Why are there unclaimed deposits with banks
Deposit protection for overnight money and fixed-term deposits
Security for overnight money and fixed-term deposits
Investing money in overnight money is one of the safest of all and brings significantly higher interest income compared to a savings book or current account. The statutory - and in this country usually also additional deposit protection - is a main argument for this form of savings.
In many cases, however, the statutory deposit insurance is a rather abstract term for savers. It is pointed out again and again that credit balances - whether overnight deposits, fixed deposits or savings accounts - are protected by law, but what does that actually mean and how safe is the money at foreign banks in times of crisis? In the following we offer a comparison of different security systems, take a look at the ratings of the respective nations and explain the fundamentals of the security of capital.
The statutory deposit insurance for savings deposits
In terms of the key data, the statutory deposit insurance is simple: The protection applies to 100,000 euros per customer and bank. All deposits that a saver has with a credit institution are taken into account. If the compensation event occurs, the processing may currently not take longer than 20 working days after the claims have been asserted. These regulations have been implemented across the EU.
|Validity of the protection limit||Security limit in euros per customer||Protection applies to x percent of the deposits|
|Safety limit since January 2011||100,000 euros||100 %|
|Safety limit from July 2009||50,000 euros||100 %|
|Safety limit until July 2009||20,000 euros||90 %|
How are financial products hedged?
You can see in the graphic below which financial products are covered by deposit insurance or other compensation systems and to what extent
Deposit insurance for all EU member states
For other countries, of course, different amounts of deposit insurance apply. We have listed the different deposit protection limits within the EU for you:
|country||Deposit protection limit|
|States within the EU or Europe|
|Great Britain||85,000 GBP|
|Norway||100,000 euros for EU offices or cross-border activities, NOK 2 million for investors in Norway|
|Sweden||100,000 euros if you have a branch in Germany, 1,050,000 Swedish kronor if you are based in Sweden|
|Switzerland||100,000 Swiss Francs|
|States outside the EU or Europe|
|United States||$ 100,000|
The European Bank Resolution Directive - trap for balances of EUR 100,000 or more
The European Bank Resolution Directive (BRRD) including the "bail-in" clause has been in force since January 2015 (interested readers can find the legal text on eur-lex.europa.eu). The danger that this poses to savers with deposits above the legally secured EUR 100,000, but also to owners of subordinated bonds and shares, if their bank is threatened with a haircut, can be observed in Italy at the beginning of 2016: There were four credit institutions there whose bad loans in a so-called "bad bank" were outsourced.
The result: around 10,000 owners of subordinated bonds and shares in the institutions concerned are now threatened with losses. A privately financed compensation fund with a volume of up to 100 million euros is intended to cushion the investors' losses. However, this only helps investors who would otherwise lose more than half of their savings. In the case of subordinated bonds worth 450 million euros and shares worth 300 million euros, even the 100 million euros of the compensation fund should not be enough.
Hence our recommendation at this point:
Never invest more money with banks in the EU than is covered by the respective statutory deposit insurance. The same applies to banks in Germany: Balances of more than EUR 100,000 should ideally be distributed over several banks, as there is only an actionable claim for compensation within the framework of the statutory deposit protection!
Deposit insurance in Germany
Choose your bank carefully
The European rules for bank resolution have been in force since January 1, 2016. These stipulate that creditors of the banks are liable in the event of insolvency - as well as the taxpayers (more on this in our guide to the banking union).
On the one hand, this affects investors, i.e. holders of shares or bonds of the institution concerned, and on the other hand, savers as well: only deposits up to 100,000 euros are covered by the statutory deposit guarantee and thus protected against access by creditors.
Danièle Nouvy, head of the European banking supervision, said on this subject in an interview with the "Süddeutsche Zeitung": "Savers should choose their bank very carefully".
Savers who want to invest more than EUR 100,000 should distribute their money to different banks - ideally with different security systems and the best possible rating (our editorial team has prepared the ratings of over 150 banks for you).
Money market funds are also an alternative, as these are special assets that are protected from access by creditors of the bank.
Innovations from July 3rd, 2015:
On July 3, 2015, the new Deposit Protection Act (EinSiG) came into force, which implements the European Deposit Protection Guidelines in German law. What remains unchanged is that customers of a financial institution (including savings banks or cooperative banks) have a statutory claim of up to 100,000 euros in the event of compensation. This right applies to all 28 EU countries.
More security when saving abroad
If a foreign bank has a branch in Germany, the German deposit insurance will reimburse its customers for their money in the event of compensation. The prerequisite for this is that the bank associated with the domestic branch has its headquarters within the European Economic Area. In addition to the countries of the European Union, these states also include Iceland, Liechtenstein and Norway. For savers, this removes an uncertainty that previously existed when investing money in the account of a foreign bank. In the event of compensation, the German deposit guarantee will contact the foreign protection system at the bank's registered office without any action on the part of savers and ensure smooth compensation. This means that savers no longer have to grapple with claims for compensation in a foreign language.
What should I do in the event of compensation?
Those affected do not have to apply for compensation independently. The deposit guarantee system takes over the establishment of contact. A statement is only required for amounts over 100,000 euros.
Incidentally, banks have an obligation to provide information, i. H. they must explicitly inform their customers of their entitlement to compensation. The information must be provided in writing - once when the account is opened and regularly thereafter (once a year).
