Guarantee of bank deposit in Europe

October 19, 2017

You have already wondered if it is possible to get your money back if your bank went bankrupt. For this reason, France established in 1999 the Guarantee Fund for bank deposits. Nevertheless, this system has limits and it is necessary to know them in order to be able to properly protect its savings.

French banks are obliged to join and contribute to this fund, which would enable each investor to be able to keep his money up to 100,000 euros per depositor and per establishment, regardless of the bank and the number of accounts held. Thus, if a person holds more than 100,000 euros in a bank, the surplus is not guaranteed. It may be recoverable if there is a bank winding-up procedure. In addition, depositors are considered creditors of the bank and not owners of their money.

But it goes much further…

Indeed, since January 1, 2016, the European Union has decided to call on depositors and savers if a bank goes bankrupt, to avoid the participation of the State and therefore taxpayers. This agreement, called “bail-in” – in comparison with the “bail-out”, which is an external bailout by the state – went unnoticed in France, voted by order to avoid debates in Parliament, is very important. If a bank goes bankrupt, savers will not bail out it. All the money that is above 100,000 euros will be taken directly by the bank as a debt. The level of life insurance is guaranteed to the tune of € 70,000. The first to pay will be the shareholders, followed by those who bought bonds and finally, if not enough, the bank will be able to draw into the bank accounts of its customers to save themselves! Depositors and savers will have to bail out at least 8% of the bank’s losses before it can call on national funds for resolution. It shows many problems and many questions. Indeed, the information that banks provide to their prospective clients to prove their financial health is not sufficiently advanced and difficult to decipher and it is a real problem of transparency for savers. Moreover, banks know that they are protected in the event of a bankruptcy, which allows them to be even less cautious on the financial markets.

Finally, it is important to note that the French banks are all much interconnected. So, if a problem happens to one of them, there is a good chance that it will lead others to it. Your assets in excess of € 100,000 will be deducted and you may not be able to recover them.It is therefore important not to put all your eggs in one basket in order to protect your capital as much as possible. CALAY advises you to open offshore bank accounts that will be more trustworthy since offshore banks usually do not lend money to their clients and do not use either. Moreover, this would allow you to never exceed the 100,000 euros guaranteed by French banks. For more information, contact CALAY Banking, your offshore banking partner!

CALAY Banking ™, the choice of prosperity in all legality!



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