Is Your Money Safe in banks in Europe?

While the headlines are usually full of references to the emerging economies in places like Asia, Europe has long been the first choice for corporate strategy of the world’s multinationals. European businesses as well as businesses from across the globe look to Europe to increase their market share.

European Union laws protect savings and current account holders in the event that the bank holding their funds should collapse. By EU law bank depositors are protected up to EUR100, 000. This compensation is awarded per person, per bank. In other words if you hold multiple accounts at one bank you would get a one-time payment of EUR100, 000 (or the equivalent in the local national currency) for your aggregated accounts.

Joint account holders can both apply for EUR 100,000 compensation if your bank fails. So on the one account you could get a maximum of EUR200, 000. There are certain other exceptions to this rule where under EU regulations you may qualify for further financial protection above the limit of EUR100, 000. If you have a “temporary high balance” in your account at the time of the bank’s failure you may be eligible for further financial compensation

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Your temporary high balance must stem from one of the following:

  • If you have received funds from sale of a private residence or deposited funds in your account in preparation for purchase of a residence.
  • If you have received funds from a major life event like marriage; civil partnership; divorce settlement; retirement money; redundancy; inheritance etc.
  • Funds received as an insurance pay-out or court-ordered compensation for wrongful conviction or criminal injuries can also receive additional financial protection.

Under the above mentioned circumstances the EU regulations protect your funds for at least 3 months and no more than twelve months following your receipt of the funds or from when the funds were officially transferable (this many vary slightly depending on the individual regulations in the particular EU country where your funds were held).

How does EU Directive 2014/49/EU Protect your Money in Europe?

This European Union legislation was created in 2014 in order to protect bank deposits; make faster pay-outs possible and improve financing. The directive requires all EU countries to:

  • Establish at least one Deposit Guarantee Scheme (DGS) to be joined by all banks.
  • Make certain to provide a simplified and harmonious protection of deposits.
  • Provide depositors with information about their financial protection rights when opening an account and annually thereafter.
  • The key aspects of the DGS protection of assets must be made clear to depositors.
  • Include information about the account holder’s DGS eligibility status on their regular account statements.

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