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Old 18.04.2016, 08:31
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Re: Guarantee of funds in Swiss Bank Accounts

100K per customer per bank. http://www.esisuisse.ch/en/home.htm
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Old 18.04.2016, 09:32
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Re: Guarantee of funds in Swiss Bank Accounts

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100K per customer per bank. http://www.esisuisse.ch/en/home.htm
How does that work if you have a loan from the bank? Presumably, if I have deposits totalling CHF 200k with my bank, but also a home loan of CHF 1 million, and the bank fails, then I walk away CHF 800k in the black... Right?
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Old 18.04.2016, 09:39
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Re: Guarantee of funds in Swiss Bank Accounts

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How does that work if you have a loan from the bank? Presumably, if I have deposits totalling CHF 200k with my bank, but also a home loan of CHF 1 million, and the bank fails, then I walk away CHF 800k in the black... Right?
I suspected the balance is not netted off, your 800k loan is an asset of the bank. You will loose 100k & possibly most of the 'guaranteed' 100k as the 'guarantee' money does not exist in practice & is capped at 6 Billion which is short change.

People believe when they pay money into a bank it's their money, it belongs to the bank & not the depositor.
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Old 18.04.2016, 09:50
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Re: Guarantee of funds in Swiss Bank Accounts

I was joking about being net in the black, of course... although I suspect there would be a slew of lawsuits if credit balances (i.e. credit from the depositor's perspective) weren't netted off against debts.
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People believe when they pay money into a bank it's their money, it belongs to the bank & not the depositor.
You've said that more than once. Do you have a reference for this statement? If all deposits are the bank's property, why would they pay anybody'y cash back? Why not shut up shop and roll in the billions for centuries to come? Even if it is true, surely there'd be a contract to protect the depositor? (I'm not saying you're wrong, just askin' (to paraphrase a certain other poster on EF).)
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Old 18.04.2016, 10:04
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Re: Guarantee of funds in Swiss Bank Accounts

Never mind ^^... I googled it. As you said, deposited funds become an asset of the bank, your right to them is a liability for the bank. Interesting, as of course loans made by the bank are also assets of the bank, held by the borrower... surely there's a strong argument for liabilities to a person being offset against assets held by the same person?
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Old 18.04.2016, 10:30
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Re: Guarantee of funds in Swiss Bank Accounts

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Never mind ^^... I googled it. As you said, deposited funds become an asset of the bank, your right to them is a liability for the bank. Interesting, as of course loans made by the bank are also assets of the bank, held by the borrower... surely there's a strong argument for liabilities to a person being offset against assets held by the same person?
There is no strong argument for the bank especially as they may sell your loan & just be the administer.

Some agreements do indeed net off balances, it's important to read & understand the implications when you take out a loan, everything in life is negotiable.
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I was joking about being net in the black, of course... although I suspect there would be a slew of lawsuits if credit balances (i.e. credit from the depositor's perspective) weren't netted off against debts.
You've said that more than once. Do you have a reference for this statement? If all deposits are the bank's property, why would they pay anybody'y cash back? Why not shut up shop and roll in the billions for centuries to come? Even if it is true, surely there'd be a contract to protect the depositor? (I'm not saying you're wrong, just askin' (to paraphrase a certain other poster on EF).)
Quite amazed how little you understand about the financial system, google is you friend as you found out Why would you even bother to sue a bankrupt bank? as an unsecured creditor it would be a total waste of time.
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Old 18.04.2016, 17:54
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Re: Guarantee of funds in Swiss Bank Accounts

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100K per customer per bank. http://www.esisuisse.ch/en/home.htm
Not exactly, the Swiss 'guarantee' is not like the EU one. The sentence reads:

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In the event of a bank going bankrupt, all esisuisse members (all banks with branches in Switzerland) will transfer to esisuisse within five days the amounts required of up to a total amount of CHF 6 billion. Clients will receive up to CHF 100 000 of their savings.
In fact this means that clients will receive a maximum of CHF 100K should their claims exceed 100K and less should the total claims exceed CHF 6 billion. For the smaller banks that should be OK, but for the larger banks that might not workout so well.
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Old 18.04.2016, 17:56
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Re: Guarantee of funds in Swiss Bank Accounts

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How does that work if you have a loan from the bank? Presumably, if I have deposits totalling CHF 200k with my bank, but also a home loan of CHF 1 million, and the bank fails, then I walk away CHF 800k in the black... Right?
It depends on whether or not you had the 'right of offset' clause removed from your loan agreement I was surprised when the bank agreed to remove it from my mortgage agreement 20+ years ago.
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Old 18.04.2016, 20:12
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Re: Guarantee of funds in Swiss Bank Accounts

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There is no strong argument for the bank especially as they may sell your loan & just be the administer.

Some agreements do indeed net off balances, it's important to read & understand the implications when you take out a loan, everything in life is negotiable.


Quite amazed how little you understand about the financial system, google is you friend as you found out Why would you even bother to sue a bankrupt bank? as an unsecured creditor it would be a total waste of time.
Lol. Not being aware of one element of retail banking doesn't make me amazingly lacking in understanding of "the financial system". I'd guess that my experience in merchant and investment banking gives me more insight into that side of "the financial system" than you what do you think?

