Latvia's Ministry of Finance, working with Latvijas Banka, has prepared draft amendments to the Deposit Guarantee Law for the Cabinet of Ministers to consider on 17 March. The proposals would change how banks and credit unions contribute to the deposit guarantee fund, with the stated aims of supporting new market entrants and reducing sector payments over the medium to long term. The draft would remove the one-off initial payment currently required from newly established credit institutions and credit unions after licensing, introduce a clearer framework for calculating contributions, and allow certain expenses to be covered from income earned from managing the fund. It would also introduce a target fund level of 3% of participating members’ total covered deposits, replacing the current framework that sets only a minimum level of 0.8% without a maximum that would stop contributions. Once the 3% level is reached, calculated contributions for the following calendar year would be set at EUR 0, while Latvijas Banka would set regular contributions to rebuild the fund within a specified time if payouts or other changes reduce it below the target. Regular contribution rates would be capped at 0.05% of the average covered deposit balance in the previous quarter, except where payouts have been made and available funds fall below 0.53% of members’ total covered deposits. Latvijas Banka data cited in the release put the fund level at year-end at 2.46% of covered deposits, or nearly EUR 300 million, with management income of EUR 5.4 million in 2023, EUR 8.3 million in 2024, and EUR 4.5 million in the first three quarters of 2025; provisional estimates suggest the 3% target could be reached in 2027. The Ministry projects that, after the target is reached, annual contributions could fall to around 0.09% of covered deposits, or about EUR 9 million, compared with current average annual contributions of about EUR 22 million, and expects the revised regime could enter into force by autumn 2026.

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