This raises the risks of having money on deposit in Spain
The Government has announced that it will use Spain’s Deposit Guarantee Fund (Fondo de Garantía de Depósitos) to bail out failed banks and savings banks.
The Deposit Guarantee Fund was set up to protect personal deposits up to €100,000 in the event of a bank failure, not to bail out the banking sector. All European countries have one, as required by European law (deposits in the UK are guaranteed up to £85,000 per person). The Deposit Guarantee Fund is financed by the banks themselves.
Depending on the cost of bailing out rotten financial institutions like CAM it could mean there is not enough money leftover in the fund to protect savers’ deposits in the event of a bank failure the Government can’t stop. It certainly means the fund will have less money to do the job it was meant for. CAM is unlikely to be the last savings bank the Government has to bail out.
Behind this move lies the Government’s desire to keep the cost of Spain’s bank restructuring off the books and keep the public deficit down.
Elena Salgado, the Minister of Finance (pictured above), claims the move will not affect the €100,000 personal deposit guarantee, and argues it’s only fair to make the banks pay the cost of fixing the banking sector.
Her denials are to be expected, but there is no getting away from the fact that this move makes it more risky to have money on deposit in Spain.
Thoughts on “Deposit Guarantee Fund will be used to bail out failed banks”
campbell D Ferguson, FRICS, www.surveyspain.com says:
Scandalous. So the banks are to be permitted to spend their ‘insurance’ money on themselves instead of it being available for depositors when they fail.
Paul Wentworth says:
Seems like the financial shenanigans in the boardrooms of big finance intitutions like the banks is continuing, now that the halcyon days of them throwing caution to the wind and chucking money at the building sector with gay abandon has hit the buffers with their balance sheets now looking a dangerous mess. It realy is a little bit rich that they are now looking to government to bail them out using funds that should have been ring-fenced from any predetory plunder, by them of all people, outragous! It reminds one of the recent case of a certain media barons plunder of his company Pension Fund to prop up his ailing empire leading to his eventual demise, bankers take note!
The Minister of Finance pictured in your photograph looks so stressed that she will be having a heart attack. Not too surprising when you consider that she has just pulled the security blanket, required by law, from beneath all bank account holders.
Terry Callister says:
Governments and banks are one large cartel that does not give a fig for their voters or customers. There needs to be another way for the world to be run. Dependence on the banks who are only interested in profits and shareholders and who got the world into the mess it is in has gone to far. The world needs a revolution.