With the aim of getting a better organization of the system of bank guarantees on savings, the Public Administration promoted the creation of the Deposit Guarantee Fund (FGD). In case you do not know this financial entity, we encourage you to stay in this post, since we will talk in detail about the Deposit Guarantee Funds.
What is the deposit guarantee fund?
He Deposit Guarantee Fund (FGD) is an organization with its own legal personality, and of a financial nature, whose main purpose is protect money that has been invested in bank accounts and deposits when banks go bankrupt.
The ppossible insolvency of the financial sector Spanish is supervised by the Public Administration, something that already supposes a guarantee for the savings of the people. Even so, the Deposit Guarantee Fund It is a very relevant organism since it provides even more security for savers, intervening in bankruptcy cases.
The FGD is an organization that encompasses 117 banking entities (as of March 2020). Said entities are those that appear in the Special Registry of the Bank of Spain, since by appearing in it, they are required by law to belong to the Deposit Guarantee Fund.
He initial requirement for the FGD to intervene is that the financial entity in question is declared in bankruptcy. This statement means that the bank makes it official that it is not possible to meet your pending payments. Another option is that the The Bank of Spain considers that a specific financial institution cannot pay its debts, without the need for the latter to declare bankruptcy.
Once the aforementioned occurs, the intervention of the Deposit Guarantee Fund consists of the following steps:
- The intervened bank must deliver to the FGD the data of customers who have deposits at said bank, including the amount of funds that have been deposited.
- With the simple prerequisite that the affected clients have another bank account, the FGD will enter the amount that corresponds to each person. In this part of the process, the beneficiaries do not need to make any request.
- He money income in the accounts of the beneficiaries will be carried out in the following periods:
- From January 1, 2019 to December 31, 2020, 15 business days.
- From January 1, 2021 to December 31, 2023, 10 business days.
Deposit guarantee fund coverage
The financial products under the protection of the Deposit Guarantee Fund are:
- Bank deposits: Within this section, the safe deposits are those to fixed term, Besides combined and of the structured. However, fixed-term deposits have the particularity that the benefits from profitability are also guaranteed.
- Savings accounts and checking accounts: Both financial instruments have security provided in the same way as safe deposits.
It should be noted that the FGD in Spain covers the products described above but up to a maximum amount, €100,000 for each holder bank account in an entity that has gone bankrupt. Therefore, in situations of deposits with two holders, the FGD covers 200,000 euros if the amounts of both holders are added.
However, it must be taken into account that if a specific client has acquired several financial instruments in the same entity, and the total funds are greater than 100,000 euros, the client will lose the part that exceeds said amount. For this reason it is It is advisable to diversify savings in different banks.
For people who hold investments in banks of foreign countries, but within the European Union, are have the same guarantees as in the case of Spanish banks. This is because the EU establishes that the banks of the member countries must adhere to a guarantee fund that covers up to 100,000 euros per holder and account, such as the Deposit Guarantee Fund in Spain.
It is common sense that anyone who invests their savings in a bank, require certain guarantees that you will not lose them. In this sense, he Deposit Guarantee Fund, with its affiliated entities, is constituted as a additional source of security for investors.
In addition, at Alter Finance we offer you our financial advisory services. Contact us when you need it.