Depositor protection at banks and investment firms

If bankruptcy proceedings are instituted against a bank or securities firm or a protective measure is taken pursuant to Art. 26 para. 1 lit. e-h BankG the depositors lose access to their account balances (deposits). The deposits fall into the bankruptcy estate and, without the deposit guarantee system, would only be covered with the distribution of the bankruptcy proceeds and, if necessary, only in part. The deposit guarantee system, on the other hand, ensures that deposits up to a maximum total of CHF 100,000 per creditor are paid out within a short period of time. This is intended to prevent depositors, fearing for the safety of their funds, from withdrawing them from their bank, thus leading to a banking storm.

Functionality of the depositor protection

Swiss depositor protection is based on a three-tier system:

1. Privileged deposits are credit balances at domestic and foreign branches of Swiss banks and securities firms up to a maximum of CHF 100,000 per creditor (Art. 37a BankA). These privileged deposits are initially paid out of the available liquid assets of the bankrupt institution and outside the collocation proceedings under bankruptcy law.
2. To the extent that liquid assets are insufficient to cover them, esisuisse, the deposit guarantee institution, finances the payment of deposits at Swiss offices up to a maximum of CHF 100,000 per creditor. The benefit obligation of esisuisse is limited by law to 6 billion Swiss francs.
3. If the privileged deposits have not already been paid out to the depositors (level 1 or 2), they will be collated in the second bankruptcy class up to a maximum amount of CHF 100,000. The payment of the privileged deposits will then only take place with the distribution of the bankruptcy proceeds and, if necessary, only in part. In addition to the above-mentioned privileged deposits, the bankruptcy privilege also applies to claims of bank foundations for occupational benefits (so-called pillar 3a assets) and of vested benefit foundations (a total of CHF 100,000 per beneficiary is considered privileged).

Further useful information on depositor protection is provided by the questions and answers of esisuisse.

Self-regulation and esisuisse

The association "esisuisse", which is organized under private law, is the body responsible for deposit insurance. "esisuisse" is the self-regulation of banks and securities houses for deposit insurance and has existed since 2005 (until 2014 with the name "Deposit Insurance of Swiss Banks and Securities Dealers (ESI)"). All licensed institutions that have secured deposits are obliged to join this self-regulation.