Fond de Garantie des dépôts

FAQ

Questions that you might ask or that others might ask you :

1. a) Principle: Is my bank covered by the deposit guarantee ?

b) Am I covered by my bank, which is a branch of a foreign-based institution ?

2. Is on-line banking covered ?
   
3. If my bank goes bankrupt, how much is guaranteed ?
   
4. If I find out that my bank has closed, what should I do ?
   
5. How are joint accounts repaid ?
   
6. Are all my deposits taken into account ?
   
7. I also have securities. How would I be reimbursed and in what proportion ?
   
8. For my securities, what do you guarantee ?
   
9. If my bank closes, what does the Fonds de Garantie des Dépôts do ?
   
10. When does the Fonds de Garantie des Dépôts pay me the compensation to which I am entitled ?
    
11. Am I entitled to contest the compensation payment offered ?
    
12. What should I do about amounts not included in the compensation ?
    
13. Does the Fonds de Garantie des Dépôts have the necessary funds to cope with any banking failure ?
    
14. What is the Commission Bancaire in comparison to the Fonds de Garantie des Dépôts ?
    
15. What relationships exist between the Fonds de Garantie des Dépôts and the financial authorities ?

1. Is my bank covered by the deposit guarantee ?

a) Principle: The principle is simple: all credit institutions approved by the Comité des institutions de crédit et des entreprises d'investissement (French Committee for credit institutions and investment companies - CECEI) automatically have to be members of the Fonds de Garantie des Dépôts (French Deposit Guarantee Fund). Depending on the individual approval, it may benefit from one or more types of guarantee (cash, securities or warranties).

Note that the security guarantee procedure, when relating to custodians of securities belonging to third parties, includes not only credit institutions but also investment companies approved in France, agents authorised by the Conseil des Marchés Financiers (French Financial Services Authority) for custody and administration of financial instruments and members of compensation chambers.

Please refer to the list of member institutions of the Fonds de Garantie des Dépôts broken down by type of guarantee "cash guarantee", "securities guarantee" and the "warranties guarantee".

b) Am I covered by my bank, which is a branch of a foreign-based institution ?

If the head office of your institution is located outside the European Economic Area (see list of countries of the European Economic Area), its French branch, which must be approved by the French authorities, is included in the French guarantee procedure. However, if the institution has its base in a state belonging to the European Economic Area, the procedure applicable to its branch is in principle the current procedure of that country.

In any event, the institution with which you intend to open an account must notify you of the guarantee system(s) to which it belongs.

2. Is on-line banking covered ?

The guarantee procedures apply to all institutions regardless of the process by which business is conducted.

If an already approved traditional bank launches a website, it does not have to complete any further formalities as far as regulations are concerned. Transactions processed via its website are automatically covered by the guarantee procedure.

However, a new bank wishing to trade exclusively on the Internet must obtain an approval in advance from the authorities responsible for its head office if this is located in a state belonging to the European Economic Area The guarantee procedure applicable to cash deposits and securities is that of its head office.

If the bank's head office is located outside the European Economic Area, it must obtain prior approval from the French authorities (CECEI) if its website is aimed at business in France. The bank will therefore automatically be a member of the Fonds de Garantie des Dépôts.

It is therefore essential for an Internet customer to establish - in the legal information section of the website of the bank concerned - the guarantee applicable to deposits and securities held on his/ her behalf by the bank. It might be helpful to look at the location of the head office (see see list of members of the guarantee procedures for deposits, securities and warranties).

3. If my bank goes bankrupt, how much is guaranteed ?

Compensation in the French system amounts to €70,000 per customer cash deposit and up to €70,000 per investor of securities. Compensation is much less in most other countries of the European Economic Area (such as the Netherlands, UK, Luxembourg, etc.), where it is close to €20,000.

The maximum limit is established for each depositor or investor, applying to all deposits or assets, net of liabilities due, belonging to the same depositor or investor with the same member institution, regardless of how many accounts there are, the location in the European Economic Area or the currency concerned, provided that it is denominated in a currency of a State of the European Economic Area.

