The deposit insurance fund commenced paying out compensation to 6500 clients of the savings fund

The National Deposit Insurance Fund commenced its 20-day period of paying compensation. After Jógazda Savings Cooperatives operating licence has been withdrawn, depositors can expect HUF equivalent of EUR 100 thousand per person as the maximum compensation amount. Pursuant to legal requirements, all insured depositors will be indemnified until 31 January.

In its Resolution No. EN-I-1/2011, the Hungarian Financial Supervisory Authority withdrew the operating licence of Jógazda Savings Cooperative. Subsequently, NDIF launched the process of depositor indemnification on 4 January, pursuant to Act CXII of 1996 on Financial Institutions and Financial Enterprises (Hpt.).

EUR 100 000 – new compensation amount

Depositors of Jógazda Savings Cooperative are due to receive the HUF equivalent of EUR 100 thousand being the maximum insurance amount, in line with the requirement that came into effect on 1 January 2011. In this case, it means HUF 27 885 000 per person (based on the central bank foreign exchange rate valid as of the date the operating licence was withdrawn, i.e. on 3 January 2011).

Jógazda Savings Cooperative has nine branches, six of which are located in county Abaúj (Gönc, Telkibánya, Encs, Novajidrány, Hidasnémeti, Abaújvár), and one each in Tiszaújváros, Kecskemét and Budapest. The credit institution had a deposit base of HUF 9.8 billion and approximately 6500 depositors on the date of closing.

As opposed to earlier cases of NDIF’s interventions, the depositors of Jógazda Savings Cooperatives need not necessarily visit a branch, given that they may receive the compensation due by mail within the next twenty days. As a convenient and safe solution, however, they may also choose to request transfer of the compensation amount to an account opened with another credit institution, thus avoiding the risk of withdrawing a large sum in cash”, NDIF’s Managing Director András Fekete-Győr stated.

Compensation methods

a) Irrespective of the compensation amount due, private individual depositors may request funds transfer to a bank account kept with a credit institution operated in Hungary. In such cases, the home branch of Jógazda Savings Cooperative needs to be informed of the details of such a bank account selected until the branch closing time on 10 January 2011. Should this not take place until 10 January, NDIF will perform the compensation using one of the following two methods.

b) Up to HUF 1 million, credit notes are used for compensation. In such cases, the clients need not visit a branch, as NDIF uses the client details held by “Jógazda” Savings Cooperative to mail the settlement of accounts and the compensation amount to the client.

c) For private individuals, compensation amounts over HUF 1 million are paid using NDIF deposit insurance cards, except if the client opted for funds transfer. Also in such cases, depositors need not visit their home branches, as NDIF sends out such deposit insurance cards by mail, after the delivery of a letter notifying of the compensation and the PIN code. The letter containing the card will describe all information needed for the use of the card.

Legal entities, unincorporated business organisations, other organisations and sole entrepreneurs need to specify a bank account number held with another credit institution, irrespective of the compensation amount due, as in such cases NDIF is only allowed to perform indemnification by way of funds transfer. In such cases, no time limit applies to such specification, i.e. it may be complied with later than 10 January 2011. However, NDIF can pay no compensation until it is done.