Contributing to the Deposit Guarantee Fund (DGF)

Introduction

The DGS Sint Maarten is financed through an ex-ante Deposit Guarantee Fund (DGF). The DGF will be built up within ten years to the target level of 7% of all covered deposits through annual contributions from covered credit institutions.

When the DGS has to reimburse depositors but the available financial means in the fund are not sufficient to finance the payments, the funding gap can be bridged by levying extraordinary contributions (ex post) and obtaining third-party financing.

Annual base contributions

Covered credit institutions in Sint Maarten contribute to the DGF through annual premiums, which are used to build up the DGF on an ex-ante basis. These contributions are calculated in accordance with the applicable legislation and are based on the size of each credit institution’s covered deposits (also deposit base). The statutory objective is to build up the DGF to a target level of 7% of total covered deposits within ten years.

Each year before 1 May, the CBCS as the administrator of the DGS, determines the annual base contributions to be paid by credit institutions. The calculation is based on the average amount of covered deposits held at the end of each quarter. In determining the base contribution, a correction factor and a risk-weight factor may be applied. This brochure gives an insight into how the annual base contribution is calculated.

Extraordinary contributions (ex post)

If the DGF does not have sufficient financial resources to cover the reimbursement under the DGS, the CBCS will impose extraordinary contributions on the remaining credit institutions. To make funds available immediately to adhere to the 20 working days reimbursement period, the CBCS may request advance payment. For a more detailed description this brochure will explain how extraordinary contributions and any advance payments will be determined and collected in the event of a DGS repayment.

Third-party financing

If the DGF needs to make funds available for DGS reimbursements and the available fund resources or extraordinary contributions are not sufficient or not available in time, the DGF may obtain (temporary) financing from third parties to bridge the funding gap.

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