Protection Scheme

Protection scheme of the German savings banks finance group

The German Savings Banks Finance Group has an institutional protection scheme. This scheme protects deposits held at a savings bank (Sparkasse), a federal state bank (Landesbank) and a federal state building society (Landesbausparkasse).

There has not been a single case of default by a member institution since the formation of the protection scheme in the 1970s. No customer within the Savings Banks Finance Group has lost his deposit nor related interest so far.

This scheme consists of 13 protection independent schemes:

  • eleven savings banks guarantee funds of the regional savings bank associations,
  • the security reserve of the Landesbanken and central giro institutions and
  • the guarantee fund of the central building societies.

These independent protection schemes have been consolidated in an institutional protection scheme of the German Savings Banks Finance Group in order to maximize the protection available to safeguard an institution in the event of a crisis. The German Deposit Guarantee Act (EinSiG) entered into force in Germany on 3rd July 2015. The law transposes the relevant EU Directive. The Savings Banks Finance Group realigned its proven guarantee scheme to these statutory requirements which is recognised as a deposit guarantee scheme under EinSiG.

1. Voluntary institutional protection scheme

The objective of this scheme is to protect the member institutions themselves and to avert imminent or existing financial difficulties at these institutions. To achieve this, the protection scheme can, for example, contribute new liability funds, provide guarantees or sureties vis-à-vis third parties or even satisfy third-party claims. These measures may be combined. This is designed to rectify the problems faced by the institution in question and to avoid a bank resolution with regard to the SAG [Sanierungs- und Abwicklungsgesetz (Bank Recovery and Resolution Act)].

All the securities (not of an equity / regulatory capital nature1) that Hamburg Commercial Bank AG has issued will therefore continue to fall under the institutional protection of the guarantee system of the Savings Banks Finance Group (Art. 39 (1) of the statutes).

1 especially in accordance with recital 41, 44 of the EU Commission’s Communication 2013/C 216/01 of 30 July 2013 [Banking Communication („Bankenmitteilung“)
 

2. Statutory deposit guarantee

In case the German Federal Financial Supervisory Authority ascertains a compensation case in accordance with EinSiG (e.g. if the voluntary institutional protection scheme has failed averting financial difficulties at a credit institution), the customer has a claim against the deposit guarantee scheme for the repayment of his deposits up to EUR 100,000. This compensation shall be paid within seven working days.

More information on http://www.dsgv.de/en/savings-banks-finance-group/institutional_protection_schem .

Future Protection of the Bank`s deposits

Against the background of the privatization completed on 28 November 2018 with the closing some arrangements have been made with regard to the proposed transition of Hamburg Commercial Bank from the voluntary institution protection scheme of the German Savings Banks Finance Group to the Private Banks deposit protection scheme.

These arrangements are as follows:

Hamburg Commercial Bank`s membership in the voluntary institutional protection scheme continues according to § 94 paragraph 4a statutes for another three years until 31.December 2021. All securities (not of an equity / regulatory capital nature2) that Hamburg Commercial Bank AG has issued will therefore continue to fall under the institutional protection of the guarantee system of the Savings Banks Finance Group (Art. 39 (1) of the statutes).

The seamless transition of Hamburg Commercial Bank to the Private Banks protection scheme is planned for 1st January 2022.The protection scheme consists of the Compensation Scheme of German Banks (Entschädigungseinrichtung deutscher Banken [EdB], legal deposit guarantee) an the voluntary Deposit Protection Fund of the Federal Association of the German Banks (freiwilliger Einlagensicherungsfonds des Bundesverbandes deutscher Banken e.V. [ESF]).

The admission of Hamburg Commercial Bank

  • to the EdB takes place on 1st January 2022 based on EinSiG by allocation of German Banking Authority (BaFin)
     
  • to the ESF as of 1st January 2022 requires that the Bank meets the statutory requirements for participation in the ESF at the end of 2021. The decision of the BdB Board of Directors on the inclusion of HCOB in the ESF as of 1st January 2022 was announced on 08th November 2021.

    In accordance with its statute, the ESF protects deposits of certain customers of HCOB, subject to the exceptions provided therein. The protected deposits are mainly demand deposits, time deposits and savings deposits.
    Deposits included in the Bank's own funds, liabilities arising from bearer and negotiable debt securities, and deposits from credit institutions, financial institutions, securities firms and local authorities, among others, are not protected.