Legal basis of deposit protection
The former Deposit Protection and Investor Compensation Act (EAEG) has been divided into the Deposit Protection Act (EinSiG) and the Investor Compensation Act (AEG) since July 3, 2015. The EinSiG regulates deposit insurance in Germany.
How well are the statutory deposit guarantee systems financially equipped?
The statutory deposit guarantee systems as well as the recognized institutional guarantee systems are required to save up to 0.80% of the covered deposits in a deposit guarantee fund by 2024. Our infographic shows the current status of the coverage ratio in the individual euro countries:
We have calculated on a separate statistics page how the volume of insured deposits, the available reserves and thus the coverage ratio of the statutory deposit insurance systems have developed over time in the individual European countries:
Deposit insurance coverage rates in Europe since 2015 »
In exceptional cases, deposits are protected up to 500,000 euros
As of July 3, 2015 in exceptional cases Deposits of savers are legally protected up to an amount of 500,000 euros. This is what the federal cabinet decided in November 2014. Of course, the extended protection does not apply to all deposits, but only to special cases:
- Income from the sale of a privately used property
- Severance payments
- Pension equalization after divorce
- Payouts as part of the company pension scheme
In addition, the extended protection is only valid for six months from receipt of the money in the account.
Summary: From July 3, 2015, deposits are legally protected up to an amount of EUR 500,000 if they come from private property sales, a severance payment, a pension adjustment or company pension scheme. The protection is valid for a maximum of six months from receipt of the money on the account.
Further innovations from May 31, 2016
From May 31, 2016, the period for repaying savings will only be 7 days (up to then 20 working days). The statute of limitations for claims will in future be 10 years - this is what the new law on deposit protection provides.
Savings banks and cooperative banks also have to pay in
Furthermore, savings banks and cooperative banks must also pay into the new security fund. The existing pension funds, which the savings banks and cooperative banks have already built up, can, however, obtain official recognition as a deposit guarantee system.
In addition to the previous cooperative protection scheme of the Federal Association of German Volksbanks and Raiffeisenbanks (BVR), there is now also the BVR Institutssicherung GmbH, which is officially recognized as a deposit protection system. The new BVR Institutssicherung GmbH covers the legally prescribed deposit insurance up to 100,000 euros per customer / bank. The BVR's protection scheme, organized as a cooperative, represents a voluntary extended deposit protection through institute protection (institute protection is the task of both protection systems)
Statutory and extended deposit insurance
Deposit insurance in Germany is extremely stable and organized. First and foremost, it is based on the legal systems, e.g. B. the compensation institution of German banks GmbH (EdB) and compensation institution of the Federal Association of Public Banks, the deposits with 100,000 euros per customer and bank. For amounts beyond this, the voluntary securing anchors apply - e.g. B. the deposit protection fund of the Federal Association of German Banks and the deposit protection fund of the Federal Association of Public Banks in Germany - whose protection limit currently provides 20 percent (since 2015) of the relevant liable equity of the respective bank or 100 percent in an unlimited amount.
The deposit protection fund of the Federal Association of Public Banks in Germany (ESF) has a total volume of 0.10% of the sum of the deposits of all members to be protected. The companies pay an amount of 0.005% of their assessment base on September 30, but at least EUR 2,500.
In addition, there are the two association systems of the Volks- and Raiffeisenbanken and the savings banks, which also promise practically unlimited protection through institutional insurance: the security scheme of the Federal Association of Volksbanks and Raiffeisenbanks and the liability association of the Sparkassen Finanzgruppe. These systems are based on the mutual support of the member companies, with the savings bank association operating its own regional support fund. Previously, these systems were exempt from being assigned to the statutory deposit guarantee systems. This special regulation will no longer apply in the future.
Caution: Never invest more than 100,000 euros in the same bank, even if it is a member of one of the voluntary security systems. There is only a legally enforceable claim to compensation within the framework of the statutory deposit protection. The extended security schemes are voluntary. If the pot of a voluntary security fund is empty, savers (proportionally) also get empty!
No legal entitlement to benefits from voluntary security funds
A judgment by the Berlin Regional Court (Az. 10 O 360/09): "In principle, bank customers have no legal entitlement to payments from the deposit protection fund of private banks. Liabilities incurred by a bank from the assumption of debt do not meet the statutory requirements according to § 6 No. 1 SEF for a benefit from the deposit protection fund. " (Source: full text judgment on www.openjur.de)
Banks in the German deposit guarantee systems
In the following, we have outlined how the deposits of private customers are protected by the statutory deposit protection or the deposit protection fund of the Federal Association of German Banks. For amounts up to 100,000 euros, which should affect the majority of all investors, the statutory deposit protection is usually sufficient. If you want to invest more, you should pay attention to an additional deposit protection. Important: The extended deposit protection is usually voluntary, i.e. without any legal entitlement.
