What happens to your money if the bank goes bankrupt?

The past few weeks have been turbulent for financial services companies and everyone who invests and saves. First, the failures of two US banks, Signature Bank in New York and Silicon Valley Bank (SVB), sent financial services prices on a rollercoaster, then came the big plunge and the acquisition of Credit Suisse.

Despite legal requirements and supervision, financial institutions are not immune to turbulence and bankruptcies. When customers quickly withdraw large sums of money, liquidity collapses. According to the “Financial Times”, Credit Suisse customer money outflows have sometimes reached 10 billion francs a day. If a capital raise fails, a negative spiral is created and things can go quickly. Even as the central bank, government or buyers rush to help, events like this leave many of us wondering what will happen to our money in the worst case scenario. Here are some points you should know.

In Switzerland, your money is subject to the so-called depositor protection. If a bank goes bankrupt, your savings will be a maximum of one maximum amount of CHF 100,000 protected (see details on FINMA).

This maximum applies per customer and per bank. Do you have multiple accounts at one bankthen your money is just anyway up to a maximum of 100,000 Frank protected. However, the banks provide Esisuisse for depositor protection A maximum of CHF 8 billion is available (Fixed value of 1.6% of all secured assets in Switzerland). This means that 80,000 accounts of CHF 100,000 each can be maintained.

The following matters are covered by depositor protection (for details, see Esisuisse):

Deposits into vested benefits or Pillar 3a accounts or invested benefits or Pillar 3a custodial accounts are not covered by deposit protection (more on this below).

Securities in your brokerage account such as stocks, bonds, funds, certificates, etc. are kept for you by the bank, but are your property. If the bank goes bankrupt, they will be provided to you. In the best case, the bank has a contractual lien or set-off to cover debts, so if you have a mortgage, your collateral can be used for cover.

This depends on which solution you have for your third pillar or acquired benefits:

The service of most online providers is to make it easier to choose and manage your money. How it is secured depends on whether the online provider itself has a banking license and is therefore a bank or has another license.

If the online provider does not have a banking license itself, you manage your money with the help of the online provider, but it is held in a securities account or savings account with an underlying bank, the so-called custodian bank, and you enjoy the same depositor protection and the securities are yours. If the online provider goes bankrupt, the underlying bank will take over and you will be asked to either transfer your money to another solution, leave it with the bank, or it may happen that another provider immediately takes over and then you have the choice. whether you want to stay or change.

Have you ever experienced the bankruptcy of your financial institution? How do you protect your money in an emergency? Everything with one bank or with different providers? 🏦