How to ensure that the deposit guarantee fund shields more than 100,000 euros | markets

Armored deposits in Spain by the Deposit Guarantee Fund (FGD) have stood at 100,000 euros per entity and holder since 2008. The outbreak of the Great Financial Crisis raised it from the previous threshold of 20,000 euros. The shield, however, does not have limits for transactions with real estate, those linked to marriage, divorce, retirement, dismissal, disability, death and those based on the payment of insurance benefits. Of course, it must be communicated to the financial institution in question and the duration of this unlimited shielding is temporary.

The great mantra of the FGD for deposits is that the money insured in a financial entity attached to it amounts to 100,000 euros. And it is true. The deadlines for returning that money are even assessed: they are, barring any setbacks, seven days. Until December 31, 2023, when the FGD cannot return the reimbursable amount within seven business days, it will pay, within five business days after the request, an adequate amount of your deposits in order to cover your sustenance, according to the current regulation.

But there is a specific case in which the aforementioned threshold does not apply. These are the so-called specially guaranteed balances. In these, the amount is protected whatever it is for three months from the moment in which the amount has been paid or from the moment in which said deposits have become legally transferable.

They are those that come from transactions with real estate of a residential and private nature, those that derive from payments received by the depositor on a timely basis and are linked to marriage, divorce, retirement, dismissal, disability or death and those based on the payment of insurance benefits or compensation for damages resulting from a crime or a judicial error.

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In any case, it is necessary for the client to notify the financial institution. In a letter sent by CaixaBank to customers who were simultaneously customers of the Barcelona-based bank and Bankia, the bank states that “the customer must request the Declaration of amounts specially guaranteed by the Fund from an office of the entity Deposit Guarantee” and provide sufficient proof that the origin of the funds comes from any of the aforementioned categories.

In that letter, the entity chaired by José Ignacio Goirigolzarri and led as CEO by Gonzalo Gortázar recalls that, as a single entity, the amount insured per owner remains at 100,000 euros. Until the merger, the client had insured a maximum of 200,000 between both entities.

Deposits made by other credit institutions on their own account and in their own name, as well as those made by broker-dealers and brokers, insurers, securities investment companies (socimi), investment funds and pensions, securitization and risk capital.

Deposits made in the entity by public administrations are also not covered, with the exception of those made by local entities with an annual budget equal to or less than 500,000 euros.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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