Extended deposit insurance systems in Germany
Deposit protection of selected banks with overnight money
The amount of deposit protection of the banks we tested with overnight or fixed-term deposits can be found in the "Deposit protection" column of our comparisons and calculators. The information provided there always applies per customer and account. For joint accounts with two account holders, the who per account holder applies:
Deposit protection for foreign currency accounts
On July 3, 2015, the European deposit insurance will be implemented in national law in Germany. For savers who want to invest money in a currency account, this brings the greatest possible security, because: from this day onwards, deposits in accounts in foreign currencies are also covered by the statutory deposit insurance. If a bank active in Germany is part of the extended deposit protection scheme via the protection fund of the Federal Association of German Banks or the deposit protection fund of the Federal Association of Public Banks in Germany, its additional protection also applies to accounts in foreign currencies. In the event of compensation, i.e. if the bank managing the account goes bankrupt, compensation will also be carried out for foreign currency accounts in euros.
Reorganization and Liquidation Act (SAG) - Deposits over EUR 100,000 in danger?
In particular, savers with a total balance (added up over possibly several accounts) of more than EUR 100,000 at a (!) Bank should carefully control their investment behavior since January 1st, 2015. Why? On the one hand, as already mentioned, the statutory deposit protection in Germany is limited to 100,000 euros and with it the legally enforceable claim for compensation. On the other hand, the German Reorganization and Liquidation Act (SAG) makes it clear what can be done with higher deposits.
The SAG has been implementing EU rules (according to SRM) since it came into force in January 2015 and is intended to prevent taxpayers from having to bail out banks. For example, the resolution authority can use the principle of creditor participation to write off a bank's liabilities in whole or in part or, for example, to convert them into shares in the institution. Alarming for savers: The resolution authority can also withhold deposits of over EUR 100,000 from bank customers simply by administrative act in order to wind down or reorganize a distressed bank in an orderly manner.
A look at the BaFin publication on the law on the restructuring and resolution of credit institutions quickly shows the explosiveness. BaFin wrote in the publication dated January 5, 2015 that you just mentioned:
"In the future, the instrument of creditor participation will be of particular importance. Shareholders and creditors can now participate in the losses and recapitalization of the institute in the event of a crisis. The aim is to no longer finance the management of banking crises with taxpayers' money.
In order to ensure that in the event of a crisis there are sufficient liabilities to be able to use the instrument of creditor participation, this stipulates that the institutions must hold a minimum amount of suitable liabilities. How high this quota is is determined individually for each institute. "
The all-clear comes from the Association of German Banks: For banks whose extended deposit protection runs through the Association of German Banks, its deposit protection fund would step in if BaFin should write down the liabilities of a troubled credit institution.Investors would not have to fear any losses, even with deposits of more than EUR 100,000, because: If deposits are affected by bail-in measures that are carried out in accordance with the Reorganization and Liquidation Act, this represents a security case within the meaning of the statutes of the deposit protection fund ; consequently, in the event of a bail-in, these deposits are protected to the same extent as in all other security cases.
Editor's recommendation: Never invest more than EUR 100,000 in a bank. Distribute larger savings to several carefully selected banks to reduce risk. Placing part of the liquid assets in a third country is also an option. When looking for suitable offers to diversify the money as recommended, our help Overnight money calculator and our Time deposit calculator.
Deposit insurance in countries outside the EU
Deposit insurance in China
Since May 1, 2015, China has also introduced deposit insurance for savers. From this point onwards, savings deposits up to an amount of 500,000 yuan (currently around 65,000 EUR) per saver will be protected. Higher savings deposits remain unsecured.
With the introduction of deposit insurance, the Chinese government wants to reduce risks in the financial sector and save savers the nervousness of (actual or suspected) difficulties in individual banks. So far, however, bank failures in China have not been the order of the day, as the state has guaranteed liquidity and solvency at all times. Nevertheless, there were already bank runs on several institutions in eastern China in 2014, based on rumors of their insolvency (see reports on Reuters.com or the FAZ).
Conclusion on deposit insurance within the EU
When opening a call money account in one of the EU countries, the deposit protection limit should always be observed, even if bankruptcy is unlikely. You can see how high the security limits of individual banks are from our comparisons in the "Deposit protection" column:
EU deposit insurance
Proposal by the EU Commission for a uniform EU deposit guarantee
On November 24, 2015, the EU Commission presented its plans for a regulation of a Europe-wide deposit insurance scheme (European Deposit Insurance Scheme - EDIS). These plans envisage that from 2017, uniform protection for bank deposits in Europe will gradually be set up. The EU deposit insurance is intended to provide greater security for savers in the various member states and to increase financial stability within the EU. The introduction of EDIS would mean that all depositors in the Banking Union would have the same protection regardless of their place of residence. The model for EDIS is the American deposit insurance FDIC. The EU deposit insurance forms the third pillar of the banking union.
How does the EU deposit insurance work?
From 2017, all banks will have to pay into national security funds - initially 0.18 percent of their savings deposits. The proportion will gradually increase to 0.80 percent by 2024. The national funds then flow into a uniform EU fund. Between 2017 and 2020 the EU fund will act as a reinsurance system, i. H. the money from the pot is only distributed if the national security systems are insufficient. Joint liability for national and European security instruments will be established by 2024. The EU share increases annually. From 2024, only funds from the EDIS pot should flow. The goal is a total amount of approx. 43 billion euros in the European security fund. In the event of a bank failure, the fund is replenished with extra contributions from the other banks.
All member states are free, in addition to the 0.80 percent, to collect further deposits for national security purposes.
Which countries are involved in an EU deposit insurance scheme?
The 19 euro member states would be required to participate. In addition, other EU states can also participate, e.g. B. Bulgaria or Romania.
How high is the protection of the deposits within the framework of the EU deposit insurance?
The new pot still protects bank customers' deposits up to 100,000 euros per person. Deposits in accounts and savings books are protected. The deposit protection applies to all banks in Europe. Savings banks, Landesbanken and cooperative banks are also not excluded. So far, the respective states have been individually liable for this sum.
Criticism of the EU deposit insurance from Germany
The EU Commission regards the establishment of the European Deposit Insurance Scheme (EDIS) as a logical consequence of the creation of a unified banking supervisory authority and a resolution authority. However, the federal government rejects the submitted plans. The main criticism is the communitarisation of the deposit guarantee systems in the EU. This sets the wrong incentives and does not reduce the risk of bank failure. The Federal Government wants to prevent German bank customers from ultimately being held liable for possible bank failures in other EU countries.
The German Savings Banks and Giro Association (DSGV) agreed with this opinion.
The Deutsche Kreditwirtschaft (DK) also rejects the Commission proposal and opposes "decidedly against the proposed reallocation of the existing security funds and future contribution payments." In addition, the DK does not see the EU resolution authority as a suitable provider of European deposit insurance.
Wirtschaftswoche issue 49 from November 27th, 2015
Mark Fehr summed up the most important argument against EU deposit insurance in an article in Wirtschaftswoche issue 49 of November 27, 2015: "The plan sets the wrong incentives and does not make Europe's banks safer, but more insecure".
The idea behind it: currently only 14 of the 28 member states of the EU have built up their respective national security funds or have fully filled them. The other 14 member states would not only be rewarded for their default. They would also be deprived of the incentive to protect their deposits as best as possible. In an emergency, the EU will take care of it when its safety catch is completely filled in 2024.
In his article, Mark Fehr also refers to the recent reform of the deposit insurance scheme in the USA, which served as a blueprint for the new EU deposit insurance scheme. Result: "The balance sheet risks increased especially for those banks that particularly benefited from the higher protection." The technical term behind it is the moral hazard, behind which the fact hides the fact that risks are taken all the more frivolously, the more completely others are liable for them.
Despite the rejection from Germany, the EU Commission's proposal can be implemented. It is sufficient for a majority of the EU countries to decide in favor of implementation in the EU Council (at least 55 percent of the member states).
Critical words also from Bundesbank President Jens Weidmann in the "BILD"
Bundesbank President Jens Weidmann also criticized the planned procedure for implementing the EU deposit guarantee. The "BILD" newspaper said: "The requirements for a European deposit insurance are not met. The state of the national banking systems still depends heavily on the national financial and economic policy ..."
Actual expropriation of German bank customers and transfer union through the back door
Clear words also come from MEP Michael Theurer (FDP) in a press release on his website. In it he describes the plans as "de facto expropriation of German bank customers" and as "transfer union through the back door".
Hans-Werner Sinn, President of the Ifo Institute, calls EU deposit insurance "catastrophic insanity"
In issue 50 of Wirtschaftswoche on December 4, 2015, Hans-Werner Sinn, head of the Ifo Institute, wrote that "the advised national security funds could not offer protection to the still healthy countries even if they were full". The background to this statement is that the volume of the national security fund should only comprise 0.80 percent of the covered deposits. The hope of some politicians that losses for Germany would be limited to the maximum liability of the national security fund, he calls "an illusion, because the creation of a common European deposit insurance after exhaustion of the existing security funds would automatically put a strain on the international community".
EU deposit insurance has an inadequate legal basis
An expert opinion by the German banking industry confirms the inadequate legal basis for a European deposit guarantee system (EDIS). According to Prof. Dr. Herdegen, the European Commission uses Article 114 of the Treaty on the Functioning of the European Union (TFEU) as the basis for the planned European Deposit Insurance Scheme (EDIS). However, this is insufficient as a legal basis. According to the expert opinion, it could "be used for measures aimed at harmonizing legal and administrative provisions of the member states. However, only if this harmonization serves to remove obstacles to market freedoms or distortions of competition".
In addition, the expert opinion comes to the conclusion that "contributions that would have to be paid by the banks directly to EDIS would constitute levies (taxes) within the meaning of the exception of Article 114 (2) TFEU". The Deutsche Kreditwirtschaft comes to the conclusion that an amendment to the contract on the working methods of the European Union is necessary in order to transfer sovereignty over the planned fee to an EU agency if it collects large amounts of contributions from credit institutions. Interested readers can find more on this topic in an article in the "02elf Abendblatt".
What are the proposals made by the EU Commission on October 11, 2017?
The criticism of EDIS has resulted in the introduction of the European deposit insurance being delayed. The original plan can no longer be implemented in this way. That is why the EU Commission presented a revised concept on October 11, 2017.
There should also be two levels:
- A reinsurance phase
- A co-insurance phase
The reinsurance phase should be shorter. The second stage should only be passed if the risks have been reduced.
In the reinsurance phase, EDIS would only support the national security systems. It would contribute money for a limited period of time if the national guarantee systems did not have sufficient funds to pay out secured deposits in the event of a crisis. The national security systems would have to repay the money to EDIS and continue to protect deposits at the national level.
In the co-insurance phase, EDIS would then be more and more responsible for deposit insurance instead of the national systems and would also cover losses.
Special states: Deposit insurance in various European states
Deposit insurance in Austria
Update from July 2015: Austria reforms deposit insurance from July 2015
The draft law from the Austrian Ministry of Finance is due to come into force in July 2015. This would make the statutory deposit insurance in Austria a thing of the past, and the state would no longer be the first to be liable if banks went bankrupt.
"The state withdraws from the deposit insurance", writes DiePresse.com. This makes it clear what is happening in Austria at the moment. The noble goal of the European Union to improve the deposit insurance in the individual states backfires completely.
So far, the Austrian deposit insurance provides that the banks are liable up to a sum of 50,000 euros in the event of bankruptcy. The state guarantees the second 50,000 euros up to the EU-wide security limit of 100,000 euros per customer as part of the statutory deposit insurance.
Emergency fund set up for the banks
For the purpose of reforming the deposit insurance, an emergency fund will be set up and filled with 1.5 billion euros. This emergency fund is intended to secure deposits of up to EUR 100,000 per customer in the event of Austrian banks going bankrupt.
Now one might say yes: it's nice that the state is no longer liable when banks go bankrupt. But conversely, this also means: once the pot is empty, then it is empty. And 1.5 billion euros is not really a lot if you consider the sum of the deposits of larger banks.
Is nothing really going to change for savers?
According to the Austrian Ministry of Finance, nothing should change for savers. But is it really that simple? Not at all. The discontinuation of the state guarantee in the area of deposit protection throws the entire previous system of protection over the heap. Because from summer the state has nothing to do with securing the deposits of its savers. In the worst case scenario, there is a risk of a fiasco for savers in Austria if even one large institute should go bankrupt. Not to mention several bank failures. The press also comes to this judgment:
The bankruptcy of a major bank will collapse the system
The emergency fund for the banks, which is supposed to secure the deposits within the framework of the specified security amount of 100,000 euros per customer, will not, however, be filled with 1.5 billion euros from the start. The banks in Austria are only obliged to replenish their own funds to secure their deposits by 2024 - and this gradually.
Even then, its content would only include 0.80 percent of current deposits in Austrian banks. It is estimated that the banks' emergency fund will contain around € 745 million in 2020. In 2024 it would then be the targeted 1.491 billion euros. There will be a risk assessment, which should provide the basis for how much money which bank has to pay into the emergency fund.
It is already foreseeable that the emergency fund will not be able to absorb the damage in the event of a bankruptcy of a larger financial institution and to pay out the savers to the full extent of the deposit protection.
Make one out of five security systems
So far there are five different security systems for savers' deposits in Austria. The Raiffeisen banks, the Volksbanks, the savings banks, the state mortgage banks and the private banks each have their own systems for securing the funds invested. This should come to an end in 2019, after which there should only be a single deposit guarantee, with the aforementioned emergency fund.
But this emergency fund is still empty, the money that this pot should contain at some point has to be paid in first. According to this, 150 million euros are to flow into the fund every year on the part of the banks. The change should apply as early as July of this year, but it is still unclear which bank has to pay how much into the emergency fund. The new system is anything but ready to go, but it should be launched this summer. Should a bank fail in the coming years, a financial disaster in Austria is likely to be inevitable.
Deposit insurance in Austria until July 2015
In Austria, every banking association has its own security system. Exact figures on the contributions or the assets of the respective fund are not published online. On the deposit insurance side of the banks and bankers, it simply says: "We point out that we cannot provide any information about the creditworthiness of our member institutions." The security limit for all systems corresponds to the requirements of the European Union.
Deposit insurance in Latvia
On January 1, 2014, Latvia became the 18th country to join the euro zone and introduced the euro as its national currency. All savings deposits are subject to the statutory deposit protection of up to 100,000 euros per customer. Protection is provided by the Deposit Protection Fund of Latvia (Noguldījumu garantiju fonds).
|Latvia: Noguldījumu garantiju fund|
|Deposit Guarantee Fund||-|
|Security limit||100,000 euros|
Deposit insurance in the UK
In Great Britain, two authorities are involved in banking supervision - the Financial Conduct Authority (FCA) is responsible for the correct behavior of banks and consumer protection, and the Prudential Regulation Authority (PRA) takes care of the capitalization of banks and insurance companies. The Deposit Protection Fund (Financial Services Compensation Scheme) protects the deposits of private customers up to an amount of 85,000 GBP (which corresponds to approx. 100,000 euros). More than 900 banks, building societies and credit unions are under the protection of the FSCS. The reimbursement period is 7 days.
|United Kingdom: Financial Services Compensation Scheme|
|Security limit||£ 85,000|
Since the coverage for deposits at British banks was raised to 85,000 British pounds by the British deposit insurance scheme FSCS at the beginning of 2017, the maximum amount covered by the British deposit insurance scheme is currently around 99,700 euros.
This corresponds roughly to the EU legal obligation of the member states to guarantee an amount of cover equivalent to 100,000 euros.
The European Deposit Protection Directive obliges the member states to adjust their coverage in the event of unforeseen events such as currency fluctuations after consulting the Commission. That was done in January 2017 by the FSCS.
Note on Brexit: The referendum on the British exit from the EU on June 23, 2016 does not change anything in the statements. Initially, the deposit protection remains at £ 85,000. The subject of deposit insurance will be taken up at a later date as part of the unbundling negotiations between Great Britain and the EU, but it is not up to date.