    Deposits from creditors other than natural persons and foundations with legal capacity shall be protected only if
    i) the deposit is not a liability arising from a registered bond or a promissory note loan,
    ii) and the term of the deposit does not exceed 18 months. The maturity restriction does not apply to deposits that already existed before 1st January 2020. After 31st December 2019, the grandfathering pursuant to the preceding sentence shall cease to apply as soon as the relevant deposit falls due, can be terminated or can otherwise be reclaimed, or if the deposit is transferred by way of singular or universal succession.

    Liabilities of banks that already existed prior to 1st October 2017 shall in principle be secured in accordance with and under the conditions of the regulations of the statute of the Deposit Protection Fund applicable until 1st October 2017. This does not apply to liabilities of Hamburg Commercial Bank AG, as the bank was not yet affiliated to the Deposit Protection Fund at that time.

    The protection limit per creditor is 20% until 31st December 2019, 15% until 31st December 2024 and 8.75% from 1st January 2025 of the bank's own funds relevant for deposit protection within the meaning of Art. 72 of Regulation (EU) No. 575/2013. For deposits established or rolled over after 31st December 2011, the new protection limits apply from the aforementioned cut-off dates, irrespective of the time at which the deposit was established. For deposits established before 31st December 2011, the old protection limits apply until the maturity of the deposit or until the next possible termination date. You can enquire about these protection limits at the HCOB. It can also be found on the Internet at www.bankenverband.de .

    With regard to further details of the protection, please refer to § 6 of the statutes of the Deposit Protection Fund, which will be gladly provided upon request.
  • Already from 1 st January 2019 Hamburg Commercial Bank will be accompanied by the Audition Association of German Banks (Prüfungsverband deutscher Banken e.V.) during the three-year transition phase.
     

More information about private bank`s protection scheme on https://bankenverband.de/was-wir-tun/einlagensicherung/ .

Through this procedure arranged with German Savings Banks Finance Group and Federal Association of the German Banks continuity regarding the safety of Hamburg Commercial Bank `s deposits is given furthermore.

2 especially in accordance with recital 41, 44 of the EU Commission’s Communication 2013/C 216/01 of 30 July 2013 [Banking Communication („Bankenmitteilung“)

 

Maintenance and Guarantee Obligation

EU Agreement

An understanding regarding state guarantees Maintenance and Guarantee Obligation was reached between the EU Commission and the German federal government on July 17, 2003. This stipulates that Maintenance Obligation should be transformed into a market-based ownership relationship and that Guarantee Obligation should be abolished. A transitional period of four years until July 18, 2005 for full implementation was agreed upon. A grandfathering clause is provided for all commitments made prior to or during the transitional period.

The following overview contains important information on the Brussels agreement:


Maturity of Liabilities
Date of Issuance Up to July 18, 2005 July 19, 2005 to
Dec 31, 2015
After Dec 31, 2015
Up to July 18, 2001 Maintenance &
Guarantee Obligation
Guarantee Obligation Guarantee Obligation
July 19, 2001
to July 18, 2005
Maintenance &
Guarantee Obligation
Guarantee Obligation No Guarantee
After July 18, 2005
No Guarantee No Guarantee


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Under the institutional liability (Anstaltslast) the owner shall protect the bank’s economic basis, to keep it operational for the entire duration of its existence and to make up for possible shortfall by subsidies or other suitable means. The guarantee obligation (Gewährträgerhaftung) obliges the guarantor to indemnify the creditors in case of an insolvency or liquidation of the bank. It gives creditors a direct claim against the guarantor and can only be invoked if the bank’s assets are insufficient to satisfy the creditors. The guarantee obligation is neither limited in amount nor in time.

Maintenance and Guarantee Obligation (Anstaltslast and Gewährträgerhaftung) for Hamburg Commercial Bank AG

The state of Schleswig-Holstein and the City of Hamburg ratified a state treaty which stipulates that guarantee obligations are also valid for Hamburg Commercial Bank to the same extent, that is, as these obligations were valid for the previous bank entities, Hamburgische Landesbank and LB Kiel. (Art. 2 Liability for Hamburg Commercial Bank AG liabilities).