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I can tell you of another very specific case, which I had studied in great depth in 2006 when I became aware that TEOTWAWKI was coming for banks and I started chasing the best yield/safety for my own liquidities.

The case relates to ING. ING has a subsidiary called ING Direct, which markets no-thrills, low-fees, at some time high-yield (but not so much so today) online banking services. The brand is operated worldwide, but the legal framework is not everywhere the same.

In France, ING Direct is a branch of the Dutch ING Direct. It is not a french-incorporated subsidiary, and it is not registered as an "établissement de crédit" at the Banque de France. It is only registered as a branch of a foreign bank from the EC.

As such, ING Direct.fr was NOT (and still isn't) covered by the "Caisse de Garantie des Depots" scheme (of 7Ok€ per depositor and per bank at the time, Sarko talked of raising it to 100k€ but I don't think it's actually in place yet). The website of CGD makes it very clear that depositors in such situations would have to file cross-border claims with the deposit insurance of the home country (The Netherlands in this case). At the time, the Netherlands offered only 20k€ per depositor in insurance (this has subsequently been made an EC-mandated minimum, but it wasn't even in place in the UK during the NR run).

EC does not mandate equal treatment in insurance for branches and subsidiary, nor for local or foreign banks. What it does mandate is that depositors from any EC country in a given bank, should be given equal treatment by all regulators concerned by a failure of this bank. Enrolment in deposit insurance may or may not be mandatory for cross-border operations, it is a mess.

Pierre

by Pierre on Tue Aug 18th, 2009 at 10:58:53 AM EST
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