Monday, 16 February 2009

Finnish Deposit Guaranty

In the autumn, the EU Council convening in the composition of Economic and Finance Ministers (ECOFIN) unanimously recommended that the minimum deposit protection for individual depositors be increased to EUR 50,000 with effect from 8 October 2008.

Owing to Finnish banks' good capital position and profitability, there was no immediate need for increasing the level of deposit protection in Finland. However, in order to ensure Finnish banks' equal competitive position, the level of minimum deposit protection was increased from EUR 25,000 to EUR 50,000.

Bank that are covered by the deposit guaranty:

Aktia Pankki Oyj
eQ Pankki Oy
Evli Pankki Oyj
FIM Pankki Oy
Helmi Säästöpankki Oy
OP-yhteenliittymään kuuluvat pankit
Paikallisosuuspankkiliitto ry:n jäsenpankit
Nooa Säästöpankki Oy
Nordea Pankki Suomi Oyj
S-Pankki Oy
Sampo Pankki Oyj
SEB Gyllenberg Private Bank Ab
Skärgårdsbanken Ab
Sofia Pankki Oyj
Säästöpankkiliitto ry:n jäsenpankit
Suomen Asuntohypopankki Oy
Tapiola Pankki Oy
Ålandsbanken Abp

For More Information: FIN-FSA


HousingFinland said...

I have highlighted again the information and put on the right side as a menu on this blog.

I think that either Banks will be nationalized or run into very big issues in the next 2 years. Pohjola OP,last week, was a clear reminder...

So remember if you have less than 50.000 Euro, you are fine. If you have more than that then you should spread your saving in more than one bank, as they each guaranty 50.000 Euro.

If you are very rich, then you should buy 3 month, 1 year US treasury bond to be on the safe side...OK maybe German least, that's what the informed investors/large capital holders are doing... the yield on those instruments are about equal to zero which clearly show a run to safety...

Anonymous said...

I find it interesting that when I started working in Finland (16 or so years ago) most firms dealt with something like 3 to 5 banks (at least that was the choice on the bills I paid). Now it is common for a firm just to use 1 bank.

The exception to this 1 bank rule seems to be the local authorities who out of fairness/equality seem to use all the banks operating in their area. Local newspapers also seem to follow this line (not cutting off someone who might advertise???)

It looks as if most businesses will be in difficulty if their one bank closed for business. Or are they assumming that the banks are too big to fail and the government will have to keep them working?

"island Crow"

Anonymous said...

Yes, the deposit guaranty in Finland is 50000 €, while there is still no date on when the guaranty will expire. This means the gov could stop it anytime if they like. By the way, the US 250000$ guaranty will expire at the end of this year.

Then, there are the another questions. What is the guaranty (if any) for the shares and bonds in a customer's book-keeping-account at a bank? If the bank goes for insolvency, will the shares and bonds go done with it?

Thank you for sharing the important information!

HousingFinland said...

Regarding the shares...if you buy shares, you are shareholder of the company...the bank is only an intermediary (i.e providing the trading platform and taking commisions).

So if the banks goes bust, you are still shareholder of the company associated with the shares.

Now if the company goes bust, most probably the share will value next to nothing (i.e sirius radio in the US...)

Now it's better that you check those information with the bank itself or stock broker...I just give you my understanding here.

But becarefull, do not see putting your money in shares as being safe than putting in a deposit account...stock will most probably continue to correct.

PS: be carefull of the current sucker rally ( that look like starting in this 19 February), as the correction could be substantial!!! but who knows? I think you could trade if you need to, but trade little!! money is king in a deflationary environment, whatever the scare the media and some web site that try to make you think that hyperinflation is coming...

But again, judge by yourself and ask multiple advise and be always critical and manage risk: do no be greedy!!!!

Anonymous said...

Thanks a lot for your valuable advice! HousingFinland

Charles Monk said...

I was asking in Osuuspankki about this last week.

The lady there pointed out that the guarantee is per person, so if you have a joint account with your spouse, then the cover is EUR 100K.

My particular question was about mortgages. If you have a mortgage with the bank for EUR 50K and a current account balance of EUR 50K and the bank goes down, what happens? Is the guarantee against the bank's net liability to you, or against the current account?

IIRC, in the UK some people have been caught out having been suddenly 'forced' to pay back lots of their mortage with money which they had planned to use for other things. Then of course were unable to secure a replacement mortgage.

The lady in OP said that the mortgages and current accounts were separate, so that would not happen here. The mortgage would be taken over by some other institution.

HousingFinland said...

Thanks Charles for the important additional information!