Deposit insurance in Malta
Malta has been a member of the European Union since 2004. Accordingly, the EU-wide harmonized deposit insurance also applies in the southern European island state. This amount of a maximum of 100,000 euros per depositor per credit institution is secured via the deposit protection fund "Depositor Compensation Scheme". The reimbursement period in the event of failure of a credit institution is 20 working days. The banking sector in Malta comprises 23 banks.
|Malta: Depositor Compensation Scheme (DCS)|
|Representative Offices Financial service providers||2|
|Security limit||100,000 euros|
Deposit insurance in the Netherlands
Update from 2015: Change in the funding of deposit insurance
In 2015, the Netherlands will also change the financing of their deposit insurance in accordance with the EU resolutions on the harmonization of European deposit insurance. By 2024, 0.80 percent of the protected deposits should then be available as security assets in the national security fund. All banks will pay into this fund on an annual basis.
Statutory deposit insurance in the Netherlands
The Dutch deposit insurance system still has a security limit of 100,000 euros per customer and bank. The fee system of the security fund "depositogarantiestelsel" managed by the Dutch central bank has meanwhile been extensively modernized. The future goal is assets of one percent of the deposits to be protected. That corresponds to an amount of almost four billion euros. According to estimates by the deposit guarantee system and the Ministry of Finance of the Netherlands, it will take 15 years before this volume is reached.
If you are a saver and want to find out more about deposit protection in the Netherlands, you can do so by calling # 31 (0) 800/0201068 or http://www.dnb.nl. All information is also available in English on the website of the Dutch Central Bank.
Compensation case process
If the Dutch central bank determines the event of compensation, savers are usually informed personally. It also publishes the case in question on its website (http://www.dnb.nl). Savers can now assert their claims and apply for a refund of their deposits on the Central Bank website notified to them within three months of the claim event being declared. The application must be submitted in English. The central bank begins repayment no later than 20 working days after determining the event of compensation. She has seven days from the start of repayment to compensate all savers.
Deposit insurance in Sweden
Sweden is one of the countries in Europe that has consistently received top ratings from all agencies. When it comes to deposit insurance, however, savers have to be careful and differentiate between whether they are saving with a Swedish bank with a branch in Germany or whether they are investing their money directly with the bank in Sweden.
At Swedish banks with a branch in Germany, deposits of up to EUR 100,000 per customer and bank are protected by law. IKANO Bank is one of these banks.
Customer deposits at banks based in Sweden, on the other hand, are since January 1, 2021 amounting to up to 1,050,000 Swedish crowns Legally protected for each saver and bank. As a look at a currency converter shows, the deposit protection in this case can temporarily amount to less than the 100,000 euros per saver and bank known in Germany. Investors who have invested their money in banks such as Klarna or Nordax Bank should therefore always have a look at the current exchange rate between the Swedish krona and the euro.
Deposit insurance in Norway
Like Sweden, Norway is given top marks by all rating agencies. Here, too, savers have had to take a closer look since January 2019 to see how high the deposit protection is that applies to them.
Before 2019, all savers had a uniform deposit protection of up to 2 million Norwegian kroner per customer (approx. 200,000 euros). Since 2019 it has become more complicated for citizens of the European Union. For Norwegian banks with branches in the EU, a deposit protection of up to 100,000 euros has been in effect since then, while for investors in Norway the deposit protection of up to 2 million NOK per customer continues to apply.
Some Norwegian banks have also organized their business as cross-border activities. That means they also operate in the EU from Norway. These banks also include the Monobank, BN Bank and Complete Bank, which can be accessed via WeltSparen. Until 2018, they were also covered by deposit protection of up to NOK 2 million per customer. Since 2019, however, deposits at these banks have been protected up to 100,000 euros per customer.
|Norway: Norwegian Banks ’Guarantee Fund|
|Security limit||100,000 EUR (for EU citizens)|
The country ratings
If one takes into account not only the structure of the deposit guarantee systems, but also the ratings of the countries, the overall picture is quite positive. With the exception of Latvia and Malta, which three rating agencies only give an “average creditworthiness”, Germany, Austria, the Netherlands and Great Britain all achieve ratings that reflect a high level of security for investors. The outlook is also largely stable. Some agencies are a little more pessimistic. Malta is the only one of the nations compared here that has positive signs for the future.
