Deposit

Why was the deposit guarantee scheme established?

The savings entrusted to a bank remain due and payable to the customer; in other words, the customer holds a claim against the bank and the bank must be able to reimburse the customer.

When a bank is no longer able to return these savings to its customers, the Prudential Supervision and Resolution Authority (ACPR) notes the bank's failure and contacts the FGDR. The FGDR then compensates the customers up to an amount of €100,000 per customer, per institution within a maximum period of 7 working days.

The deposit guarantee scheme has two important effects:

- firstly, it prevents depositors from facing financial difficulties due to the unavailability of their assets in the case of their bank's failure;

- secondly, by strengthening confidence in the system, it prevents the spread of failures from one bank to another.

When the FGDR intervenes to compensate customers, it replaces the customers as the bank’s creditor [2] in the amounts paid by it.

Deposit guarantee: about 350 institutions covered

All banks and credit institutions operating in France are covered by the deposit guarantee scheme. Membership in this scheme is a prerequisite for conducting their business in France.

→ Search for your bank among the institutions covered [3]

→ Learn more about the categories of institutions covered [1]

→ Download the descriptive brochure of the FGDR's guarantees [4]

→ View the list of accounts covered and not covered by the FGDR [5]

€100,000 guaranteed per customer and per institution, within a 7-day time limit

All deposits covered by the guarantee are added up to determine the amount which the bank owes its customer. The FGDR pays compensation in this amount, up to €100,000 per person, per institution, within seven working days.

Moreover, all sums deposited in savings accounts guaranteed by the French government (Livret type 'A' savings account and Livret Bleu savings account, Livret Développement Durable et Solidaire (LDDS) savings account and Livret d’Epargne Populaire (LEP) savings account) are covered, up to €100,000 per customer, per institution.. The FGDR compensates customers at the request of and for the French Government.

What principles are used to calculate the compensation?

To determine the compensation amount of each customer’s deposits, the FGDR, as of the date on which the funds become unavailable, receives each customer's account statement from the institution. The balance of each account includes the transactions completed by the customer and which could have been recorded on the date of availability, the deferred debits not yet posted resulting from payments by card and accrued interest not yet due which the bank owes its customer, net of social contributions.

On that basis, the FGDR:

- checks whether the bank's customer is covered by the deposit guarantee scheme;

- lists all the customer’s deposit accounts covered by the deposit guarantee scheme;

- identifies all savings accounts covered by a special French government scheme (Livret A, LDDS and LEP);

- identifies joint accounts and calculates the portion accruing to each of the co-holders;

- where appropriate, makes a distinction between the customer's business accounts and personal accounts: if you have kept your personal assets separate from your business assets (one-person limited liability company (EURL) or limited liability individual business owner (EIRL)), you receive compensation separately for your personal accounts (up to €100,000) and your business accounts (up to €100,000);

- identifies undivided co-ownerships as a recipient separate from its members, and does the same for partnerships and for each of the beneficiaries of a multiple owners account;

- considers only accounts with a credit balance: accounts with a debit balance do not reduce credit balances, except for legal or contractual set-off;

- adds the portion of the joint accounts [6] to the amount to be compensated under the deposit guarantee scheme;

- applies the €100,000 coverage level for the total of the deposit accounts at the same credit institution;

- identifies the compensation amount under the deposit guarantee scheme for the deposit accounts;

- identifies the compensation amount for deposit accounts guaranteed by the French government by adding up the amounts of accounts covered by the French government guarantee (Livret A and Livret Bleu savings accounts, LDDS and LEP).

The FGDR prints 2 compensation statements:

- one for savings accounts guaranteed by the French government guarantee (Livret A, LDDS, LEP),
- one for all other accounts covered by the deposit guarantee scheme.

Accounts with a debit balance are not offset by credit accounts and should be repaid to the bank's liquidator.

For non-compensated accounts exceeding the €100,000 limit, declared to the bank's liquidator, a claim may be filed with the bank's liquidator at a later date.

A deposit guarantee scheme that benefits all bank customers

As a general rule, all bank customers are covered by the deposit guarantee including:

- natural persons whether minors, adults under guardianship or represented by a third party;

- companies (limited companies (SA), limited liability companies (SARL), one-person limited liability companies (EURL), ... of any size, regardless of their status;

- associations and other professional groups, non-trading partnerships, foundations and groups of any kind;

- public institutions, local governments and their own institutions.

The scope of this coverage is designed to strengthen the public’s confidence in the banking system to the greatest extent possible. This is consistent with the goal of preserving financial stability.

However, the laws and regulations provide for certain exceptions and special cases.

A guarantee that covers all bank deposits

→ To view the list of accounts covered and not covered by the FGDR, click here [8].

All amounts deposited at a bank in current accounts and savings accounts are covered by the deposit guarantee scheme regardless of the currency in which the accounts are denominated.

