If your money is usually safer in a bank account than under your pillow, the onset of a financial crisis can be a game-changer. What will happen if a monumental crash causes the bankruptcy of the establishment? Will the State be able to puncture your woolen socks if its boxes are empty?
Two guarantee funds
The French have always preferred security to risk. This is the reason why the majority of their money is placed on regulated bank books and in euro funds of life insurance. Thanks to their capital guarantee, these financial products make it possible to recover all of your payments (excluding management fees) increased by the interest generated. At least in normal times, since nothing is less certain in case of failure of the establishment.
The previous economic crises prompted the French State to provide for compensation schemes for savers through the financial security law of 25 June 1999. The Deposit Guarantee and Resolution Fund (FGDR) was thus set up to compensate for the bankruptcy of a bank, while the Personal Insurance Guarantee Fund (FGAP) targets insurance companies. Far from being bottomless wells, these devices reach a little more than 4.2 billion euros for the first and about 2 billion for the second, which is far from covering all of the liquidity of the French. And for good reason, since the law of 1999 provides for application limits.
Protection ceilings
Current accounts, time deposits, bank books, young people's books, home savings accounts (CEL and PEL), old people's savings plans, as well as cash accounts attached to a securities account or a PEA are protected by the FGDR in the limit of 100,000 euros per depositor and per establishment, regardless of the number of deposit accounts open. Clearly, if you have 130,000 euros spread over different products in the same bank and the mechanism is activated, you will lose a maximum of 30,000 euros. On the other hand, the A, sustainable development (LDD) and popular savings (LEP) passbooks are fully guaranteed by the State and are therefore not affected by this ceiling. In addition, the FGDR provides a guarantee on securities accounts and stock savings plans up to 70,000 euros.
In addition, temporary exceptional deposits deposited less than three months before the bank default on a current account, term or an unregulated savings account, are covered up to 500,000 euros. However, this sum must come from a particular operation such as the sale of real estate, an inheritance or a donation. As for the FGAP, it protects the sums invested in life insurance and retirement savings product (old PERP, Madelin, Perco and new PER) up to 70,000 euros per saver and per establishment. The guarantee increases to 90,000 euros for pension annuities (death, incapacity and invalidity).
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Extreme cases
Since its creation, the Deposit Guarantee and Resolution Fund has been used only once, in 2010, to compensate users of securities accounts after the bankruptcy of the European private banking company, while the dedicated fund insurance never needed to be activated. In case of difficulties, the State has in fact other means of action (buyout, nationalization, etc.), upstream, to avoid the collapse of a large financial institution.
- Legislation
- Saving
- Bank
- Investment