If you're referring to my comment about lawsuits, obviously I wouldn't advocate suing a bankrupt bank. There would be lawsuits against Esisuisse, cantonal governments, the federal government and any other institution or person who could conceivably be held accountable. That's part of the reason why the banks were bailed out not so long ago.
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Old 18.04.2016, 20:23
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Re: Guarantee of funds in Swiss Bank Accounts

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Lol. Not being aware of one element of retail banking doesn't make me amazingly lacking in understanding of "the financial system". I'd guess that my experience in merchant and investment banking gives me more insight into that side of "the financial system" than you — what do you think?

If you're referring to my comment about lawsuits, obviously I wouldn't advocate suing a bankrupt bank. There would be lawsuits against Esisuisse, cantonal governments, the federal government and any other institution or person who could conceivably be held accountable. That's part of the reason why the banks were bailed out not so long ago.
Amazed if your 'in banking', that you really don't get the basics or have any understanding of the balance sheet of a bank. Deposits are Liabilities, Loans are assets, if you did not know that I really don't know where to start.

Also very surprised you never read & understood the implications your mortgage agreements which presumably you signed. (I have pointed this out more than once as you said earlier) You think you can sue someone else because you entered into an agreement by choice yourself & did not understand what the terms were. As Jin2007 points out he negotiated the clause out of his contract.
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Old 18.04.2016, 20:31
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Re: Guarantee of funds in Swiss Bank Accounts

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Amazed if your 'in banking', that you really don't get the basics or have any understanding of the balance sheet of a bank. Deposits are Liabilities, Loans are assets, if you did not know that I really don't know where to start.

Also very surprised you never read & understood the implications your mortgage agreements which presumably you signed. (I have pointed this out more than once as you said earlier) You think you can sue someone else because you entered into an agreement by choice yourself & did not understand what the terms were. As Jin2007 points out he negotiated the clause out of his contract.
I'm not 'in banking'.

I was in merchant and investment banking 25 years ago. Never saw the balance sheet of any bank, though -- just those of very large customers when we leased them 747s and restructured their debt.

But sure, it's reasonably obvious that deposits are assets. I just never really thought about it.
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Old 18.04.2016, 20:38
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Re: Guarantee of funds in Swiss Bank Accounts

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But sure, it's reasonably obvious that deposits are assets. I just never really thought about it.
Deposits are liabilities NOT ASSETS!
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Old 18.04.2016, 20:44
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Re: Guarantee of funds in Swiss Bank Accounts

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Deposits are liabilities NOT ASSETS!
Duh. Yes, I know. Need sleep!
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Old 19.04.2016, 10:28
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Re: Guarantee of funds in Swiss Bank Accounts

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surely there's a strong argument for liabilities to a person being offset against assets held by the same person?
The first 100k in your account are privileged and will be paid out fairly quickly. In theory the remaining 100k can be offset by part of the mortgage, but your bank is likely to have excluded that in your mortgage contract (check yours). So the remaining 100k in your account will probably become an ordinary part of the class three credits while your mortgage is likely to come due fairly soon after default (if not immediately, again check your contract).

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I suspected the balance is not netted off, your 800k loan is an asset of the bank. You will loose 100k & possibly most of the 'guaranteed' 100k as the 'guarantee' money does not exist in practice & is capped at 6 Billion which is short change.

People believe when they pay money into a bank it's their money, it belongs to the bank & not the depositor.
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In fact this means that clients will receive a maximum of CHF 100K should their claims exceed 100K and less should the total claims exceed CHF 6 billion. For the smaller banks that should be OK, but for the larger banks that might not workout so well.
While technically correct you guys are ignoring some essential aspects.

As you may know, creditors form creditor classes, the lower the class the higher the priority (lower-numbered class is satisfied first). In case of default, unsecured creditors including ordinary account holders are part of creditor class three. However, for each client the first 100k are upclassed into class two. This is a big disadvantage to the remaining class-three creditors as there will be much less assets available to satisfy the remaining claims of that class. It's also a big disadvantage to the other class-two creditors if there are not enough funds to satisfy all class-two creditors as these will get paid out less proportionately.

The guarantee fund of 6bln only comes into play if and when there are not enough bank assets to satisfy all ordinary rank-two creditors plus the upclassed total of the 100k-guarantees, though it will only be used to 'make whole' the upclassed 100k.

What's more, the 6bln guarantee fund is an entity of its own, it is refilled by the operating banks. So if the guarantee fund happens to have been emptied but not yet refilled there's no longer a guarantee (or merely a reduced guarantee to the extent it has been refilled).

Ignoring special cases like secured credits, craftmen's right of distraint, etc. creditor classes look as follows:
Class one: employee salaries including 2nd pillar payments due and Kinderzulagen
Class two: social security payments due: AHV/IV/EO, accident insurance, etc
Class two: upclassed 100k per client
Class three: all other unsecured creditors including standard accounts and bonds, and also financial products such as tracker certificates and exchange traded notes, less the 100k upclassed per client
Class four: subordinate bonds (nachrangige Anleihen). Not officially a class.

Your security account is not the banks' property thus it's not a part of distributable assets. However, bonds with the bank as debtor and financial products issued by the bank including all exchange traded notes and all discount certificates such as 'cash or share' certificates, tracker certificates, and similar, are essentially debt owed by the bank and will indeed be part of the ordinary default (class three) even though they are booked in your security account.

Last edited by Urs Max; 19.04.2016 at 10:39.
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