Deposit protection: how safe are your savings?
Government-backed deposit insurance schemes can protect savers and investors in the event that a bank fails. However, the level of security that these schemes provide varies greatly around the world, so it’s important to understand how much of your wealth is covered.
Bank failures are rare, but they usually happen very suddenly. So, if your wealth is spread internationally, you need to make sure that you are well-informed about the levels of protection that apply to each of your accounts. There may not be time to learn the details if the worst happens.
As a starting point, you should try to find out from your local regulator of financial services some basic information. For example:
- what your national deposit insurance scheme covers;
- what the maximum level of compensation is;
- whether this is per account or per account-holder;
- if there is a cap on total compensation payable; and
- whether the deposit-taking institution that you intend to use is a fully paid-up member of their local deposit insurance scheme.
See also our table, below, which summarises selected deposit insurance schemes in various jurisdictions.
Choosing which institution to hold your wealth
In addition to this, you should of course thoroughly research the bank where you hold or plan to hold deposits.
You need to be aware that a single bank may trade under several brands within one country, but only have one authorisation. So, if you place deposits in two differently branded accounts of the same bank and based in the same jurisdiction, a single compensation limit may apply across both accounts.
This scenario does not generally apply to banks that are based in different jurisdictions, however. For example, Barclays Bank PLC in the Isle of Man and Barclays Bank PLC in the UK are covered by separate compensation schemes. However, banks operating in the EEA and authorised by their home state, can be covered by their home state scheme only and with only one compensation limit.
Your best chance of ensuring your wealth is protected is to bank with a strong, transparent and reputable institution. Having an in-depth understanding of who you are dealing with could save you a great deal of inconvenience in the long term.
Summary of selected deposit insurance schemes
|Country||Maximum deposit compensation guarantee in local currency (sterling equivalent in brackets, as at 6 May 2014)|
|Kenya (Deposit Fund Protection Board)||KS100,000 (£800)|
|Nigeria (Nigeria Deposit Insurance Corporation)||NN500,000 (£1,870) for universal banks, NN200,000 (£740) for micro-finance banks and primary mortgage banks|
|South Africa||None – currently under consideration|
|Ghana||None – currently under consideration|
|Egypt||None for private-sector banks, some implicit deposit insurance for public-sector banks|
|United Arab Emirates||None – currently under review. Deposits were fully guaranteed after the global financial crisis of 2007/08, but have now lapsed.|
|Oman (Deposit Insurance Authority)||RO20,000 (£31,800) or 75 per cent of net deposit, whichever is less|
|UK (Financial Services Compensation Scheme)||£85,000. Foreign currency deposits included. Customers’ loans or debts to the failed bank will not be deducted from the compensation payment|
|Other European Union members (implemented through independent national deposit protection funds – sometimes more than one scheme per country)||European Union rules prescribe coverage of €100,000 (£82,050). Foreign currency deposits included.|
|Isle of Man (Depositors’ Compensation Scheme)||£50,000. Foreign currency deposits included.|
|Jersey (Jersey Banks Depositors’ Compensation Scheme)||£50,000. Foreign currency deposits included.|
|Guernsey (Guernsey Banking Deposit Compensation Scheme)||£50,000. Foreign currency deposits included.|
|Switzerland (esisuisse)||CHF100,000 (£67,250). Foreign currency deposits included.|
|Singapore (Singapore Deposit Insurance Corporation)||S$50,000 (£23,700).|
|Hong Kong (Deposit Protection Board)||HK$500,000 (£38,700). Foreign currency deposits included.|
|USA (Banks: Federal Deposit Insurance Corporation, Credit Unions: National Credit Union Administration)||US$250,000 (£152,950). Foreign currency deposits included. Limit applies per person per category of account, so accounts in different categories of ownership may be capped separately.|
Data correct as at 6 May 2014. Compensation limits are those applying per person, per bank, unless otherwise stated. Limits refer to coverage for individual depositors in locally licensed financial institutions. Different rules may apply for other types of depositors and for accounts with overseas-incorporated banks operating branches in the jurisdiction.
Where to find out more and how Barclays International Banking can help
At Barclays International Banking we provide accounts in the UK, as well as in three offshore jurisdictions: the Isle of Man, Jersey and Guernsey. In the latter three locations, deposits are covered by local deposit insurance schemes up to a maximum of £50,000 .1
If you have any questions about the compensation schemes that apply to Barclays International Banking products and services, please call us on +44 (0)20 7574 3212*. Alternatively, if you have a Relationship Manager2, they can put you in touch with one of our Investment Advisers, who can talk to you about the structure of your savings and investments – while making sure your overall investment strategy is suited to your individual needs, circumstances and goals. Please note: we cannot offer investment advice to you in the United Kingdom.
To arrange to speak to your Relationship Manager, please call us on +44 (0)20 7574 3212*.
Please visit the following links to find out more about the deposit insurance schemes operating in the jurisdictions where Barclays International Banking provides accounts:
If you would like information on our products and services please call
+44 (0)20 7574 3212*