On 28 October 2021, draft law 7905 (the "Draft Law") on the granting of a state guarantee to support credit lines contracted by the Luxembourg Deposit Guarantee Fund (Fonds de Garantie des Dépôts Luxembourg (FGDL)) was submitted to the Luxembourg Parliament (Chambre des Députés).
Background
The FGDL is a public body established under Article 154 of the Law of 18 December 2015 on the failure of credit institutions and certain investment firms. It is the recognised Luxembourg deposit guarantee scheme referred to in Article 4(1) of the Directive 2014/49/EU of 16 April 2014 on deposit guarantee schemes. It collects the contributions due by participating credit institutions and manages the financial means. In the event of insolvency of a member institution, it makes the repayments as instructed by the Conseil de protection des déposants et des investisseurs (CPDI, Council for the Protection of Depositors and Investors) which is the internal executive body of the CSSF in charge of managing and administering the FGDL.
Key points of Draft Law
The Draft Law shall, if adopted, amend the aforementioned Luxembourg law of 18 December 2015 to enable the Luxembourg state to grant guarantees, capped at a maximum total amount of EUR 1 billion, for credit lines contracted by the FGDL. Such guarantees will be granted for an appropriate remuneration.
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