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One bond trader said: "If you're an uninsured depositor at a bank in Spain you wouldn't be too happy about this.
Immediate and full payment of insured and uninsured depositor claims has both advantages and disadvantages.
The Board believes, however, that an explicit policy that requires imposition of uninsured depositor loss--no matter how small--is likely to increase the risk of depositor runs and to exacerbate the depositor response to rumors.
If, in fact, proposals that rely on uninsured depositor discipline, risk-based premiums, and structural changes in the delivery of bank services raise significant difficulties, reform should then look to other ways to curb banks' risk appetites, and to limit the likelihood that the deposit insurance fund, and possibly the taxpayer, will be called on to protect depositors.
Azerbaijan Deposit Insurance Fund (ADIF) has started payment of compensations to the last remaining uninsured depositors of Azerbaijan's Ganjabank OJSC, the ADIF said in a message Feb.
Proceeds from the sale of closed banks' properties are added to the pool of liquid assets of these banks for distribution to uninsured depositors and other creditors in accordance with the rules on concurrence and preference of credits.
Then, the bank had bailed-in its uninsured depositors and was forced to absorb the operations of its main competitor Cyprus Popular Bank, widely known as Laiki, after they both gave up their operations in Greece.
Proceeds from the sale of closed banks properties are used to increase the chances of recovery of uninsured depositors and creditors of their trapped funds while gains from the sale of corporate assets are added to the Deposit Insurance Fund, PDICs main fund source for payment of valid deposit insurance claims.
PDIC also takes over the banks ordered closed by the Monetary Board; administers closed banks' assets, records and affairs; as well as preserves and disposes such assets for the benefit of the creditors and uninsured depositors, it added.
Uninsured depositors will thus improve their chances of recovery from the assets of closed banks, since their claims will be settled ahead of other ordinary creditors.
material losses for Corpbank's uninsured depositors following the
It is unclear, however, how the authorities will be able to protect Corpbankas uninsured depositors with the government of Prime Minister Plamen Oresharski having now resigned and Parliament awaiting to be dissolved to open the way for early elections.