Although there are several regions where economic growth has expanded phenomenally over the past few years Europe remains the focus for the majority of large international companies. Even European companies strive to strengthen their position in the European market by launching into new local markets. Europe’s financial power brings with it security.

If you have a savings or current account in a European bank, then your funds are legally protected in the event that the bank fails. EU legislation protects money held in European bank accounts up to 100,000EUR or the local currency equivalent.  If you hold several accounts at one bank the coverage of 100,000EUR applies to your aggregated accounts. You don’t get up to 100,000EUR for each bank account but rather for all funds held at a particular bank – the coverage is per person and per bank. With joint accounts both partners are entitled to the limit of 100,000EUR each (max 200,000EUR).

 

When are Funds Held in European Bank Accounts Protected above 100,000EUR?

In some unique situations EU legislation protects your funds held in European banks by more than 100,000EUR. In these situations, amounts exceeding 100,000EUR are protected for 3-12 months after receiving the funds or from the time when the funds became legally transferable. Each EU country sets its own conditions and thresholds in relation to these conditions. Cases where funds held in European bank accounts are protected in excess of 100,000EUR in the event that the bank fails include:

  • Funds received as part of insurance benefits or compensation for criminal injury or wrongful conviction is covered above 100,000EUR.
  • Funds received in connection to a significant life event – retirement, redundancy, marriage, divorce, dismissal, invalidity etc. is covered above 100,000EUR.
  • Funds received from the sale of a private residence is protected above 100,000EUR by EU legislation.

 

Legal Protection of EU Bank Accounts

European Directive 2014/49/EU states that European nations are required to set up at least one Deposit Guarantee Scheme (DGS) to protect deposits in banks, building societies or credit unions. 

Principles of the 2014/49/EU Directive include:

  • DGSs can protect depositors by reimbursing a limited amount (100,000EUR) to compensate account holders whose bank has failed. 
  • The directive requires all banks to join their country’s DGS with the intention of ensuring a level of protection for depositors.
  • DGSs must be funded entirely by financial institutions and not taxpayers’ money.
  • The directive limits the deposit protection to 100,000EUR.
  • A gradual reduction of the repayment time of deposit guarantees.
  • An officially recognized DGS in one EU country must cover deposits at the bank’s branches in other EU countries. 
  • DGSs should help prevent mass withdrawal of funds in the event of a bank failure which could lead to financial instability.

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