Status: 03/14/2023 6:44 p.m
Do German investors have to worry about their account deposits in view of the SVB bankruptcy? Rather not, as a look at the German security system shows. It was reformed after the 2008/2009 financial crisis.
The current turbulence on the American banking market brings back bad memories of the financial crisis of 2008. In the course of the collapse of several institutes, above all Lehman Brothers, confidence in the stability of the banking system was shaken for a long time.
A lot has happened since then. Regulation on both sides of the Atlantic has been tightened. This means, among other things, that the banks have to arm themselves for loan defaults with significantly higher capital cushions than in the past.
Deposit insurance rests on two pillars
The safeguarding of customer deposits was also subsequently reformed. The Deposit Guarantee Act (EinSiG) has been in force in Germany since 2015, which, in accordance with EU-wide rules, stipulates protection for deposits of up to EUR 100,000 per investor and institution. So if an institute were to fail, jointly organized security systems in the industry would step in.
In addition to this legal regulation, almost all credit institutions in Germany voluntarily secure customer funds – far beyond the legally guaranteed sum of 100,000 euros. The voluntary deposit insurance is primarily guaranteed by the deposit insurance funds of the Federal Association of German Banks (BDB) and the Association of Public Banks (VÖB). Branches of foreign banks usually take part in voluntary deposit insurance.
Since this year, a maximum of five million euros per customer and bank has been insured. However, this upper limit should drop to three million euros in 2025 and to one million euros in 2030.
The banks organized in the BdB agreed on these limits after the Greensill bankruptcy in March 2021, after the compensation for Greensill customers had cost the association a total of almost three billion euros.