We advised the Estonian Guarantee Fund (Tagatisfond) in relation to a reusable credit line contract to be concluded between Tagatisfond (as the borrower) and the Republic of Estonia (as the lender).
The first project of its kind
The credit line has a withdrawal period of 3 years and a contract term of 5 years, with a maximum limit of EUR 720 million in 2023, EUR 750 million in 2024 and EUR 785 million in 2025. It is meant for the deposit guarantee sub-fund, which is one of the five sub-funds of Tagatisfond. The purpose of the deposit guarantee sub-fund is to pay compensation to the depositors in the event of a possible loss (e.g. insolvency of a credit institution).
The case was unique because Tagastisfond and the Estonian Ministry of Finance (representing the Republic of Estonia) have never concluded a reusable credit line contract before. Furthermore, the contract will have a national effect, including providing security to all Estonian depositors.
Protection of funds
The Estonian Guarantee Fund is a legal person in public law founded under the Estonian Guarantee Fund Act on 1 July, 2002. The objective of Tagatisfond is to guarantee, under the conditions and to the extent provided by the law, protection of funds deposited by clients of credit institutions (depositors), clients of investment institutions (investors), unit-holders of mandatory pension funds and policyholders under insurance contracts for a mandatory funded pension, and accumulate funds for financing of the implementation of the crisis resolution tools and rights provided for in the Estonian Financial Crisis Prevention and Resolution Act, thereby increasing the reliability and stability of the Estonian financial sector.
Our services and client team
We advised Tagatisfond on all matters related to the reusable credit line contract. Our work on the matter also included an analysis and incorporation of the laws and regulations specifically applicable to such an arrangement, including the Estonian Guarantee Fund Act, the State Budget Act, etc.