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-   -   Are your bank deposits exposed to potential bank bail in? (https://www.englishforum.ch/finance-banking-taxation/297434-your-bank-deposits-exposed-potential-bank-bail.html)

Horatio Gonzales 28.03.2020 13:06

Are your bank deposits exposed to potential bank bail in?
 
During the last crisis the banks that were deemed too big to fail were bailed out by their governments.
Since then laws have been revised/added across Europe and including Switzerland. As far as I can tell that allows banks that are too big to fail to be "bailed in" by account holders. As I understand it people with holdings in excess of €250,000 or Fr.250,000 (Subject to correction/clarification) may have their deposits commandeered in order to bail in the Banks.

Are you holding in excess of 250,000 in any of your accounts?

https://www.finma.ch/en/~/media/finm...2020.pdf?la=en

Phil_MCR 28.03.2020 13:11

Re: Are your bank deposits exposed to potential bank bail in?
 
nope. doesn't make sense to hold large cash balances in bank accounts due to:

-ve interest rates
bail-in risk
opportunity cost

Horatio Gonzales 28.03.2020 13:51

Re: Are your bank deposits exposed to potential bank bail in?
 
fully agree however many have liquidated quite a lot of assets recently to be prepared to buy in so may be have extraordinary amounts on account.

Jim2007 28.03.2020 14:03

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by Horatio Gonzales (Post 3164361)
During the last crisis the banks that were deemed too big to fail were bailed out by their governments.
Since then laws have been revised/added across Europe and including Switzerland. As far as I can tell that allows banks that are too big to fail to be "bailed in" by account holders. As I understand it people with holdings in excess of €250,000 or Fr.250,000 (Subject to correction/clarification) may have their deposits commandeered in order to bail in the Banks.

Are you holding in excess of 250,000 in any of your accounts?

https://www.finma.ch/en/~/media/finm...2020.pdf?la=en

And back in the real world - there is no such thing as a "bail in", it is just a polite way of saying your money is gone and you are very unlikely to get any of it back.

It does not really matter if they pay you a cent in the Franc or give you some kind of "bail in" share certificate, the result is the same you don't have any money.

If you have more that the minimum guaranteed about on deposit with a bank then it is probably a good idea to make some adjustments - probably a money market product if you need to have quick access to the cash.

Horatio Gonzales 28.03.2020 14:07

Re: Are your bank deposits exposed to potential bank bail in?
 
call it what you like in the real world or in any other world for that matter the point is they’ll take your money.

wantone 28.03.2020 16:54

Re: Are your bank deposits exposed to potential bank bail in?
 
There is always this risk so one should split the cash in various banks.

Btw there are ultra wealthy persons that have 50m USD in deposits.

Also many many small, medium and large companies have huge bank balances.

amogles 28.03.2020 17:10

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by Horatio Gonzales (Post 3164361)

Are you holding in excess of 250,000 in any of your accounts

Pah, humbug, what a paltry sum to have on your bank account.

My butler earns more that that in a week

yacek 29.03.2020 12:07

Re: Are your bank deposits exposed to potential bank bail in?
 
Is Postfinance too big to...?

Carolyn7 29.03.2020 17:11

Re: Are your bank deposits exposed to potential bank bail in?
 
Yes I have major concerns about this, to put it mildly. I inherited a good amount of money last year, which is intended to purchase a property and subsidize my retirement in the next year or so. At the moment it's sitting in a savings account with UBS. Obviously wishing I'd already acted on the property purchase but as it will be outside of Switzerland it hasn't been possible yet. Certainly had thought it probably should not be all in one bank, but I am where I am. Anything I can do in the immediate short-term or am I SOL at this point??

V__ 29.03.2020 17:15

Re: Are your bank deposits exposed to potential bank bail in?
 
Where is the 250k figure coming from?

I thought Swiss bank accounts are backed by the government up to 100k per account, everything above that is a loss

jamon8 29.03.2020 17:29

Re: Are your bank deposits exposed to potential bank bail in?
 
Is it the same risk as you have it lets say on IB account?

wantone 29.03.2020 18:13

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by jamon8 (Post 3164849)
Is it the same risk as you have it lets say on IB account?

I think IB cash is insured up to $250k. Even if IB fails client cash is separated than IB's own capital and money. It will take some time but all the money will be recovered.

The problem is that IB is keeping the cash at various banks. So if the banks have issues then yes potentially it could be a problem.

wantone 29.03.2020 18:14

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by Carolyn7 (Post 3164841)
Yes I have major concerns about this, to put it mildly. I inherited a good amount of money last year, which is intended to purchase a property and subsidize my retirement in the next year or so. At the moment it's sitting in a savings account with UBS. Obviously wishing I'd already acted on the property purchase but as it will be outside of Switzerland it hasn't been possible yet. Certainly had thought it probably should not be all in one bank, but I am where I am. Anything I can do in the immediate short-term or am I SOL at this point??

Open accounts in other banks and move some of it there.

jamon8 29.03.2020 18:30

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by wantone (Post 3164889)
I think IB cash is insured up to $250k. Even if IB fails client cash is separated than IB's own capital and money. It will take some time but all the money will be recovered.

The problem is that IB is keeping the cash at various banks. So if the banks have issues then yes potentially it could be a problem.

And if IB fails I presume I still own stocks/ETF, which I bought through them?

wantone 29.03.2020 18:35

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by jamon8 (Post 3164906)
And if IB fails I presume I still own stocks/ETF, which I bought through them?

Yes, I think so. It also depends if they are under IB name or your name. And the depository they are using. In the statement there is all the info that you need. It is a bit more complicated than that but I doubt if IB has issues as it seems they are careful with margin requirements.

fatmanfilms 29.03.2020 18:41

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by wantone (Post 3164911)
Yes, I think so. It also depends if they are under IB name or your name. And the depository they are using. In the statement there is all the info that you need. It is a bit more complicated than that but I doubt if IB has issues as it seems they are careful with margin requirements.

If you had any idea, you would know they would be held in a custody account.

Carolyn7 29.03.2020 18:41

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by wantone (Post 3164891)
Open accounts in other banks and move some of it there.

Yes seems like the obvious, but there are restrictions on how much you can take from a savings account at once/in a year so not sure if it's feasible.

fatmanfilms 29.03.2020 18:43

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by Carolyn7 (Post 3164916)
Yes seems like the obvious, but there are restrictions on how much you can take from a savings account at once/in a year so not sure if it's feasible.

You usually can if you forsake interest, why anyone would hold CASH, that could not be liquidated beats me as the most dumb investment in the world.

Carolyn7 29.03.2020 18:52

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by fatmanfilms (Post 3164918)
You usually can if you forsake interest, why anyone would hold CASH, that could not be liquidated beats me as the most dumb investment in the world.


Thanks. Well it was never supposed to be an "investment" - more of a temporary holding place. And aren't actual investments also looking pretty shaky right now?

wantone 29.03.2020 18:53

Re: Are your bank deposits exposed to potential bank bail in?
 
Quote:

Originally Posted by fatmanfilms (Post 3164915)
If you had any idea, you would know they would be held in a custody account.

Usually, brokers keep the stock under their name though since they need to in order to lend them for short selling.

Some, under clients name. It is not clear as they need flexibility for the stock yielding activities.

I know that IB doesn't really tell you in their statement if your stock is under their name of under your name.


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