The news about the arrest of financier Mario Conde, accused of repatriating the money he took from Banesto from Switzerland, has shocked a good part of Spanish public opinion. And how could it be otherwise, it has made them go back to the bad practices of the national banking system, or more specifically of its managers, which can lead to the bankruptcy of the bank. Just remember what happened to Bank of Madrid, a subsidiary entity of the Private Bank of Andorra, which was intervened a year ago by the banking authorities, after the complaint by the United States Treasury against this entity for allegedly having laundered capital from organized crime.
And with greater perspectives in time, the Bankia case, with the infinity of problems that its savers and shareholders had, before being nationalized after the serious cash and financing incidents that the group then chaired by Rodrigo Rato had. Faced with these highly alarming scenarios for some users, and after the arrest of Mario Conde, it is completely normal for many of them to wonder at this time if your savings are safe in the bank. Or worse, what would happen to them if their lifelong financial institution went bankrupt.
It is not a generalized alarm, far from it, but if a wish of Spanish savers is to preserve your heritage, no matter how little, if my bank fails. And that can affect both your relationships with the bank products subscribed (time deposits, promissory notes, public debt, etc.), as well as the investments made by the entity. And that they go so far as to involve the shareholders of financial groups that could ever go through this unpleasant situation: the bankruptcy of the company. In any case, it will be necessary to go point by point to explain all the possible scenarios in this hypothetical possibility.
First scenario: bankruptcy
Whenever we talk about the bankruptcy of a bank, we think of the thousands and thousands of small savers who have saved their monetary contributions in a widely popular product, as in this case are term deposits. Well, in a bankruptcy situation, customers who have subscribed to these savings models will guaranteed by the Deposit Guarantee Fund of Credit Institutions up to a maximum of 100.000 euros by owner and account.
However, they will not recover them immediately, but will be at the expense of the proceedings of justice, but in all cases they will go to your checking account. Those who have contracted the impositions under amounts higher than this amount will have it much more difficult, since under no circumstances could they charge it. Unless the bankrupt bank passed to a new entity, and this one assumed the rights of the clients. And that there is a third option, that the affected entity is liquidated, and in which case they would be in the worst of situations, since they would be on the waiting list after suppliers, shareholders, and investors in general.
In any case, there is a completely legal and very simple strategy to apply that will allow you to prevent these situations from happening to you if you have more than 100.000 euros to store in bank deposits. And it would be a matter of subscribing different products of these characteristics, up to the amount guaranteed by the deposit fund. If possible in different banks, and with accounts that are not the same. As a consequence of this effective action, you will be able to protect all the savings against the possible bankruptcy of a financial institution.
Another very different case is that of clients who, instead of deposits, have signed bank promissory notes. Although they are products with similar characteristics, in the latter are not covered by the Deposit Guarantee Fund, in no case. So if this unwanted scenario occurs, you could lose all the savings, without the possibility of recovering it. Not surprisingly, and from this perspective, promissory notes are savings models that carry greater risk, and it is convenient that you know them before signing a contract.
Furthermore, the difference in profitability between the two savings models is practically non-existent, since they move under the same commercial margins imposed by the banks. And that as a consequence of the cheaper price of money by the European issuing bank, they are established in a narrow range that goes from 0,15% to 0,50% approximately.
Second scenario: what about investors?
Another very different scenario is the one that affects small and medium investors, who have taken positions in the shares of a bank, which has subsequently closed its line of business. Both in financial assets in the stock markets themselves, and through investment funds. Well, they should remain calm in those delicate moments, since you will not lose your investments. Not in vain, the entity is the manager of your wealth, do not forget. And the worst that can happen to you is that your securities account is not operational for a certain time, between 1 and 6 months. In this way, you will not be able to perform any kind of operation.
Once the suspension is lifted, you will be in a position to sell your shares in the equity markets, or simply undo your positions in mutual funds. The main problem that you may encounter is that the financial assets that you have in your investment portfolio are undervalued in their prices with respect to your purchase operations. And as a result of this operation, you can leave many euros on the way. You can also wait until in the coming months, or even years, they can recover their level of quotation in the equity markets.
Third scenario: how are the customers?
There is another dilemma, which does not affect investors or depositors so much, but rather bank users who only have basic products subscribed with the entity (accounts, passbooks, savings plans, etc.). Their situation, with rare exceptions, will be completely the same as in the case of clients who have subscribed any term tax. And for the same reason as in this case, it is more than advisable that for amounts greater than 100.000 euros, they opt for open a different account, or unless it is in the name of other recipients. They can be your parents, siblings, or other family members.
Hence the importance of placing the money in a secure and stable financial institution, and that it does not violate any regulations on the regulation of the Spanish banking system. However, at this time you can be sure about this scenario, since all national banks they have passed the solvency tests on their financial system with good marks, which have been made recently from the highest regulatory bodies of the Monetary Union.
Fourth scenario: what about my credits?
There is another possibility that can happen to you, and that has to do with the situations where you have a line of credit granted (personal, consumer, mortgage, etc.) with a bank that can go bankrupt, and is rescued with public money. Initially, you would not lose your source of funding since it would go directly to another entity, or you would directly be in charge of paying it to the state itself.
Another very different case is when the bankruptcy is technical, and there is no possibility of rescuing it. Then, the debt contracted through your loan would be distributed among the creditors of the entity.
Recommendations from consumer organizations
Different associations in defense of consumers have made a series of tips to try to prevent these cases from happening in the Spanish banking system. And specifically, from the Association of Users of Banks, Savings Banks and Insurance of Spain (ADICAE) Spanish require the national administration to implement a large battery of measures that aim to prevent these situations So detrimental to the interests of customers. And among which the following stand out:
- Surveillance, control and reporting the increase in commissions and expenses that credit institutions apply to their financial products and services.
- Review of the evolution of interest rates on credits, loans and other remunerative or late payment interests to prevent them from increasing with higher spreads. Likewise, special attention will be paid to contract conditions in mortgage loans, specifically in relation to the requirement of links such as contracting insurance, pension plans, use and disposition of cards, etc.
- Debugging of responsibilities of managers of financial entities that opt ​​or have opted for the rescue.
- Especially monitor, and report where appropriate, the types of savings-investment products and their financial conditions and contractual that are placed with consumers by all those credit institutions that request aid from the FROB, as well as the forms of marketing and sale.
- Defense of the rights of small shareholders of those savings banks turned into banks that issued shares to recapitalize themselves and that must go to the FROB to clean up their accounts.
Self-defense of bank users
In any case, clients have some loopholes to prevent extreme situations in banks, and that will start from the importation of some lines of action that are certainly useful to protect both their investments and their savings.
- Do not subscribe savings products for amounts greater than 100.000 euros.
- Stay away from models that are not guaranteed with the Deposit Guarantee Fund.
- Opt for financial entities more solvents and that they comply with the solvency regulations of the banking system.
- Create different checking accounts when the savings bag you have is very expansive.
- The best way to prevent your damages it will be informing you about them.