Mission of the Fonds de Garantie des Dépôts et de Résolution
Contribute to the stability and financial security of the French banking system
The Fonds de Garantie des Dépôts et de Résolution (FGDR) is an entity whose mission is to serve the public interest and protect bank customers in the event that their bank fails. By securing customers' assets, the Fonds de Garantie des Dépôts et de Résolution helps to ensure the stability of the French banking system.
Protection of depositors and investors through compensation in the event of a bank failure
Created by Law 99-532 of 25 June 1999 relating to savings and financial security, the FGDR intervenes when a bank fails. It is responsible for compensating depositors within 7 working days, in an amount up to €100,000 per person, per institution, if the institution where their assets are held is no longer able to meet its commitments.
The FGDR is also charged with compensating investors, in an amount up to €70,000 per person, per institution, for securities (stocks, bonds, units of UCITS) and other financial instruments that their investment services provider is unable to return to them in the event that it fails, as well as the associated cash.
The FGDR takes the place of a failed bank or financing company when it is no longer able to honour, vis-à-vis the public, performance bonds (mandatory guarantees delivered by a bank) issued by it in favour of business professionals who are required by law to provide a guarantee to their customers.
Intervene on a preventative basis to protect the public’s deposits if a bank is in difficulty
The FGDR can also intervene on a preventative basis to allow the orderly discontinuation or restructuring of a troubled institution before it fails. When the situation allows, the FGDR may take action before suspension of payments occurs, thereby preventing an interruption in customer services and compensation, which would prove disruptive for customers and is often more costly.
In an effort to prevent a banking crisis, the FGDR finances asset restructuring or transfer measures aimed at protecting the public's deposits.
Contribute to bank crisis resolution
Law 2013-672 of 26 July 2013 on the separation and regulation of banking activities initiated and anticipated the "resolution" scheme for bank crises and conferred upon the FGDR broad powers with respect to the financing of recovery ("resolution") tools for troubled banks and the handling of so-called systemic crises, as the Chairman of the Board of the FGDR is one of the six members of the new Resolution College within the Prudential Supervision and Resolution Authority (ACPR), which is responsible for developing and implementing measures aimed at preventing and resolving bank crises.
For this reason, the former Fonds de Garantie des Dépôts (FGD) became the Fonds de Garantie des Dépôts et de Résolution (FGDR), in cooperation with the Collège de Résolution, created as part of the Prudential Supervision and Resolution Authority (ACPR), the French prudential supervision and resolution authority.
Order No. 2015/24 of 20 August 2015 containing various provisions for adapting legislation to European Union financial law supplements the initial 2013 provision and transposed both Directive 2014/49/EU of 16 April 2014 on deposit guarantee schemes (“DGSD2”) and Directive 2014/59/EU of 15 May 2014 on the resolution of credit institutions (“BRRD”).
This order establishes law in France that complies with European banking union regulations.
French law now contains a series of measures that cover two areas:
- entities must provide recovery plans to respond to a significant deterioration in their financial situation and, for its part, the European or French resolution authority (depending on the entity) must develop so-called resolution plans to determine the measures that it must implement, where relevant;
- crisis management: from the initiation of the resolution procedure to the implementation of a series of measures (tools).
The provisions specific to the FGDR are contained in Book VI of the Monetary and Financial Code (Title 1, chapter III, section 4 Bank crisis prevention measures) and in the decree of 11 September 2015 specifying the terms of intervention of the FGDR with respect to resolution.
A concerted effort to ensure the security of the banking system
The aim of the FGDR, in conjunction with the Banque de France, the French Ministry of Economy and Finance and the Prudential Supervision and Resolution Authority (ACPR), is to strengthen the public's confidence in the soundness and stability of the French banking system.
|Fonds de Garantie des Dépôts et de Résolution
|Banque de France||Ministère de l'Économie et des Finances||Autorité de Contrôle Prudentiel et de Résolution ACPR||Autorité des Marchés Financiers AMF|
The French banking sector in figures
As of 31 December, 2017, 424 credit institutions, 181 financing companies and 132 investment firms were authorised in France (source ACPR – 2017 French banking and insurance market figures, page 26);
The French banking system has a total of €7.709 trillion in assets on a consolidated basis (source ACPR – 2017 French banking and insurance market figures, page 4);
The total resources collected by banks from customers is €2.817 trillion (page 5);
The total outstanding amount of €2.817 trillion consists mainly of €1.106 trillion in ordinary accounts with a credit balance (current accounts), €991 billion in savings accounts with French government guarantee (including Plan d’Epargne Logement (PEL) home savings plans, Compte d’Epargne Logement (CEL) home savings plans, Livret Type 'A’ savings accounts, Livret Type 'LDD'S savings accounts, etc.) and €441 billion in term accounts (page 5).
Facts and Figures of the banking sector in France (source Fédération Bancaire Française - October 2018):
- 99% of French people have a bank account (Observatoire de la micro-finance);
- 4 French banks rank among the top 9 in Europe;
- There are 347 banks, 37,209 branches and 57,649 ATMs across the country (source ECB);
- Outstanding amount of Livret type ‘A’ savings accounts: €281 billion and outstanding amount of Livret type 'LDDS' savings accounts: €106 billion (Caisse des Dépôts – July 2018);
- 83 million payment cards are in circulation in France;
- Employment: 366,200 employees (Fédération Bancaire Française scope) with 98% under permanent contract, i.e. 2% of private employment in France.