How Latvia's Deposit Guarantee Fund protects savers
If a Latvian bank or credit union becomes unable to pay out deposits, each client is guaranteed compensation of up to €100,000 per institution. The Bank of Latvia administers the fund, which currently holds over €312 million.
Latvia has operated a deposit guarantee system since 1998, protecting deposits held by individuals and businesses at banks and credit unions. Since 2015 the system has followed a new Deposit Guarantee Law aligned with EU directive requirements, ensuring a uniform level of protection across the European Union.
How the guarantee works
When the Bank of Latvia determines that a credit institution or credit union can no longer pay out deposits, depositors receive guaranteed compensation within seven working days, without waiting for insolvency proceedings to conclude. The guarantee covers all types of deposits in any currency up to €100,000 per institution, with balances across multiple accounts at the same bank added together. If deposits are spread across several institutions, each carries its own separate €100,000 guarantee.
In certain cases — for example, when funds credited within the previous three months came from a property sale or state compensation payments — an individual may claim an additional €200,000, bringing the total possible payout to €300,000.
Fund financing and state backing
The fund is financed through regular quarterly contributions from banks and credit unions, calculated according to their deposit volumes and risk profiles, plus investment income. Amendments effective since June set the fund's target size at 3% of total covered deposits nationwide. As of the end of June this year, the fund held €312.671 million. If funds run short, the Bank of Latvia can borrow from other institutions or, as a last resort, draw on the state budget — as happened in 2011 following the insolvency of Latvijas Krājbanka, when about €477 million had to be paid out.
The most recent guaranteed payouts involved Baltic International Bank SE in 2022 (€43.7 million) and the Pūnas Cooperative Credit Union in 2024 (€213,000).