|country||Short Therm||Long Therm||was standing|
|Albania||B.||-||-||-||B +||B1||-||-||Apr 21|
|Belgium||A-1 +||P-1||F1 +||R-1 (high)||AA||Aa3||AA-||AA (high)||Apr 21|
|Bulgaria||A-2||-||F2||-||BBB||Baa1||BBB +||-||Apr 21|
|Denmark||A-1 +||P-1||F1 +||R-1 (high)||AAA||Aaa||AAA||AAA||Apr 21|
|Germany||A-1 +||-||F1 +||R-1 (high)||AAA||Aaa||AAA||AAA||Apr 21|
|Estonia||A-1 +||-||F1 +||R-1 (middle)||AA-||A1||AA-||AA (low)||Apr 21|
|Finland||A-1 +||P-1||F1 +||R-1 (high)||AA +||Aa1||AA +||AA (high)||Apr 21|
|France||A-1 +||-||F1 +||R-1 (high)||AA||Aa2||AA-||AA (high)||Apr 21|
|Greece||B.||NP||B.||R-4||BB-||Ba3||BB||BB (low)||Apr 21|
|Great Britain||A-1 +||-||F1 +||R-1 (high)||AA||Aa3||AA-||AA (high)||Apr 21|
|Italy||A-2||P-3||F3||R-1 (low)||BBB||Baa3||BBB-||BBB (high)||Apr 21|
|Ireland||A-1 +||P-1||F1 +||R-1 (middle)||AA-||A2||A +||A (high)||Apr 21|
|Latvia||A-1||P-2||F1||R-1 (low)||A +||A3||A-||A (low)||Apr 21|
|Liechtenstein||A-1 +||-||-||-||AAA||-||-||-||Apr 21|
|Lithuania||A-1||-||F1 +||R-1 (low)||A +||A2||A.||A.||Apr 21|
|Luxembourg||A-1 +||-||F1 +||R-1 (high)||AAA||Aaa||AAA||AAA||Apr 21|
|Malta||A-2||-||F1 +||R-1 (middle)||A-||A2||A +||A (high)||Apr 21|
|Netherlands||A-1 +||P-1||F1 +||R-1 (high)||AAA||Aaa||AAA||AAA||Apr 21|
|Norway||A-1 +||-||F1 +||R-1 (high)||AAA||Aaa||AAA||AAA||Apr 21|
|Austria||A-1 +||P-1||F1 +||R-1 (high)||AA +||Aa1||AA +||AAA||Apr 21|
|Poland||A-1||P-1||F2||R-1 (low)||A.||A2||A-||A.||Apr 21|
|Portugal||A-2||P-3||F2||R-2 (low)||BBB||Baa3||BBB||BBB (high)||Apr 21|
|Sweden||A-1 +||P-1||F1 +||R-1 (high)||AAA||Aaa||AAA||AAA||Apr 21|
|Switzerland||A-1 +||-||F1 +||R-1 (high)||AAA||Aaa||AAA||AAA||Apr 21|
|Slovakia||A-1||-||F1 +||R-1 (middle)||A +||A2||A-||A (high)||Apr 21|
|Spain||A-1||P-2||F1||R-1 (low)||A.||Baa1||A-||A.||Apr 21|
|Czech Republic||A-1 +||P-1||F1 +||-||AA||Aa3||AA-||-||Apr 21|
|Cyprus||A-3||NP||F3||R-2 (middle)||BBB-||Ba2||BBB-||BBB (low)||Apr 21|
|All statements without guarantee|
The following graphics show how these ratings are to be classified:
High security of savings
The bottom line is that the deposits are currently safe in all countries - at least up to 100,000 euros. However, savers who choose a bank domiciled abroad must be aware of the fact that in the event of compensation they generally have to contact the relevant deposit guarantee system.
The 10 most important questions about deposit insurance
1. How high is the statutory deposit insurance?
The statutory deposit insurance (in Germany e.g. via the compensation scheme of German banks GmbH) protects deposits up to an amount of 100,000 euros per customer. All banks are obliged to belong to a corresponding compensation scheme (see: Deposit Protection and Investor Compensation Act - EAEG).
Exceptions are Sparkassen, Landesbanken, Landesbausparkassen and cooperative banks that have their own security systems. Although they are no longer exempt from being assigned to a deposit guarantee system, they can have their internal systems recognized - as stated in the Deposit Guarantee Act of May 28, 2015. This has also happened. Both the institutional security of the Sparkassen-Finanzgruppe and that of the BVR have been recognized by the Federal Financial Supervisory Authority (BaFin).
Also anchored in the Deposit Protection Act is the obligation that German deposit protection systems must build up a minimum of 0.8% of the deposits covered. The statutory right to compensation may also include claims to interest. The claim for compensation is reduced to the extent that the loss of assets caused by the compensation event is compensated for by third party payments (EAEG § 4 Paragraph 3).
2. Does the statutory deposit insurance only apply in Germany?
The European Union (EU) has set itself the goal of uniformly protecting the deposits of private customers in its member states. Accordingly, the banks concerned are obliged to belong to a state deposit guarantee system in the respective country. The current requirements are regulated in the EC directives 94/19 / EC and 2009/14 / EC. The member states can, however, stipulate better conditions in their national legislation. The maximum guaranteed amount is 100,000 euros per customer.
The deposit protection up to 100,000 euros applies in Belgium, Bulgaria, Denmark, Germany, Estonia, Finland, France, Greece, Great Britain (here: 75,000 GBP - approx. 88,000 euros), Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Sweden, Slovakia, Slovenia, Spain, the Czech Republic and Hungary.
There are deviating regulations z. B. in Norway (2 million NOK), Iceland, Switzerland (100,000 CHF) and Russia.
3. How are deposits over 100,000 euros protected?
In addition to the statutory deposit guarantee, many private banks in Germany have an extended (voluntary) deposit guarantee, e.g. B. through the Federal Association of Public Banks in Germany e.V. or the deposit protection fund of the Federal Association of German Banks (BdB). With these additional security systems, deposits from private customers are often secured in the millions or even indefinitely. However, as a rule, legal claims against the funds are excluded. In addition, all services are only provided on the basis of the performance of the relevant fund.
