Insurance of liabilities to investors

AB Šiaulių bankas liabilities to investors are insured

AB Šiaulių bankas is a participant of the liabilities to investors insurance system of the Republic of Lithuania.

Insurance company - the public institution „Deposit and Investment Insurance”, insures liabilities to investors in accordance with the procedure and conditions set out in the Law on Insurance of Deposits and Liabilities to Investors of the Republic of Lithuania.

Amount of insurance against liabilities to the investor

(protection limit)

Up to EUR 22 000      

Currency of liabilities to investors insurance benefit payments

Euro (euro cents to 2 decimal places and rounded according to mathematical rules for rounding numbers).

Object of liability to investors insurance

Insurance of liabilities to investors covers the investor's financial instruments, whatever their currency and/or cash in all currencies.

Term of payment of liabilities to investors insurance benefits

Within 3 months of the date of the insured event. The Board of the insurance company may, in exceptional circumstances and in agreement with the supervisory authority, extend this period for a maximum of 3 months.

Cases where liabilities to investors are not insured

Insurance of liabilities to investors does not cover investment risk (investment risk is the probability of incurring a loss because an investment does not make a profit or loses value).

Insurance of liabilities to investors does not cover liabilities to these investors:

1) the Bank of Lithuania;

2) credit institutions;

3) brokerage firm companies;

4) financial institutions;

5) insurance companies and reinsurance companies, insurance companies and reinsurance companies established in other Member states and third countries;

6) pension funds;

7) collective investment subjects.

Cases in which there are limitations on the benefits of the insurance of liabilities to investors

The payment of the insurance of liabilities to investors benefit may be postponed for investors or other persons referred to in Article 23(6) of the Law on Insurance of Deposits and Liabilities to Investors who are entitled to claim the investor liabilities insurance benefit and who are charged with money laundering and/or financing of terrorism regarding the legality of the acquisition of money and/or financial instruments belonging to them and/or held on their behalf, until the final court decision is made.

No insurance benefits are payable on the insurance of liabilities to investors:

1) to the Bank of Lithuania, credit institutions, financial brokerage firms, financial institutions, insurance and reinsurance companies, insurance and reinsurance companies established in other Member States and third countries, pension funds, collective investment subjects;

2) to investors who have been convicted in a criminal case for money laundering and/or financing of terrorism regarding the legality of the acquisition of money and/or financial instruments belonging to them and/or held on their behalf, until the final court decision is made.

3) to liability to investors insurance system participant's heads of administrations, board (supervisory board) and management council, persons having at least 5 percent share of the authorized capital of a liability to investors insurance system participant, persons performing independent audit on a liability to investors insurance system participant (persons who performed an audit no longer than one year prior to the day of the insured event in regards of liabilities to investors);

4) close relatives and third parties acting on behalf of the persons referred to in point 3.

Explanation of the circumstances and claims under which the relevant deposit and liability to investors insurance systems apply

Claims denominated in financial instruments are always subject only to the protection of the liability to investors insurance system.

Money of finance brokerage firm clients (investors), which are owed by a brokerage firm to an investor and held for the benefit of the client (investor) in connection with the use of the brokerage firm's investment services, and money of finance brokerage firm clients (investors) received by clients (investors) from the sale of financial instruments belonging to the client (investor), transferred (entrusted) by the client (investor_ to the brokerage firm for the purpose of investment services provided by the brokerage firm, shall be considered as liabilities to investors and such finances are covered by the insurance system of insurance of liabilities to investors rather than by the deposit insurance.

Examples of circumstances and claims that are exempted from liability to investors insurance system

1) A client holds various financial instruments with a market value of EUR 15 000 at day Y and EUR 3 000 in cash held in the client's name at bank X, which have been transferred to the bank in order to use its investment services. On day Y, an insured event occurs: bank X becomes insolvent and cannot repay the client's money and financial instruments. Is the client entitled to an insurance benefit and what should be the amount of such benefit?
Yes, the customer is entitled to an insurance benefit of EUR 18 000.

2) A client holds various financial instruments with a market value of EUR 15 000 at day Y and EUR 3 000 in cash held in the client's name at bank X, which have been transferred to the bank in order to use its investment services. On day Y, an insured event occurs: bank X becomes insolvent and cannot repay the client's money and financial instruments. Is the client entitled to an insurance benefit and what should be the amount of such benefit?
Yes, the customer is entitled to an insurance benefit of EUR 22 000.

