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Regulators of Bank Deposit Guarantee Funds

How much money can I recover in case of bankruptcy of my bank?



The Deposit Guarantee Fund for Credit Institutions ("FGD") was created by Royal Decree-Law 16/2011, of October 14. It has its own legal personality, with full capacity to carry out its purposes under private law, and its headquarters are in Madrid.

The purpose of the FGD is to guarantee deposits in money and securities or other financial instruments constituted in credit institutions, with a limit of €100,000 for money deposits or, in the case of deposits denominated in another currency, its equivalent by applying the corresponding exchange rates. Additionally, the FGD guarantees the following deposits, regardless of their amount, for three months from the moment the amount has been paid or from the moment said deposits have become legally transferable: a) Those from transactions with real estate of a residential nature and private nature; b) Those derived from payments received by the depositor on a timely basis and are linked to marriage, divorce, retirement, dismissal, disability or death; and c) Those that are based on the payment of insurance benefits or compensation for damages that are the consequence of a crime or a judicial error. In addition,guarantees 100,000 eurosfor investors who have entrusted securities or other financial instruments to a credit institution. These two guarantees offered by the FGD are different and compatible with each other.

In order to fulfill its deposit guarantee function and in defense of depositors whose funds are guaranteed and of the FGD itself, the FGD may adopt measures to support the resolution of a credit institution charged to the deposit guarantee compartment. Exceptionally, as long as a resolution process has not started, the FGD may use its resources to prevent the liquidation of a credit institution in the legally provided cases.

Summary of the Swiss system

The deposit protection system will be used when a bank Swissbreak. In fact, in this casecustomers could lose their deposits, at least in part.

Depositor Protection
Depositor protection in Switzerland consists of the following essential elements:

* The rules
The legislator has set strict rules for a bank to accept customer deposits. The regulations stipulate, for example, that banks must maintain sufficient capital and liquidity to be able to repay their clients' deposits at any time. Similarly, there are prescriptions for how banks should be organized.

* Surveillance
The Swiss Financial Market Supervisory Authority, FINMA, continuously monitors banks to ensure that these strict regulations are met. If a bank is in a difficult situation, FINMA can also impose protective measures or reorganization measures to avoid bankruptcy.

* System stability
the Swiss National Bank (SNB) can take measures to maintain the stability of the system.

* Deposit guarantee
the deposit guarantee scheme kicks in if a bank fails anyway. In the event of bank failure, the deposit guarantee system protects customer deposits untilCHF100,000against losses.

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