TALLINN – The Estonian government decided July 14 to compensate 80 percent of all private deposits at the bankrupt Maapank up to 100,000 kroons ($6,900) and all government deposits up to 350,000 kroons.
Deposits of education, welfare and health care institutions frozen at the bank will be fully compensated.
Estonia's opposition politicians criticized the scheme, which they say gives municipalities preference over private depositors.
But government officials were sure this was the best and fairest way to solve the problem.
"By deciding this way, the government solved the problems of the biggest number of creditors," said Heido Vitsur, economic adviser to Prime Minister Mart Siimann.
One former prime minister, Mart Laar of the Pro Patria Union party, suggested instead that only deposits of local governments be compensated.
Laar said taxpayers' money should not be used to compensate for the deposits of companies, fearing that it gives the impression that all money will be compensated, no matter what the circumstances.
He pointed to the fact that now-bankrupt car company EAG Autokeskus, known for lending money at high interest rates, is demanding money back just like private depositors.
EAG left 1,500 creditors without 90 million kroons went it went bankrupt May 25.
Thousands of small Maapank depositors have received their deposits of up to 20,000 kroons from 77 Uhispank and three Tallinna Pank branches since July 10. The process has gone peacefully up to now.
The expanded compensation scheme is estimated to cost 146 million kroons: 119.8 million kroons to private depositors, 19.5 million to local governments and 5.8 million to education and health care institutions. About 86,743 out of 91,384 depositors' claims were compensated through the first plan. The present plan will leave 361 private depositors' and 40 local governments' claims unsatisfied.
The government has decided to order an expert evaluation from an international independent institution to clarify the Maapank situation and make amendments to the legislation to avoid similar situations in the future.