Compensation payments are also subject to some exceptions that normally do not apply to most customers of a financial institution (for these exceptions refer to regulations nos 99-05, 99-12, and 99-14).

4. If I find out that my bank has closed, what should I do ?

Your accounts are stopped, in particular your current account, and payment methods provided by this bank do not work. You should take all necessary steps to open an account with another bank as soon as possible. The Fonds de Garantie des Dépôts should generally be in a position to pay (see question 9) the compensation due to you quickly.
Initially, you do not have to take any action with regards to the Fonds de Garantie des Dépôts (see question 10).

5. How are joint accounts repaid ?

The share of each depositor in the total value of the joint account is taken into account for determining the maximum limit of €70,000. Unless otherwise stated, the account is split evenly between the two depositors.

Thus, a customer with a personal account showing a credit balance of €30,000 and a joint account with his/her partner, or any other person, showing a credit balance of €78,000 would be entitled to receive from the Fonds de Garantie des Dépôts, in the event of default by his/her institution :

€30,000 + (€78,000: 2) = €69,000

His/her partner, assuming that he/she has no other credit, would be entitled to €39,000 (i.e. €78,000: 2).

6. Are all my deposits taken into account ?

All types of deposits that a customer may have under normal circumstances are included such as current account deposits, deposit account balances, passbook accounts, and property purchase savings accounts. The relevant laws nevertheless exclude certain items, depending on the professional nature of the customer or the type of deposit or investment.

For the list of excluded deposits and securities (see egulations no. 99-05, art. 3 99-05-art. 3, 99-12-art. 2 et 99-14-art. 3).

Note that deposits in a currency of a country not belonging to the European Economic Area, like the dollar or the yen, are exclude (see the list of countries of the European Economic Area).

7. I also have securities. How would I be reimbursed and in what proportion ?

The investment guarantee comes into play on request from the Commission Bancaire (French banking commission) whenever an agent or holder of securities is not in a position to return them to the customers to whom they belong.

Consequently, as soon as the shortfall is established, the securities still held by the agent are allocated to the owners of the securities in proportion to their holdings.

The Fonds de Garantie des Dépôts compensates the customers for the securities or financial instruments, which they have lost, based on the market value on the date they ceased to be available. This date is set by the French banking commission, at the time it requests the engagement of the Fonds de Garantie des Dépôts. Compensation is paid by cheque, bank transfer or equivalent financial instruments for the identical market value, if the customer has accepted such means of payment, offered to him/her by the Fonds de Garantie des Dépôts.

Customers have a period of 15 days to contest the compensation and/or accept the offer of securities compensation.

8. For my securities, what do you guarantee ?

Securities normally held by customers (shares, debentures, units in unit trusts etc.) are guaranteed, but as for the "cash guarantee" procedure, French law (see article L 322-1 of the Code Monétaire et Financier(Monetary and Financial Code) excludes securities deposited by certain parties from the securities guarantee due to their type, the information they hold concerning the company's situation or particular advantages granted to them. Some securities are also excluded due their specific nature or illegal origin.
These exclusions are listed in CRBF Regulation no. 99-14, art. 3

9. If my bank closes, what does the Fonds de Garantie des Dépôts do ?

A few days after the closure of the institution, of which you will normally be made immediately aware via the press, the Fonds de Garantie des Dépôts will send you a general information letter. Then, as soon as the analysis of all your accounts has been performed based on accounting documentation of the bank, you will receive a registered letter stating the amount of compensation proposed. This compensation will have been calculated in accordance with CRBF regulation nos 99-05 and 99-14 applying to the balance on your accounts at the date when your deposits or securities ceased to be available, this date being set by the French banking commission.
After verifying your identity, the Fonds de Garantie des Dépôts pays you the funds (by cheque or by bank transfer) once it has received your agreement to the amount proposed. Nevertheless, you have a period of 15 days to contest it (see Q. 11).

10. When does the Fonds de Garantie des Dépôts pay me the compensation to which I am entitled ?

According to the law, it must make the payment within 2 months. However, this deadline can be postponed up to three times by the French banking commission. The Fonds de Garantie des Dépôts makes every effort to pay the compensation to as many customers as possible as quickly as possible. Indeed, one of its main benefits is the speed with which compensation is paid. If the relevant accounting documentation is available, the first compensation payments can generally be made one week after the closure of the bank.

