The Deposit Guarantee Fund was formed in 1998, comprised of the Government budget payment of 0.5 million lats and the same amount paid by the Bank of Latvia. Now the funds are accumulated from quarterly payments of deposit takers, — banks and credit unions, — in the amount specified by the Deposit Guarantee Law.
In October 2008 the amendments were passed to the Deposit Guarantee Law in accordance with the decision of the Council of Economic and Finance Ministers (ECOFIN) to increase minimum guaranteed deposit to EUR 50 000. The compensation in this amount is guaranteed to the clients of the Latvian banks (both natural and legal persons) per depositor per each bank, covering deposits, current account balance, salary accounts, savings accounts etc. If several accounts are at one bank in one name, they are added together.
By terms of the Deposit Guarantee Law, if the Fund's deposits are unavailable for paying out the above-named guaranteed compensations, such payments shall be made from the Government budget via FCMC. However, there has been no such case since the establishment of the Fund.
The funds in the Deposit Guarantee Fund are accumulated and managed by the Financial and Capital Market Commission (FCMC). The income obtained as a result of managing the funds is also included in the Deposit Guarantee Fund.
As concerns the deposits in the branches of foreign banks (6 in Latvia), the deposit guarantee system of the foreign country where the bank is registered applies to these deposits.