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Format imprimable
Compensation procedure for a bank
closure
What guarantees does the Fonds de Garantie des
Dépôts (Deposit Guarantee Fund) offer to depositors in the event of a
bank closure?
As soon as the Commission Bancaire (French banking commission)
establishes that a member institution of the Fonds de Garantie des
Dépôts is no longer in a position to return the funds it has received
from the public, either immediately or in the future, it requests the
engagement of the Fonds de Garantie des Dépôts.
At the same time, the French banking commission and potentially the
commercial court take other measures relating to the administration of
the institution. These measures lead to the closure of the branches of
the institution, preventing its customers from using their various
accounts.
From the start of the proceedings led by the french banking commission,
the Fonds de Garantie des Dépôts publishes a statement indicating
that its engagement is linked to seeking compensation for the depositors
and that they do not have to take any particular action for the time
being vis-à-vis the Fonds de Garantie des Dépôts in order to
ensure their rights to compensation.
As soon as the Fonds de Garantie des Dépôts has the necessary
information, i.e. usually immediately, it sends a letter to all the
institution’s customers (with or without compensation claims) informing
them of the procedure and the rules governing compensation that will be
applied.
This letter is sent to depositors’ addresses as they appear in the
institution’s files.
At the same time, the Fonds de Garantie des Dépôts arranges for
each customer’s account to be analysed in order to identify those
requiring compensation and the amount due.
Once each depositor’s situation has been established, a letter, enclosing
an assigned discharge, is sent indicating the amount of the expected
compensation. The customer may immediately accept the proposed
compensation resulting from an analysis of the accounts in credit and in
debit, but still retains the right to contest this proposed compensation
for a period of 15 days.
Once the assigned discharge, involving acceptance of the proposed
compensation and transfer to the Fonds de Garantie des Dépôts of
the depositor’s rights and claims, has been signed by the depositor and
returned to the Fonds de Garantie des Dépôts, it pays the amount
due either by bank transfer or by cheque after verifying the identity of
the depositor. The assigned discharge has the effect of transferring the
depositor’s rights and claims towards the defaulting institution, up to
the value of the compensation paid, to the Fonds de Garantie des
Dépôts.
Regulations require the Fonds de Garantie des Dépôts to compensate
depositors within a period of two months, which can be extended by a
maximum of 4 additional months. In practice, if the internal
documentation is immediately available, compensation payments begin
within a few days.
In summary, the depositors of a credit institution for which the
Fonds de Garantie des Dépôts is engaged do not have to take any
action towards the Fonds de Garantie des Dépôts to recover their
compensation. However, if they have not received the first standard
letter sent to all customers describing the procedure and the
compensation rules within 10 days of the closure of the credit
institution, they should contact the Fonds de Garantie des Dépôts
(4, rue Halévy - 75009 Paris).
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