A solid financial system
What will happen with my savings if the Bank goes bust?
The Spanish National Financial system is solid and has a wide net of organisms for the control and supervision of the Bank activity in order to put a stop, from the roots, to any problem that may arise.
Countries that are more exposed to the contagion of the financial crisis derived from the subprime mortgage crisis are those who have over valuated property prices, or companies or individuals who are excessively in debt.
Old crisis such as Argentinean "corralito" and the bankrupt of Banesto in 1993 contributed for our bank system to become stronger. This system has now enough means to detect a financial problem and put a solution so consumers will not be affected. In Spain, there are several National organisms to look for the security of users of Financial Institutions Funds for Bank Deposits Guarantee
They guarantee Bank clients of the refund of Bank deposits and financial assets to a specific limit. This institution also reinforce the solvency and operating status of a Bank in a difficult situation in order to defend the interests of both the depositors and the Fund itself.
The Spanish Guaranteeing system is made of three different institutions:
1.- Fund for the guaranteeing of Money deposits in Banks, (Fondo de Garantía de Depósitos en Establecimientos Bancarios (FGDEB),
2.- Fund for the guaranteeing of Money deposits in Savings Banks ( Fondo de Garantía de Depósitos en Cajas de Ahorros (FGDCA) y
3. - Fund for the guaranteeing of Money Deposits in Credit Cooperatives. Fondo de Garantía de Depósitos en Cooperativas de Crédito (FGDCC).
Every Bank, Saving Bank and Credit cooperative needs to obligatorily be a member of its respective Fund
Foreign Banks operating in Spain, when they are not members of the European Union or when their deposits are not guaranteed in the origin country need to be a member of the FGDEB.
The National Gazette ( Boletin Oficial del Estado) publishes those institutions that are members of each of the said funds. These funds have their own patrimony coming from annual contributions of the member institutions. These contributions are established by Law. Exceptionally some extraordinary contributions can be asked and even the Bank of Spain can be asked to make contributions to the fund.
Offered guarantees
* How much is paid?Money deposits: 20.000 € per person or company
Financial assets deposits: 20.000 € per person or company
* When are they paid?
In two different occasions:
a) If a Bank/Saving Bank/ Credit cooperative is declared bankrupt
b) If a Bank cannot paid back deposits which are due for payment and if the Bank of Spain consider the Bank to be unable to pay them in an immediate timeframe.
Financial experts recommend savings to be diversified within several banks and institutions and place in each one that maximum guaranteed amount (20.000€). It is also advisable to have several holders by each account.
Payments by the Guarantee Funds needs to be made within three months, even though, under specific circumstances, these payments can be postponed if the Bank of Spain decides so. If a client has a deposit higher than the guaranteed limit, he will have to intervene in the judicial creditor’s meeting procedure of the Bank for the refunding of his money.
Investment funds, pension plans, insurances... are also guaranteed by other organisms such as:
· Comisión Nacional del Mercado de Valores (CNMV) for investment funds
· Dirección General de Seguros y Planes de Pensiones ( DGSFP: an office of the Treasure National department) for the control and safety of Pension Plans and Insurances.
Countries of the European Union will share expenses in the case of bankruptcy of a bank that operates in several member countries. This is out of the Slovenia Agreement signed by them this year.
By Maria L. de Castro
web@costaluzlawyers.es
www.costaluzlawyers.es