Granting deposit liabilities a higher Claim class than other general creditors against the proceeds of Liquidation of an insolvent Bank’s assets, so that depositors must be paid in full before remaining creditors can collect on their Claims. Depositor Preference can take a number of different forms. For example:
- eligible Depositor Preference gives preference to all deposits meeting the eligibility requirements for deposit insurance coverage;
- insured Depositor Preference gives preference to insured depositors (and the deposit insurer under Subrogation);
- a two-tiered Depositor Preference concept, in which eligible, but Uninsured Deposits have a higher ranking than Claims of ordinary unsecured, non-preferred creditors, and insured depositors have a higher ranking than eligible depositors; and
- general Depositor Preference, in which all deposits have a higher ranking than Claims of ordinary unsecured, non-preferred creditors, regardless of their status (insured/uninsured or eligible/not eligible).