From this point on, the Bank of Spain offers protection alternatives such as the Deposit Guarantee Fund, which serves to ensure that depositors recover their money, up to a certain limit, in the event that the bank fails. Spanish banking entities registered in the Register of Credit Institutions of the Bank of Spain are required to join. So are branches of banking entities authorised in a country that is not a member of the European Union, if the deposits or guaranteed securities are not covered by a guarantee scheme in the country of origin, or if this coverage is insufficient. And, lastly, membership is voluntary for branches of banking entities authorised in another EU member country, since the guarantee is covered in their country of origin.
As the experts at Raisin warn, it is essential not to confuse the protection of bank savings with that of your investments. Fixed-term deposits and savings accounts are covered by the deposit guarantee scheme of the entity's country. Spain's scheme is known as the Deposit Guarantee Fund (FGD). On the other hand, investment products, such as shares or investment funds, are covered by investor compensation schemes. In Spain this scheme is called the General Investment Guarantee Fund (FOGAIN). The FOGAIN protects investors against the failure of the financial intermediary or fraud, but not against losses due to market fluctuations.
When is the money recovered?
Ultimately, the recovery of this money is not immediate. In the past, bank liquidation processes could be long and complex, but now European legislation is very strict to guarantee savers' peace of mind. The legal repayment period set by EU legislation is 7 business days. If a bank declares bankruptcy, the deposit guarantee scheme of the entity's country is responsible for contacting the affected clients to reimburse the capital and the interest accrued up to that point into the account provided by the client.