Deposit Insurance

Deposit Insurance

Deposit Insurance

The banking groups in Germany ( private banks, savings banks, cooperative banks, public banks and building societies ) have their own independent security systems. The legal scope is governed by the Deposit Guarantee and Investor Compensation Act in § § 4 and 5: EUR 100,000 per creditor are secured.

A German unit , run under private law banking institution in difficulties, the compensation scheme German banks GmbH ( EdB ) as statutory deposit guarantee charge. Most private banks are connected on a voluntary basis in addition to the Deposit Protection Fund of the Association of German Banks (BdB). He is liable for any individuals against damage from where the legal protection ceases, up to a maximum of 30 percent of the liable capital of each member bank. Which corresponds to the amount in each bank can be queried online.

Its border security reduces the BdB in the coming years in stages to a more realistic level from: January 2015, 20 per cent of the liable capital, then in January 2020 to 15 percent in January 2025 to 8.75 percent. Although few institutions to their customers denied the safety net of a voluntary coverage , there was in this district, most bankruptcies. Private bank Reithinger, BKMU Bank, BFI Bank and Bank noa are examples, they offered only the minimum legal protection.

Savings and cooperative banks are freed by the German legislator of the assignment to an appropriate compensation scheme , since they stand to each other in unlimited amounts within their organizations for the liquidity and solvency of the member institutions . This is the so-called Institute adhesion.

Public banks are members of the compensation scheme of the Association of German Public Sector Banks . On a voluntary basis, the institutions are also the Deposit Protection Fund of the Association of German Public Sector Banks connected eV, which assumes a hedge of deposits in unlimited amounts.

In turn, the building societies EdB is the statutory deposit insurance. On a voluntary basis, some of the building societies in the building society deposit guarantee fund eV member that secures up to a total amount of EUR 250,000 per private customer. All the above current membership lists published on the Internet, so that anyone can verify the membership of the individual bank.

The systems are powered by annual contributions and special payments if necessary by the member institutions. How much money lying dormant in the pots, is a well kept secret. But the fact is that already met with the bankruptcy of Lehman Brothers, the German subsidiary of the Deposit Protection Fund of the BdB to its limits , and the federal government stepped in with a state-guaranteed loan. A failure of the greats in the system or a reasoned banking crisis can not yet mastered so well filled Fund. A residual risk is always there. Therefore it is important that institutions solid economies by identifying risks , be priced and not go into too many of them. In addition, a hard financial supervision is required.

A problem with the voluntary scheme and the Institute liability is the fact that they are not enforceable. Investors must have confidence that he will receive benefits and that his bank is actually based in an emergency. The lack in the statutes legal claim is justified by the fact that the device would otherwise be an insurance policy , which would cause higher insurance taxes by accumulating effort.

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