The compensation disbursement schemes in Latvia are:

  • The Deposit Guarantee Fund;
  • The Fund for the Protection of the Insured;
  • The Scheme for the Protection of the Customers of the Financial Instrument Market (Investors).

The Deposit Guarantee Fund. In 2025, Latvijas Banka continued to improve the framework for depositor protection and the process for the disbursement of guaranteed compensation. Regular stress-testing of the DGF is carried out under the provisions of Section 6 of the Deposit Guarantee Law. In 2025, the cross-border cooperation and disbursement of the guaranteed compensation function was tested to assess the ability of Latvian, Estonian, and Lithuanian deposit guarantee schemes to efficiently function in situations requiring simultaneous disbursements of guaranteed compensation in several jurisdictions. The test covered communication and coordination mechanisms to ensure timely cross-border disbursement of the guaranteed compensation to depositors. In 2025, the ability to secure GDF financing was also tested by requesting a loan from the participants of the GDF pursuant to Section 21 of the Deposit Guarantee Law. Additionally, the ability of the DGF to finance resolution measures of credit institutions was also assessed.

Testing the submission and acceptance process for requests to disburse the compensation guaranteed by credit institutions was repeated in 2025. This helped Latvijas Banka in preparing for the acceptance of guaranteed compensation disbursement requests after taking over such disbursements from AS Citadele banka. Latvijas Banka took over the disbursement of guaranteed compensation from AS Citadele banka for the depositors of several credit institutions – the insolvent AS Latvijas Krājbanka, the insolvent AS PNB Banka, as well as AS ABLV Bank, undergoing liquidation. As of 1 April 2025, the guaranteed compensation to depositors of the above credit institutions that are paid from the GDF are disbursed via Latvijas Banka.

Stress tests were also conducted by Latvijas Banka on the recipient lists for guaranteed compensation in all cooperative credit unions and credit institutions. This was completed to assess the ability of these institutions to prepare a list of depositors and submit the required information to Latvijas Banka in the format specified and within the deadlines.

During the reporting year, Latvijas Banka conducted one on-site inspection in the area of depositor protection to assess the quality of credit institution's depositor lists and their regulatory compliance. Furthermore, Latvijas Banka performed a horizontal inspection in all credit institutions on the entry of data in accounting records on depositors, who manage the funds of other persons, as well as on the provision of information to depositors. During the inspection, good practices and areas for improvement were identified.

Latvijas Banka prepared proposals for amendments in the Deposit Guarantee Law, laying down a 3% DGF target of the total guaranteed deposits in credit institutions and credit unions of Latvia as well as abolishing the initial payment when an institution joins the DGF.

Latvijas Banka continued to participate in the improvement of the unified bank Crisis Management and Deposit Insurance Framework. The goal of this process is to enhance the efficiency of the insolvency prevention system for credit institutions. To find out more on the process, please visit the European Commission website and the European Parliament website.

Members of the DGF make quarterly contributions to the DGF of 0.05% of the average balance of the deposits covered in the previous quarter, multiplied by the adjustment coefficient calculated using a formula fixed in the laws and regulations. Each year, the DGF evaluates the performance indicators of its members and calculates adjustment coefficients for the contributions to the DGF in accordance with the requirements stipulated in Section 8, Paragraph three of the Deposit Guarantee Law. The average adjustment coefficient for Latvia's credit institutions was 110% in 2025 and 112% in 2024 and 99% for cooperative credit unions in 2025 and 93% in 2024.

Deposit-takers made regular contributions of EUR 22.9 million to the DGF in 2025.

Latvijas Banka was responsible for the accumulation and management of DGF funds in 2025, and its balance at the end of the year was EUR 302.3 million. The basic principle in managing DGF funds is to ensure a high level of liquidity. In 2025, DGF funds were invested in short-term, liquid, fixed-income, investment-grade, euro area government securities with a maturity of up to 12 months. In 2025, the annual return on investment was 2.21%.

The Fund for the Protection of the Insured. The funds of the FPI consist of the contributions from insurance companies of 0.1% of the total gross insurance premiums received from natural persons pursuant to the classes of insurance specified by law. Since its inception, EUR 12.3 thousand of guaranteed compensation has been disbursed from the FPI. Since the accumulated holdings of the FPI funds exceeded the amount stipulated in Section 288 of the Insurance and Reinsurance Law at the end of 2015, contributions to the FPI have been suspended since 2016. At the end of 2025, there were EUR 21.0 million in the FPI. The FPI funds were also invested in short-term, liquid, fixed-income, investment- grade, euro area government securities with a maturity of up to 12 months, and the annual return on investments was 2.20% in 2025.

Protection of the customers of the financial instrument market (investors). The investor protection scheme is based on the Investor Protection Law. Compensation for each investor is limited to EUR 20 000. Latvijas Banka ensures the payment of compensation, as well as holding the funds earmarked for such disbursements and management of the investor protection scheme, while the required funds are provided by participants of the system. The Investor Protection Law does not provide for the accumulation of funds for disbursing compensation, but the financial resources can, if necessary, be provided by the scheme participants or legal entities that have been authorised to provide investment services. In 2025, improvements continued to be made to the legal framework governing the protection of investors. For the first time ever, Latvijas Banka also tested the investor lists submitted by all participants in the investor protection scheme to verify their ability to prepare and submit investor information in the required format and within the prescribed deadline in accordance with the Regulation on the Preparation and Submission of the List of Investors Entitled to Compensation.