The Greek financial sector has faced significant challenges in the past, including the debt crisis and economic recession. Despite reforms and improvements, risks persist for banks operating in the country. Factors such as macroeconomic instability, non-performing loans, and regulatory changes can impact the solvency of Greek banks. Consequently, it is vital for customers, particularly those residing outside Greece, to understand the deposit guarantee schemes in place to protect their deposits.

Bank deposit insurance plays a crucial role in securing the deposits of retail customers and small businesses. It ensures that eligible deposits are protected in the event of a bank failure, maintaining trust in the financial system, reducing the risk of bank runs, and promoting savings and investments. In Greece, the deposit guarantee scheme serves as a safety net for depositors and contributes to the stability of the financial sector.

The Greek Deposit Guarantee Scheme is managed by the Hellenic Deposit and Investment Guarantee Fund (HDIGF), a legal entity based in Athens. The HDIGF operates under the legal framework provided by Law 4370/2016 and is supervised by the Bank of Greece. The scheme’s primary objective is to protect eligible deposits and compensate depositors in case of a bank failure.

The Deposit Guarantee Scheme is activated when the Bank of Greece determines that a bank is unable to meet its obligations to depositors. To comprehend this activation, depositors should be aware of the claim filing procedures, eligibility criteria, coverage amounts, and repayment timeframes.

Claim filing procedures: When the scheme is activated, the compensation process starts automatically, and depositors do not need to file a claim. The HDIGF will contact depositors with details on compensation procedures and payment.

Claim eligibility: All deposits held by private individuals, small businesses, and non-profit organizations are generally protected. This includes current and savings accounts, term deposits, and other types of eligible deposits.

Maximum coverage amounts: The scheme covers up to €100,000 per depositor per bank. This limit applies separately to each individual bank where a depositor holds accounts.

Temporarily high balances: In specific cases, such as real estate transactions, deposits may be covered up to €500,000 for a temporary period of three months.

Repayment timeframe: The HDIGF aims to compensate eligible depositors within 20 working days from the date the scheme is activated, with a possibility to extend this period in exceptional cases.

Bank Failures in Greece: Lessons from the Past Decade

The Greek banking sector faced considerable challenges during the last decade, mainly due to the debt crisis and economic recession. Although no major banks failed during this period, many required recapitalization and restructuring to stay afloat. The crisis led to the consolidation of the banking sector, with the four largest banks (National Bank of Greece, Alpha Bank, Eurobank, and Piraeus Bank) now dominating the market.

These experiences underscore the importance of deposit guarantee schemes in safeguarding depositors’ funds and maintaining confidence in the financial system. They also highlight the need for depositors to diversify their funds across multiple banks and stay informed about the financial health of their chosen institutions.