set to expand in this area, but political resistance due to concerns about cross-border financial responsibility may delay implementation.
Overall, stakeholders are working together to ensure that the deposit protection system remains robust and effective in safeguarding savings deposits and maintaining financial stability.