Insurance of deposits in banks: what does the FGVFO guarantee and up to what amount

When a bank is taken into receivership, depositors usually find out about the deposit guarantee system at that moment - and it's too late to plan. We tell you how the Individual Deposit Guarantee Fund (FGVFO) works, how much you can count on, and which deposits it does not cover at all.

What is FGVFO and how does it work

FGVFO is a state institution that pays compensation to depositors if the bank has been declared insolvent and a temporary administration has been introduced in it or liquidation has begun. All banks working with individuals must be members of the guarantee system - you can check a specific bank in section of banks on the website, where basic information about market players is collected.

The mechanics are simple: the money to pay depositors is not taken from the state budget, but from the fund that the banks themselves form with regular contributions. Therefore, guaranteeing deposits does not depend on whether the state has free funds at a specific moment - it is a separate insurance system.

How much does the state guarantee during war

Since the beginning of the full-scale invasion, a special regime has been in effect: the deposits of individuals are guaranteed in full, with no limit on the amount. This applies to both hryvnia and foreign currency accounts - the main thing is that the deposit meets the conditions of the guarantee (it was opened legally, for a natural person, without special conditions that remove it from protection).

After the end or abolition of martial law, a gradual transition to the usual limit is foreseen - the state returns to the fixed guaranteed amount not immediately, but according to a transitional schedule established by legislation. The exact size of the limit at the time of the transition should be checked on the official resources of the FGVFO closer to the relevant date, because it is a legally regulated figure that can be refined.

Which deposits are not covered by the guarantee

Full Wartime Coverage is a nice mitigation, but not universal. The following are not covered by the warranty:

• Contributions of individual entrepreneurs related to their business activities
• Funds in the accounts of persons related to the bank - managers, owners of significant participation, members of the supervisory board
• Deposits made on terms that provide for the waiver of guarantee (for example, some investment products in the form of a deposit)
• Funds in accounts for which there are court decisions declaring transactions invalid or signs of money laundering
• Electronic money and funds on cards, which are not legally a deposit in the classical sense

If you are not sure whether your product is a deposit in the classical sense or something with an investment component, it is better to directly ask the bank for written confirmation that the guarantee applies to this account.

Foreign currency deposits: what is the nuance

Deposits in dollars or euros are a separate story. The guarantee applies to them in the same way as to hryvnias, but there is a detail that often shocks depositors: compensation is paid in hryvnias at the NBU exchange rate on the day the bank is recognized as insolvent, and not on the actual payment date. If the exchange rate changes significantly during this time, no one will compensate the difference.

This is another argument to monitor the dynamics of the exchange rate and not keep the entire currency reserve in one bank - relevant exchange rate on the website and page comparing exchange rates in banks help to see how much the official rate of the NBU differs from the cash market at a specific moment.

What to look for when choosing a bank for a deposit

Guaranteeing deposits is insurance in case of problems, and not a reason not to think at all about the reliability of the bank. A few practical guidelines:

• Check whether the bank is included in the list of systemically important or at least works stably without news about recapitalization or rehabilitation
• Pay attention to changes in management and the supervisory board - this is not always an alarm signal. For example, when he headed the Supervisory Board of Sens Bank ex-head of Privatbank Bösh, this is more a story about the strengthening of management than about the bank's problems
• Do not chase the highest deposit rate without explanation - an abnormally high rate often signals that the bank is in dire need of liquidity
• Spread a large amount between several banks if you expect the return of the limited guarantee after the end of martial law

What to do if the bank was declared insolvent

If this happened to your bank, the procedure is as follows:

1. Wait for the official announcement of the FGVFO about the start of payments - usually this happens within a few working days after the introduction of the temporary administration
2. Check the fund's website for the list of agent banks through which the payment is made - it is there, and not in the problematic bank, that you will receive the funds
3. Apply with your passport and identification code to the designated agent bank
4. If the amount of the deposit exceeds the guaranteed limit (in normal, non-military mode), the balance becomes a claim to the liquidation mass of the bank - the return of such funds is not guaranteed and may last for years

Comparison: what is guaranteed and what is not

Frequently asked questions

Is there anything I need to do to make the deposit covered by the guarantee?

No, if the bank is a member of the guarantee system (which is mandatory for everyone who works with individuals), your regular deposit or current account is automatically protected. No additional applications or payments are required on your part - contributions to the fund are paid by the bank itself.

What will happen to the guarantee after martial law ends?

A gradual transition from full coverage to a fixed limited amount of the guarantee, as it was until 2022, is foreseen. The schedule and specific amounts of the transition are established by legislation, and closer to the end of martial law, it is worth checking the current figures on the official resources of the fund, and not focusing on the figures that were relevant several years ago.

Is it possible to lose the guarantee if you keep the deposit in foreign currency instead of hryvnia?

The very fact of a foreign currency deposit does not remove the guarantee - it applies to both dollar and euro deposits. The loss of part of the value is possible through another mechanism: the payment is made in hryvnias at the rate of the NBU on the day the bank is declared insolvent, so if the rate changes before the actual payment, the fund does not cover this difference.