11. Am I entitled to contest the compensation payment offered ?

You may contest the compensation payment offered by registered letter within 15 days. If the Fonds de Garantie des Dépôts accepts your comments, payment occurs as soon as possible. You are also entitled to take legal proceedings following this amicable claim period; in this case, payment will not be made until the litigation is complete.

12. What should I do about amounts not included in the compensation ?

There are two categories of deposits that may not be included :

• If amounts are excluded because their type falls outside the scope of compensation (e.g. deposits in non-EU currencies), you are a creditor of the bank and you must declare these amounts directly to the creditors' representative appointed by the commercial court; the Fonds de Garantie des Dépôts will notify you in advance of the amounts in question and the procedures to follow.)
• If amounts are not included because they exceed the maximum compensation limit, the Fonds de Garantie des Dépôts makes the declaration itself to the creditors' representative and you do not have to make any declaration. The Fonds de Garantie des Dépôts will notify you of all amounts concerned.

13. Does the Fonds de Garantie des Dépôts have the necessary funds to cope with any banking failure ?

The law requires all member institutions to provide the necessary funds to enable the Fonds de Garantie des Dépôts to meet its objectives. The level of funds is established by regulations and the amount of the contributions cannot be allowed to endanger the banking sector as a whole.

The Fonds de Garantie des Dépôts may also borrow and grant guarantees.

14. What is the Commission Bancaire in comparison to the Fonds de Garantie des Dépôts ?

The Commission Bancaire (French banking commission) is the supervisory body for the banking sector. It may also penalise individual institutions or directors who do not respect the regulations.

The Fonds de Garantie des Dépôts is a legal entity under private law and is independent of the French government; its funds come from members' contributions. It compensates depositors in the event of the closure of a member institution or it is engaged in advance for preventive purposes (see Q 1 and Q 2 ).

The law provides for a range of regulations governing the relations between the French banking commission and the Fonds de Garantie des Dépôts. Firstly, it is the French banking commission that decides to close an institution or that proposes the engagement of the Fonds de Garantie des Dépôts in a preventive capacity and notifies the Fonds de Garantie des Dépôts. The law also provides for an exchange of information between the French banking commission and the Fonds de Garantie des Dépôts.

15. What relationships exist between the Fonds de Garantie des Dépôts and the financial authorities ?

The Fonds de Garantie des Dépôts - legal entity under private law - enjoys close relationships both with the Comité des Etablissements de Crédit et des Entreprises d'Investissement (Committee for Credit Institutions and Investment Companies -CECEI) and the French banking commission owing to the nature of its legal duties.

In this respect, the Chairman of the Management Board of the Fonds de Garantie des Dépôts is automatically a member of the CECEI (article 612-3 of the Code Monétaire et Financier). Since the CECEI's principal duty is to issue and withdraw approvals, the presence of the Chairman of the Management Board of the Fonds de Garantie des Dépôts helps to strengthen the need to prevent difficulties arising during the decision process for granting approvals to institutions.

In addition, the French banking commission, the banking supervisor with the power to impose penalties on its members, will consult the Chairman of the Management Board of the Fonds de Garantie des Dépôts on all questions relating to an institution for which it plans to engage the Fonds de Garantie des Dépôts or for which it plans to propose its engagement in a preventive capacity.

The Chairman of the Management Board, in turn, may request a hearing with the French banking commission (see L 613-34 of the Code monétaire et financier). In addition, the French Finance Minister, the Governor of the Banque de France, the Chairman of the French banking commission, the Chairman of the Conseil des Marchés Financiers or their representatives may be heard by the Supervisory Board and the Management Board (see L 312-13 of the Code Monétaire et Financier).

In the performance of its duties, the Fonds de Garantie des Dépôts is authorised both to request information from and to provide information in its possession to the Banque de France, the CECEI, the French banking commission, the Conseil des Marchés Financiers, the COB (French stock exchange commission) and other institutions (see article L 631-1 of the Code Monétaire et Financier).