Markoulakos Law Blog

How secured are our bank deposits? Are our bank deposits secure?

How secured are our bank deposits?

We always believed that our deposits in the Banks are completely secure regardless of the amount. This belief, which was not founded on a real or legal basis, was due to our ignorance in relation to the way the banking system works and what depositing our money in a bank really entails. We are using the past tense as (after the recent and unpleasant developments in Cyprus) all of us, attorneys or not, have realized that our deposits in the Banks are not as secure and granted as we used to think.

When we have our money in our hands, in a material form, money is a movable asset which belongs to us, precisely because we have it in our hands.

 When we deposit our money in the Bank and they give us a deposit book then the money is no longer ours but the Bank's. More specifically, we conclude an "irregular deposit" agreement with the Bank based on which the Bank owes us at any given time the exact amount as shown in our deposit book (or it shows up in the computerised system). Anytime we wish, we give an order and we withdraw the money or the Bank transfers the money, based on its contractual obligation (namely the Bank is obliged to pay us). The Bank using our money makes investment on its behalf, increasing its assets, owing us at the same time, as part of its liabilities, said amount.

Consequently, if in an extreme unrealistic case, the Bank invests the total of the money it has received by the depositors in one sole investment which later gets lost, then the money of the depositors are lost as well. Of course, in order for something similar to be unlikely to happen there are many safeguards regarding the way a Bank is able to manage the money; the solvency levels are estimated based on a series of data which take into consideration all extreme scenarios with stress tests and of course each Bank's supervisory mechanism (in our case the Bank of Greece) carries out all of the statutory and appropriate controls in order for any credit event to be avoided.

Nonetheless, at least for the majority of the depositors, in order to avoid problems regardless of whether the Bank suffers a credit event or not, the Hellenic Deposit and Investment Guarantee Fund (HDIGF) has been established in Greece by virtue of Law 3746/2009 which has an obligation to compensate the depositors of the credit institutions which are unable to pay their obligations toward them up to the amount of 100,000 EUR per depositor; namely, when there are more than one beneficiaries in an account the amount is multiplied by the number of the co-beneficiaries. Prior to the Law 3746/2009 the guarantee for the deposits was only 20,000 EUR per depositor, whereas HDIGF's funds mostly come from the contributions of the national banks. At the same time, the European Union constantly issues new directives in order for the Member-States to attune their national legislation concerning the deposits guarantees while collecting the contributions of the Banks not in the national deposit guarantee funds but in the European guarantee fund.

The Banks, the deposits of which in Greece are protected by HDIGF are:

Greek Banks 

  1. National Bank Bank of Greece
  2. Alpha Bank (Alpha Bank)
  3. General Bank Bank of Greece
  4. Bank Eurobank Ergasias
  5. Piraeus Bank
  6. Attica Bank (Attica Bank)
  7. Investment Bank of Greece
  8. Panellinia Bank
  9. Aegean Baltic Bank
  10. Credicom Consumer Finance Bank
  11. Pancretan Cooperative Bank
  12. Cooperative Bank of Epirus
  13. Cooperative Bank of Chania
  14. Cooperative Bank of Evros
  15. Cooperative Bank of Thessaly
  16. Cooperative Bank of Karditsa
  17. Cooperative Bank of Peloponnese
  18. Cooperative Bank of Pieria
  19. Cooperative Bank of Drama
  20. Cooperative bank of Serres


Branches of Banks incorporated in countries outside the EU  

  1. Kedr Close Joint Stock Company Commercial Bank
  2. T. C. Ziraat Bankasi A. S.
  3. Bank of AmericaΝ.Α.
  4. Bank Saderat Iran

Of course, up until now, no deposits have been lost, whether one had more or less than 100,000 EUR, as the Bank of Greece in each separate act with which it rated a bank as non-sustainable (separation between good and bad)introduced an exception to the rule of 100,000 EUR in order to safeguard the deposits and not cause disturbance in the Greek banking system. The surplus over 100,000 EUR was once more covered by HDIGF the reserves of which were for this reason further reduced.

Therefore, as for the deposits amounting to more than 100,000EUR per depositor there is no obligational guarantee and as the Bank of Greece's and the HDIGF's capability to cover at any time the deposit regardless of the amount is not a given, we all owe to realize that the first and foremost guarantee for our deposits is the credibility of the Bank we have entrusted with our money and secondly, the HDIGF.

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