Deposit Insurance and Segregated Client Funds

Name: findependent
Brand: findependent
Rating: 4.9 (106 reviews)

Your assets – secure and protected

In Switzerland, funds held at banks are protected by legal and private safeguard mechanisms. This applies not only to account balances, but also to investments managed through an asset manager. In the event of bankruptcy of the custodian bank or the asset manager, a total loss of assets is generally not a concern. However, it is important to be familiar with the applicable regulations in order to take full advantage of the available protection.

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Deposit Insurance – Safeguarding your money

The bankruptcy of a bank does not automatically mean that clients lose all of their savings. In order to ensure the protection of bank deposits, the private association Esisuisse was founded in 2005. It operates under a federal mandate to secure bank deposits (Banking Act, Art. 37h ff.). Esisuisse does not act in its own economic interest, but fulfills a legal obligation.

Membership in Esisuisse is legally required for all Swiss banks as well as Swiss-based subsidiaries of foreign banks. If a member bank becomes insolvent, the remaining members are responsible for financing the repayments to the clients of the failed bank. This system is known as Deposit Insurance.

Important to know: Up to CHF 100,000 per bank and per client is protected. A person holding more than CHF 100,000 at a single bank, regardless of the number of accounts, should consider spreading assets across multiple banks. This is the only way to remain within the deposit insurance coverage limit.

Esisuisse has CHF 6 billion in available funds to be used in case of a bank failure. