Individuals are wondering about the fate of their deposits, their securities and their life insurance. They hear that deposits are guaranteed, but what exactly does that mean?

The rule today is €100,000 per depositor and per establishment (for a long time the guarantee was limited to €70,000). This guarantee ceiling applies regardless of the number of deposit accounts opened with the same institution. If you have a joint account with your spouse (PACS partner or any other person), you are considered as separate depositors (ie a maximum guarantee of €200,000 for the joint account).

If you have a joint account, each of the co-holders is covered by the guarantee for the part of the deposits which belongs to him, half of the balance most frequently.

If you also hold an individual bank account with the same bank, the guarantee ceiling of 100,000 euros will cover your share of the balance of the joint account and the balance of your personal account.

Which deposits are guaranteed?

This guarantee is global and covers all types of deposits: current accounts, term accounts, bank books, young people’s savings accounts, home savings (CEL and PEL), popular savings plan (PEP) bank and the cash account attached to an account securities or to a PEA.

Which banks are covered by the guarantee?

The guarantee applies to all banking establishments approved by the Prudential Control and Resolution Authority (ACPR), whether they are French banks or French subsidiaries of foreign banks.

For branches of foreign banks whose head office is located in the countries of the European Economic Area (countries of the European Union + Iceland, Norway and Lichtenstein), it is the guarantee of the country of origin that applies. . However, since January 1, 2011 , the limit of the guarantee of 100,000 euros per depositor applies throughout Europe.

You have a bank account (with a balance of €5,000) and your spouse also has a personal bank account (€3,000). And in the same bank, you and your husband hold a joint account (€6,000 or €3,000 each). You also each have a PEL (€50,000 each). You therefore have a total of €58,000 and your spouse €56,000, which you would each recover in full if this mechanism were to come into play. This guarantee would come into full effect even if you had opened PELs in the name of your three minor children and assuming that they each have €50,000. Indeed, although minors, your children will be considered as separate depositors.

What is the procedure for applying the deposit guarantee?

This guarantee only comes into play in the event of the bank’s bankruptcy and the appointment by the Prudential Control and Resolution Authority (ACPR) of a temporary administrator. The depositor does not have to take any action; it is the guarantee fund which, contacted by the ACPR, carries out an audit of the accounts. Within a fortnight, it sends a letter by registered letter with acknowledgment of receipt to each depositor, summarizing the assets held covered by the guarantee and those excluded from compensation. The depositor has seven days to contest the proposed statement. The guarantee fund then has twenty working days, from the request for intervention by the ACPR, to compensate the depositors.

Since its creation, this guarantee has never had to come into play. The guarantee fund intervened once as a preventive measure by supporting the takeover of an establishment on the verge of bankruptcy and without the depositors knowing anything about it (except a posteriori when they were informed of the change of name of their bank ). In the event of a serious, even systemic crisis, where large establishments would be affected by bankruptcy or the threat of bankruptcy, this protection could only intervene in support of that of the State.

Let us rather judge the volumes in question: faced with deposits of around 1,650 billion euros, the Deposit Guarantee and Resolution Fund has a total of 1.8 billion euros, to which we can all the same add an ability to call for exceptional contributions from its members and the possibility of borrowing.

When do you declare a bank bankrupt?

When the bank can no longer meet its commitments, which is extremely rare. If we say that European banks and especially French banks are more solid today than American institutions, it is because they are mostly investment banks and retail banks. As a result, they are less affected by the effects of the liquidity crisis on the interbank market (their deposits provide them with a certain autonomy). It is therefore understandable that by seeking to withdraw their funds, depositors would aggravate their bank’s liquidity problems and could precipitate the defaults they fear.

In the case of retail banks, their filing for bankruptcy seems difficult to imagine. To avoid the risk of a systemic crisis, banks in difficulty could either be nationalized or backed by others. And in this case, no immediate and direct consequence on the deposits. In 2008, some depositors temporarily spread their assets over several banks to stay below the €100,000 threshold and because the banks, wishing to receive cash, were then offering passbooks and term accounts on very favorable terms.

There is also a securities guarantee, capped at €70,000 per securities account holder. But such a guarantee has, even less than that of deposits, reason to play. For what ?

It comes into play if the institution, declared bankrupt, is unable to return to savers the securities that belong to them. Such cases are extremely rare, if only because bank failures are infrequent. Be aware that during the last French bank failure in 1995 (the Pallas-Stern bank), all titles were returned in full to their owners.