What does deposit insurance mean?

In a market economy, banks may become bankrupt. A bank becomes bankrupt when the bank does not have enough money to pay its depositors. Therefore, bankruptcy is associated with the loss of savings by citizens.

Deposit insurance systems are established in order to prevent certain financial consequences of bankruptcy of a bank, and increase the security of citizens in their relationship with banks. Such systems, in case of a bankruptcy, make possible payment on insured deposits up to a certain limit. As a result, depositors will feel more secure and more protected when they use their bank because their money will be more protected in the bank than at home.

So, to insure deposits means that the savings of citizens shall be insured from the risk of bankruptcy of banks.



Role and mission of creation of Agency

The bankruptcy of a bank and its failure to pay all depositors may trigger loss of confidence of citizens toward banks in particular and in the financial system generally, and consequently the country may enter a financial and general crisis.

Deposit insurance systems generally attempt to provide maximum protection to depositors. Such systems are necessary because depositors, who have limited knowledge of finance and banking transactions, are not able to assess the bank where they have deposited or want to deposit their savings

The Deposit Insurance Agency in our country only insures savings of citizens. The Agency does not insure deposits of companies and businesses conducting production, trade or service activities.
In general, the core of the mission of the Deposit Insurance Agency is to establish public confidence in the banking system and in the national financial system generally. Because of this mission, the Deposit Insurance Agency is identified as the symbol of trust.

Once the Agency is established, for the first time the savings of citizens shall be insured from the risk of bankruptcy of banks.


The main role of the Insurance Deposit Agency is to:
• protect depositors from bankruptcy of the bank where they have deposited their savings;
• make payments based on insured deposits up to a level and according to provisions of law;
• achieve the stability of the financial system.



What is protected?

The Agency insures savings deposits in leks and foreign currency that are not used for commercial purposes. In other words, savings deposited by citizens in an insured bank in:
• time deposits in leks,
• time deposits in foreign currency,
• demand deposits in leks,
• demand deposits in foreign currency,
• certificate of deposit in leks,
• certificate of deposit in foreign currency
are insured according to law.

The above-mentioned types of deposits are subject to insurance regardless whether a depositor is resident or non-resident in Albania. An Albanian resident is an individual who has lived in Albania for at least six months.



What is not protected?

The following deposits shall be excluded from insurance and compensation provided by the Agency pursuant to the provisions of this Law (uninsured deposits):
a) deposits to the extent that they exceed 700,000 Leke (seven hundred thousand Leke) or the equivalent amount in foreign currency;
b) deposits held by any company or other juridical person;
c) deposits held at an insured bank by any director, manager or member personally liable of that bank, or by any depositor of similar status in another company in the same group;
ç) deposits held at an insured bank by any person who holds five percent or more of the equity or voting rights of that bank;
d) deposits held at an insured bank by any person who is responsible for carrying out the audits of the accounting documents of that bank, or who has a similar status in another company in the group of companies to which that bank belongs;
dh) deposits of every insured bank’ depositors that has more than 20 per cent of the preferred interest, different from the interest applied following the employee conditions for all the other depositors of this bank.
e) deposits held at an insured bank by any person who has used a deposit account with that bank for proceeds of criminal activity;
ë) non-nominative deposits, including deposits represented by bearer securities;
f) deposits held with a foreign branch office of an Albanian bank; an
g) deposits received in an account with a bank during and after the day of intervention against that bank.