EU savers get 35-day compensation guarantee

Depositors in the EU will get compensation within 35 working days if their bank gets into trouble under a deal between the European Parliament and the bloc's governments, EU president France said today.

"We have an agreement with parliament," a spokeswoman for the presidency said.

Although the agreed payout time is faster than the six months of more it can take under existing EU rules, it is slower than what the bloc's executive European Commission wanted.

The reform is aimed at helping to restore people's faith in financial service after a string of banks needed rescuing with taxpayers' money.

Under the new rules, which parliament is set to adopt on Wednesday, bank accounts up to €50,000 will be fully compensated from July 2009, compared with €20,000 at present.

This will rise to €100,000 from the end of 2010.

There will be a period of five days for a bank to formally notify it is in trouble, with compensation paid up to working 20 days, with the possibility of an extension of 10 working days.

"This is a big improvement on the current situation," the presidency spokeswoman said.

EU Internal Market Commissioner, Charlie McCreevy, had proposed just three working days to notify problems at a bank with a further three working days for payouts.

Member states and lawmakers say this timescale was unrealistic. McCreevy had also wanted the 50,000 euro guarantee backdated to mid 2008 and a 100,000 euro guarantee kicking in from next year.