It is not only bank customers who ask themselves this question. Since the “too big to fail crisis” over ten years ago, the protection of customers when a bank goes bankrupt has been hotly debated in the media too. With the new smartphone banking, the topic has become even more relevant because digitization and globalization are making the banking system ever more complex.
This is how depositor protection works at PostFinance
If a bank goes bankrupt, depositor protection or investment protection (often known colloquially as a bank guarantee) comes into play in Switzerland. But how does depositor protection work and what must customers be aware of? We’ll show you in this article.
What is depositor protection?
If a bank experiences financial trouble, depositor protection, also known as a depositor protection scheme or investment protection, comes into effect in Switzerland. Colloquially, we often talk of a “bank guarantee”, but this is the same as depositor protection. What precisely is behind this depositor protection, depositor protection scheme or bank guarantee? Depositor protection is there to ensure that if a financial institution goes bankrupt, a customer's deposits up to CHF 100,000 are safeguarded. The depositor protection scheme also pledges that these deposits up to CHF 100,000 will be paid out to the customer to a specified account even before bankruptcy proceedings are underway. It must be noted that with the 3 million customers that PostFinance currently has, 6 billion francs would never be enough to cover this sum for everyone.
However, in this country this guarantee applies only to Swiss banks and securities dealers who are subject to financial market supervision by The link will open in a new window FINMA, the Swiss Financial Market Supervisory Authority. Of course, PostFinance is included here alongside other large Swiss banks including UBS, Credit Suisse and the cantonal banks. If you have deposited your money in another bank or in an account with an app-based bank, you should check what protection you have if the financial institution goes bankrupt: for example, does a foreign bank also have a government guarantee? Do the same regulations apply there as for the depositor protection scheme in Switzerland? Clarifying these things can be priceless in the worst case scenario.
How exactly does depositor protection work?
Depositor protection came about in the first place to protect depositors if a bank went bankrupt by ensuring that they incur no or only limited losses. Depositor protection backs privileged deposits, i.e. all deposits that are in the name of the bank customer. Non-privileged deposits are those that are not in the name of the bank customer, and custody deposits.
The privileged deposits are backed to CHF 100,000 and – as the name suggests – are given privileged treatment in bankruptcy proceedings. This means that they belong to the second class of creditors and are deducted from existing assets in second place.
The depositor protection scheme provides for payment to be made within 20 days of the initiation of bankruptcy proceedings. All banks and securities dealers in Switzerland are required by law to be part of the depositor protection scheme (esisuisse). This ensures that, at all times, 6 billion francs are available for immediate payout.
What does depositor protection look like at PostFinance?
All of the above points apply to PostFinance, which is also a member of the The link will open in a new window esisuisse scheme. If a bank or securities dealer in Switzerland is unable to pay, the other esisuisse members immediately provide the required funds. This means there is joint and several liability among the members and this guarantees the depositor protection scheme.
More information about the depositor protection scheme at PostFinance can be found on the page “Corporate governance: transparent business management”.