Banks that bail themselves out with their customers’ money in the event of bankruptcy: an unlikely scenario a priori, and the goal that has already happened in 2013 in Cyprus. The authorities had caused a sensation by involving large investors holding more than €100,000, to the aid of the country’s banks.
A bank, in case of bankruptcy, can puncture individual deposits to bail out.
It is an element that all the clients do not have to mind, but the answer is yes. “In the event of bankruptcy, the individual customers of a bank are considered to be creditors, the same as all the entities on which the institution owes money. They can therefore potentially be used to absorb the losses,” recalls Charles Constantine-Vallet, a lawyer specializing in banking law. However, several warranties protect the depositors, so that they may not lose everything.
What are these guarantees?
Deposits on the current account, passbook, account, term, PEL, CEL, booklet Young, gold account-species of the PEA are covered up to € 100,000 per customer, per bank. This amount is calculated by adding up all the amounts placed on these media. Please note, the amounts placed on Booklet A, LDD, and SARA are subject to a separate warranty, which is managed by the State, and reached 100,000 euros also.
Life insurance is a further guarantee that plays. It is 70.000 euros per customer per institution. For those who hold the securities (stocks, bonds…), the warranty is also of € 70,000. Attention, some investments do not benefit from the guarantee, and in particular the company savings Plans, PERCO, PERP, or the notes, coins, and objects entrusted to the service safe deposit box in your bank.
I’ve heard that the rules changed in 2016. What is it?
The principle of a guarantee of bank deposits does not date from yesterday but has been the subject of a European directive, as early as 1994 and the deposit guarantee Fund exists in France since 1999. This mechanism, however, has been recently reinforced by means of a new European text, published in 2014, and brought gradually under French law. Thus, the compensation period is past the 1 last June from 20 to 7 business days, deposits outstanding (the sale of real estate, estate, etc.) are now supported up to € 500,000, and banks need to send every year to their customers, in 2016, a document detailing the mechanism of deposit guarantee.
The State may not intervene to prevent the clients from being punctured.
If, however, he is not obliged to do so when it is a private company. In addition, another European law could reduce its future role in the resolution of banking crises. To avoid the mess, Brussels has defined the order in which creditors should be sought in the event of bankruptcy. Clients have a status that is relatively protected: they are coming, of course after the shareholders, but also after several other creditors “classic”. Only a few preferred creditors (the State, employees, etc.) are their priority. “But it is a double-edged sword: in the past, in the event of the bankruptcy of a big bank, the State intervened in most cases, even if there was no force. Now, it can be argued that resolution mechanism, to refuse to the pot,” says Charles Constantine-Vallet.
I have more than 100,000 euros in the bank, what to do to protect my money from bankruptcy?
For large estates, fearing to see they’re going up in smoke their savings, the best solution is to open accounts in several banks, never to exceed 100,000 euros. Note: for an online bank, even when it is a subsidiary of a traditional property is also recorded as a single institution, at least when there is not a single brand (such as Hello Bank by BNP Paribas). Remains as an increase in the bank accounts can seriously complicate the management of your money…
The warranty of up to € 100,000 will work-does it really in the event of a problem?
This is a real question, because the deposit guarantee Fund and resolution (FGDR), which is funded by a fee paid by the banks, currently has only a little more than € 3 billion in its funds, an amount that is expected to rise to 5 billion by 2024. A straw, knowing that the amount of the deposits to cover is close to… 1,000 billion euros.
On this point, the guarantee Fund wants to be yet to be reassuring: “Put it next to the current resources of the guarantee fund with the total amount of bank deposits covered no sense. With regard to best banks being systemic in nature, the European mechanisms in place to deal with a potential problem in a proactive way, to avoid their closure and, therefore, compensation. As for the other institutions, in the case where one of them would go bankrupt, experience shows us that the guarantee fund would be largely able to compensate depositors,” says François de Lacoste Lareymondie, a member of the management board of the FGDR.
But not all of them have this vision: “If several major banks fail at the same time, the funds would obviously not be sufficient to compensate all the world. This mechanism of deposit guarantee is based entirely on trust, and a little bit like the bank notes which are not, in the end, only a piece of paper. It is a real taboo, but a taboo useful because it allows the system not to collapse,” said Charles Constantin Vallet.