3) A client holds various financial instruments in bank X, namely ordinary registered shares of company A with a market value of EUR 150 000 on day Y. On day Y, company A declares bankruptcy and its shares become worthless. At the end of the bankruptcy proceedings, the registration of the shares of Company A is cancelled and the shares are written off from the financial instrument accounts of all investors who held them. Is the client entitled to an insurance benefit and what should be the amount of such benefit?
The client is not entitled to an insurance benefit because market risk is not covered.

4) A client purchases ordinary registered shares in Company A for EUR 70 000 at Bank X on day Y. Following the announcement of the company's extremely poor performance, the shares depreciated within 1 month and the total market value of the shares purchased by the client fell to EUR 45 000. Is the client entitled to an insurance benefit and what should be the amount of such benefit?
The client is not entitled to an insurance benefit because market risk is not covered.

Other information about the terms and conditions of the insurance of liability to investors, the conditions and procedures for paying insurance claims

The insurance of liability to investors benefit shall be calculated and paid by the insurance company on the basis of the insurance of liability to investors system participant's liabilities to investors insurance data as at the date of the insured event, data on the investors, their liabilities to investors and the amounts of the additional liabilities to investors to be covered, and the insurance of liability to investors system participant's transferred data on the market value of the investor's securities as at the date of the insurance of liability to investors event.

For the purpose of calculating the amount of the insurance of liability to investors claim, all financial instruments and cash of a single investor (including branches, representative offices, other structural units of the investor's legal person or other organisation) which the participant in the insurance of liability to investors system is unable to repay to the investor, but which do not exceed EUR 22 000 in total payable insurance of liability to investors benefit per investor, shall be added together.

If a group of persons (a joint investment) had contractual rights of claim to money and (or) financial instruments, each person in the group is considered to be an investor, and the financial instruments and money are divided equally among each of them, unless the contracts giving rise to the rights of claim or the judgments of the courts provide otherwise.

If an investor manages money and (or) financial instruments belonging to other persons on a contractual basis, the person who owns the money and (or) financial instruments, whether by rights of ownership, trust or otherwise, and who is known or can be identified before the date of the insurance of liability to investors insured event, shall have a claim to the insurance benefit. If money and (or) financial instruments belong to several persons, the financial instruments and money are divided among each of them according to the share set out in the contracts giving rise to the claim. This provision does not apply to a management company when it manages collective investment companies' and pension funds.

The amount of the insurance of liability to investors benefit is calculated on the basis of the market value of the investor's financial instruments on the date of the insured event. For liabilities to investors in a foreign currency, the amount of the insurance of liability to investors benefit shall be calculated on the basis of the reference rate between the euro and the foreign currency, as last published by the European Central Bank on the date of the insured event, and, where the rate between the euro and the foreign currency has not been published by the European Central Bank, on the basis of the reference rate between the euro and the foreign currency as last published by the Bank of Lithuania.

The investor's right to receive the insurance of liability to investors benefit is valid for 5 years from the date of the insured event of the investor liabilities. Disputes concerning an investor's right to an insurance of liability to investors claim shall be settled by courts of general jurisdiction in accordance with the procedure laid down by law.

A person to whom an insurance of liability to investors benefit has been paid out unlawfully or in error must repay it to the Insurance of liability to investors fund. The right of an Insurance of liability to investors fund to claim reimbursement of an Insurance of liability to investors fund benefit paid unlawfully or in error shall be valid for a period of 5 years from the date of payment of the Insurance of liability to investors fund benefit. Amounts repaid or awarded shall be credited to the Insurance of liability to investors fund.

Insurance of liability to investors benefits are paid without the investor having to make a claim to the insurance company. The insurance company shall publicly inform investors within the time limits for the payment of the insurance of liability to investors benefit of the occurrence of the insured event in respect of the insurance of liability to investors and of the procedure for the payment of the insurance of liability to investors benefits, and shall make this information available on its website.

More information

www.idraudimas.lt

(Public Institution "Deposit and Investment Insurance", Savanorių pr. 5, LT-03116, Vilnius, tel. (8 5) 213 5657, fax. (8 5) 213 5546, e-mail: idf@idf.lt)