Camille Van Vyve
27 Mar 2023
How well are your financial assets protected?
The failure of Silicon Valley Bank shook the global banking industry and financial markets. Following the bankruptcy, Credit Suisse was acquired by UBS in a quick bailout. Even if since 2008, banking regulation has been extremely strict in Europe, what protection do your deposits and financial assets actually benefit from? What about your easyvest accounts?
The Guarantee Fund, the saver's shield
All Belgian banks and insurance companies subscribe to what is called the “Guarantee Fund for deposits and financial instruments”. This protects account deposits (sight, term or savings) up to €100.000, life insurance (branch 21) up to €100.000, and financial instruments (stocks, bonds, funds or trackers, etc.) up to €20.000. It is activated when an institution can no longer meet its obligations, in the event of bankruptcy or fraud, in particular. In certain cases that we will examine later, the guarantee on deposits can be extended up to €500.000.
Securities better covered than you could think
Even if the financial instruments are in theory only covered up to €20.000 by the Guarantee Fund, the client always remains the legitimate owner of his securities and has a direct right to claim them. This means that the securities must be returned to him by the curator and can never fall into the mass of assets of a possible bank failure. The guarantee of €20.000 from the Guarantee Fund is therefore only activated in rare cases of administrative errors or other irregularities. Apart from these cases, an investment account offers thus a better asset protection than a savings account in the event of the bankruptcy of a financial institution.
Easyvest clients protected
The money invested via easyvest is deposited in separate accounts in the names of our clients with what is called a custodian. It is a financial institution whose sole function is to keep our clients' financial assets. This custodian, established in Belgium, naturally subscribes to the Guarantee Fund offering all the protections described above. Moreover, as our clients' money does not enter the balance sheet of easyvest, it will not be impacted in the event of cessation of our activities. Our clients' assets therefore benefit from a maximum level of protection.
The amount is decisive, not the number of accounts
The amount protected by the Guarantee Fund is calculated per person and per institution. If you have different accounts opened with the same bank (current account, savings account, term account, cash certificates), the sum of the deposited amounts will be taken into account. If your savings exceed €100.000, it is in your interest to spread them among several banks.
What about couples?
The €100.000 being guaranteed per person and per institution, a couple is therefore covered up to €200.000. For the guarantee to cover 100% of the deposits of a couple, it will therefore be necessary to ensure that the sum of the assets deposited in the individual accounts and half of those deposited in the joint accounts does not exceed €100.000 per person and per institution.
Exception #1: proceeds from the sale of your main residence
If you have recently sold a property, you probably have an account credited with an amount greater than €100.000. Fortunately, in this specific case, provided the transaction took place in the last six months and concerned your main residence, this deposit will benefit from additional cover limited to €500.000.
Exception #2: deposits aimed at the purchase of a main residence
Similarly, you are about to buy a property that will serve as your main residence, and you have an account credited with an amount greater than €100.000 to finance this purchase? As long as a sales agreement has been signed (a purchase offer is not enough), this deposit will also be covered up to €500.000.
Exception #3: deposits resulting from the payment of an insurance policy
Have you just received your group insurance, life insurance or death insurance following the death of a loved one? These amounts are also guaranteed for 6 months up to €500.000.
Exception #4: severance pay, disability, compensation received by victims of criminal offenses or miscarriages of justice
These allowances are protected in the same way as the previous exceptions. Please note, however: apart from deposits linked to a real estate transaction, the limit of €500.000 applies cumulatively. If you have recently received various insurance payment and/or various indemnities, the sum of these deposits will be covered up to €500.000.
Inheritance is no exception
Have you received an inheritance in the last 6 months? Please note: this type of deposit is only covered by the normal guarantee of €100.000. It is therefore better not to let an inheritance sleep too long in a savings account.