In addition to the deposit protection funds, the savings banks and Volksbanken & Raiffeisenbanken have their own network systems. These security systems are based on the solidarity principle, i. H. if an associated institute becomes insolvent, the other members of the association assume its liabilities. Deposits are insured here in practically unlimited amounts.
4. How safe will my money be if the deposit protection fund's protection limit drops in the future?
In 2015, the protection limit of the deposit protection fund of the Federal Association of German Banks fell from 30% to 20% of the liable equity of the respective financial institution. This development is unlikely to affect normal savers, as the following example shows. In it we presented the protection of deposits from private customers with regard to the development of the protection limit.
Source: Tagesgeldvergleich.net/Consorsbank/Volkswagen Bank
Worth knowing: The percentage security limit of the deposit protection fund of the Federal Association of German Banks (BdB) will be further reduced in the coming years. After the reduction to 20% in 2015, another to 15% will follow on January 1, 2020. As of January 1, 2025, the percentage will then only be 8.75%. of liable equity. As our example shows, the deposit protection remains high. Even if a bank only had at least the estimated equity capital of 5 million euros in this country, the minimum security would still be 437,500 euros in 2025. With an assumed average savings balance of 23,108 euros (as of 2016 - source: Bundesbank / Postbank) sufficient. In addition, the statutory deposit protection of up to 100,000 euros continues to apply.
* Average values - source: Bundesbank / Postbank
5. How much money does the deposit protection fund of the Federal Association of German Banks contain?
In general, no position is taken on the amount of the deposit protection fund (BdB). Estimates assume around 5 to 5.5 billion euros. Elsewhere, a "low double-digit billion amount" is mentioned. The reason for the less transparent behavior is, among other things. with competition law reasons. After all: Since the year 1976, the Settlement Fund has handled more than 30 compensation cases and always met the claims made.
6. How can I tell if my bank is safe?
In general, it is recommended to always observe the state deposit insurance, i. H. Park at a bank for no more than 100,000 euros. If you want to invest more capital, you should divide your money over several financial institutions if necessary. Ideally, the investment amount can be distributed within the three-pillar banking system - i.e. across private banks, savings banks, and Volksbanks and Raiffeisenbanks. We also recommend that you always take a look at the creditworthiness of the banks. How this is going can be seen from the ratings of the rating agencies. More on this can be found in our separate guide.
At banks that are located in other European countries, it should be checked whether a deposit guarantee exists. Usually, the deposits are protected up to 100,000 euros via the deposit insurance that is uniformly regulated across Europe. In case of doubt, the respective state is liable for these security systems, so that creditworthiness comes into play again - in this case the corresponding country ratings.
7. How does the europ. Banking union looking to deposit insurance?
In the context of the financial crisis, the idea of a banking union was forged, which should bring more security and stability to the European financial system in the coming years. We have already presented details on this here. Among other things, normal savers should benefit from the reform.
A first pillar of the banking union is already in place: since November 2014, the European Central Bank (ECB) has taken over the supervision of around 120 systemically important banks (see Single Supervisory Mechanism, SSM - uniform European banking supervisory mechanism). The most important cross-border financial institutions with total assets of more than 30 billion euros are controlled by the ECB according to uniform criteria. Among the 120 big banks are also 21 German financial houses. The remaining 6,000 or so banks in Europe are still subject to national financial supervision. However, the ECB has generally reserved the right to intervene in an emergency - which many experts see critically.
The second pillar is the Single Resolution Mechanism (SRM). The latter is supposed to restructure or wind up ailing banks. In this context, the establishment of an emergency fund is planned, into which the banks of the euro zone will pack 55 billion euros within 8 years. The financial institutions will pay into the country’s own pots until 2022, and the funds will flow together from 2024. The extent to which the amount is sufficient to protect systemically important banks from bankruptcy can, however, be questioned.
The last pillar is of particular relevance with regard to the savings deposits of private customers: deposit insurance.Based on a uniform system (Deposit Guarantee Schemes - DGS), deposits are protected up to an amount of 100,000 euros. The chain of liability provides that first the owners (or shareholders) and creditors of a troubled bank are called in to rescue. The bottom line is that they have to account for at least 8 percent of the balance sheet total. If there is not enough money, customers with deposits over 100,000 euros will also be claimed. If the capital is still insufficient, money is injected from the bank resolution fund.
8. How long does the payment take in the event of compensation?
Since May 31, 2016, the payment deadline in Germany has been 7 working days. Within this time window, the saver must get their money back through the deposit insurance. (Directive 2014/49 / EU). The claims of savers expire after five years.
9. How many Germans have savings deposits over 100,000 euros?
In 2014, according to a Forsa survey, the proportion of people with savings of more than 100,000 euros was around 5 percent. 1,676 people between the ages of 18 and 69 were surveyed.
Source: Bank of Scotland
10. How safe are overnight money and fixed-term deposits?
Call money and fixed-term accounts are among the investments with which there is practically no risk. If the statutory deposit insurance is observed (up to 100,000 euros), the saver can basically lean back and relax. If higher amounts are to be invested, the investor should familiarize himself with the extended deposit protection systems that we have outlined on this page. Certainly, other financial investments may offer better prospects of returns, but the risk usually increases with the expected interest rate.
Author: Mario Hess
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