This applies regardless of the contractual or commercial name of the current or savings account into which the deposit is made:

- current account, demand account, savings passbook account, term account, savings passbook account and plan, Compte d’Epargne-Logement (CEL) savings account, Plan d’Epargne-Logement (PEL) savings plan, Plan d’Epargne Populaire (PEP) savings plan;

- Livret Jeune savings account;

- cash account associated with an equity savings scheme (PEA), a pension savings scheme (PER) or equivalent held at an FGDR affiliated institution;

- bank cheque issued and not cashed;

- current or savings accounts that may combine various products from the above list;

- deposits given as collateral, such as to guarantee loan or financial market transactions, once they have become payable, i.e. when the transaction covered by the deposit has been settled (since the guarantee deposit is no longer applicable, it must be returned to the customer);

- total net balance of factoring transactions.

In addition, all amounts deposited in savings accounts guaranteed by the French government are covered up to an amount of €100,000 per customer, per institution:

- Livret type 'A' savings account (and Livret type 'Bleu' savings account);

- Livret Développement Durable (LDDS) savings account; and

- Livret d’Epargne Populaire (LEP) savings account.

The FGDR compensates customers on behalf of the French government.

Protection of factoring contracts

The decree of 18 February 2019 amending the decree of 27 October 2015 on the implementation of the deposit guarantee scheme includes sums entrusted to factoring companies in the scope of the deposit guarantee scheme. The total net balance of factoring transactions is used to calculate the amount of compensation provided to the legal entity customer in the event that its factor fails.

The total net balance of factoring transactions, given the compensation and guarantee arrangements stipulated in the contracts, consists of the total collections left in the account less drawdowns and commissions due.

When a legal entity has opened several accounts or contracts which themselves consist of several factoring sub-accounts with the same service provider, the total net balance (TNB) is the arithmetic sum of the "net balances" of the factoring sub-accounts.

The legal entity customer is informed of its TNB on each periodic statement (starting in January 2020).

Products not covered by the deposit guarantee scheme:

The deposit guarantee scheme does not cover:

- life insurance policies [9], capitalisation contracts with an insurance company;

- pension savings schemes (PER, PERP [10], PEP [11]) with an insurance company;

- collective pension savings schemes (PERCO [12], PERCO-I, PERE);

- company and inter-company savings schemes (PEE [13], PEI);

- notes, coins and items entrusted to your bank's safety deposit department;

- electronic-based cash and payment cards issued by a payment institution or an electronic money institutions, (Monéo or Nickel account);

- deposits of equity;

- cash vouchers;

- cryptocurrencies.

Securities and other financial instruments (stocks, bonds, units of UCITS, certificates of deposit, negotiable debt instruments, etc.) which are covered by the FGDR's investor compensation scheme [14].

→ To download the list of products covered and not covered, click here [8].

How is compensation paid on a business owner's business accounts?

Individual business owners (craftsmen, merchants, self-employed professionals, etc.) sometimes use bank accounts for business purposes which are separate from their personal accounts [15].

- If a business owner conducts business through a separate legal entity [16], such as a one-person limited company (EURL), or under the status of a limited liability individual business owner (EIRL), a second €100,000 ceiling is made available to compensate his/her personal accounts and a guarantee of up to €100,000 to compensate his/her business accounts [17].

Otherwise, a single coverage level of €100,000 applies for all the business owner's personal and business accounts.

How does the deposit guarantee work for a tenants-in-common account or a partners' account?

An "tenants-in-common account" is an account that belongs collectively to a group of people (called indivision or undivided co-ownership), none of whom may act independently of the others or claim ownership of a portion of the account so long as the indivision exists.

Three examples of tenants-in-common accounts are:

- an account of a deceased person before the notary has settled the estate and the amounts have been shared among the heirs;

- an account in which several people have formed a partnership for a common purpose, but without giving this partnership a specific legal form, and which requires the mutual agreement of the joint owners for all transactions;

- an account created in this form by two people which requires both their signatures for all transactions and where the name of the account includes the words "person A and person B".

In all cases, the guarantee covers the indivision and not the portion belonging to each of its individual members.

Moreover, account holders who have rights as partners of a company, members of an association or any similar group and who are not legal entities (for example, undeclared partnerships and similar groups) are treated as separate depositors. They therefore benefit from a collective coverage level of €100,000 for the accounts in question, in addition to the ceiling applicable to them individually.

How does the deposit guarantee work for a joint-tenants account?

Each co-holder of a joint-tenants account (or joint account) is eligible individually for a coverage level of €100,000.

Unless otherwise specified in the account agreement, a joint account [18] is shared equally amount the co-account holders.

The compensation paid to each joint holder is the sum of the amount of his/her personal deposit accounts and his/her portion of the joint account, up to a total of €100,000 per customer.

Example:

Person A has a personal account with a credit balance of €5,000 and person B has a personal account with a credit balance of €9,000. Together they have a joint account with a credit balance of €3,000.

- Compensation amount for which person A is eligible: €5,000 + one half of €3,000 = €6,500;

- Compensation amount for which person B is eligible: €9,000 + one half of €3,000 = €10,500.

The name of a joint account generally includes the words "Person A or Person B" and the account can be opened for more than two people.

Information notice describing compensation under the deposit guarantee scheme

The compensation procedure under the deposit guarantee scheme is described in a 4-page Information Notice.

This notice can be printed in double-sided A3 format. It is available from the FGDR upon request.

→ To download the Information Notice describing compensation under the FGDR’s deposit guarantee scheme, click here [19].