Savers should receive a maximum of 1 million euros if a private bank collapses in 2030. But the new regulation does not affect the majority of private investors at all.
In the future, German private banks will not generously compensate affected investors, institutions, social institutions and companies for their deposits in the event of a bank failure. The Federal Association of German Banks (BdB) will for the first time set compensation upper limits from 2023 and lower them by 2030. Deposits of professional investors such as insurance companies, trust companies and public legal entities will not be protected at all from 2023.
Private savers as well as social and charitable foundations will receive a maximum of five million euros per claim as of January 1, 2023, from 2025 it will be three million euros and from 2030 it will be only one million euros. For companies, the maximum amount drops from 50 million euros to 30 million euros to ten million euros. This applies only to funds in bank accounts in Germany. Deposits collected outside of foreign branches are no longer protected in the future.
“For 98 percent of private savers, nothing in practice will change after 2030” Christian Swing
So far, private banks have been largely responsible by protecting the €100,000 statutory deposit. In the banking union there is at least another 750,000 euros per deposit. In other institutes, the limit is much higher. Individual deposits are not protected in Volksbanken and Sparkassen; In the event of bankruptcy, the entire enterprise is absorbed.
“For 98 percent of private savers, nothing will change in practice after 2030,” Bank President Christian Swing emphasized Wednesday. Deutsche Bank CEO assured that “your deposits are still fully protected”. “We protect those who really need that protection.” For a BdB bank, these are those who, unlike professional investors, cannot really assess the risks of the bank. One now ensures that the system is not used inappropriately.
Cities south of Baden lost money in Grensell’s bankruptcy
Reform was initiated by the Bahrain Development Bank after the bankruptcy of Greensell Bank at the beginning of the year and appears to be seen as inevitable. “The Greensall case represents a turning point, not only because of the large contributions, but because a significant portion of the money will not go where it serves savers,” Swing emphasized when introducing the reform. At Grensell, deceived investors were compensated with a total of three billion euros. 1 billion was collected through the statutory deposit protection system, and 2 billion through the voluntary security system of private banks.
Many municipalities ran out of space, and some had parked large sums at Greensal because the bank paid higher interest rates than, say, the local thrift bank or Volksbank. Bötzingen invested 13.2 million euros, Hüfingen 3 and Bad Dürrheim invested 2 million euros. Attempts are currently underway to obtain compensation in the bank’s bankruptcy proceedings. However, nothing will change for municipalities: like municipal corporations, municipalities have not been protected by the security system of private banks yet.
120 banks pay into the Voluntary Deposit Protection Fund
The number of members of the Special Deposit Insurance Fund is about 120 banks and they fill it with their contributions. The Fund does not provide any information about the amount of funds. However, it seems that it has become too expensive for institutes. Swing emphasized that voluntary deposit insurance for private banks has always done well in its 45 years of existence, even if compensation has sometimes been a solid feat. “But it has always been clear that investors will be fully compensated.” However, such a system must also be put to the test. Because a significant part of the money went to professional depositors. With the new upper limits, according to Khayyat, voluntary deposit insurance in Germany will remain higher from 2030 than in other European countries.