Switzerland: Swiss Financial Market Supervisory Authority (FINMA)

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Yale University EliScholar – A Digital Platform for Scholarly Publishing at Yale YPFS Documents (Series 1) Browse by Media Type 1-1-1900 Depositor Protection at Banks and Securities Firms Switzerland: Swiss Financial Market Supervisory Authority (FINMA) Follow this and additional works at: https://elischolar.library.yale.edu/ypfs-documents Recommended Citation Switzerland: Swiss Financial Market Supervisory Authority (FINMA), "Depositor Protection at Banks and Securities Firms" (1900). YPFS Documents (Series 1). 12661. https://elischolar.library.yale.edu/ypfs-documents/12661 This Document is brought to you for free and open access by the Browse by Media Type at EliScholar – A Digital Platform for Scholarly Publishing at Yale. It has been accepted for inclusion in YPFS Documents (Series 1) by an authorized administrator of EliScholar – A Digital Platform for Scholarly Publishing at Yale. For more information, please contact elischolar@yale.edu. 3/30/22, 9:33 AM https://www.finma.ch/en/enforcement/recovery-and-resolution/investor-and-creditor-protection/depositor-protection-at-banks-and-s…https://www.finma.ch/en/enforcement/recovery-and-resolution/investor-and-creditor-protection/depositor-protection-at-banks-and-securities-firms/ 1/1Deposit protection is designed to guarantee clients’ bank deposits in the event of theinsolvency of licensed banks or securities firms. Deposit protection protects deposits up to amaximum of CHF 100,000 per client and per bank or securities firm.If a bank or securities firm is declared bankrupt or a protective measure is imposed under Article 26 para. 1 lets. e-h of the Banking Act,depositors lose access to the money they have deposited. The deposits fall into the bankruptcy assets and without the depositprotection scheme would at best be repaid only partially when the proceeds of the bankruptcy are distributed. The deposit protectionscheme, however, is designed to ensure that deposits are paid out quickly up to the maximum amount of CHF 100,000 per depositor.The aim is to prevent depositors from withdrawing funds from their bank because they fear for its safety, thus triggering a bank run.How depositor protection worksThe Swiss depositor protection scheme is based on a three-tier system.The  FAQs provide further useful information on depositor protection.Self-regulation and esisuisse“esisuisse”, which is organised as a private association, is the agency of the deposit protection scheme. “esisuisse” is the self-regulatoryorganisation of the banks and securities firms and is tasked with deposit protection. It has existed since 2005 (named “Swiss Banks’and Securities Dealers’ Depositor Protection Association (ESI)” until 2014). All authorised financial institutions with protected depositsare obliged to join this self-regulatory organisation. Home ...Recovery and resolutionInvestor and creditor protectionDepositor protection at banks and securities firmsDepositor protection at banks and securities firmsDeposits at Swiss and foreign branches of Swiss banks and securities firms up a maximum of CHF 100,000 per depositor areclassed as privileged deposits (Art. 37a Banking Act). These privileged deposits are first paid out from the available liquid assets ofthe bankrupt institution and outside of the schedule of claims under bankruptcy law.1.If the liquid assets are insufficient to cover these deposits, esisuisse, the agency of the deposit protection scheme, funds thedisbursement of deposits in Swiss branches up to a maximum of CHF 100,000 per depositor. esisuisse’s payment liability is limitedby law to CHF 6 billion.2.If the privileged deposits have not already been paid out to the depositors (tier 1 or 2), they are placed among the second class ofbankruptcy claims up to a maximum amount of CHF 100,000. The privileged deposits are at best paid out only partially when theproceeds of the bankruptcy are distributed. Claims on occupational pension schemes (pillar 3a assets) and vested benefitsfoundations also have preferred status (a total amount of CHF 100,000 per pension fund member is classed as privileged).3.esisuisse

Depositor Protection at Banks and Securities Firms

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Depositor Protection at Banks and Securities Firms

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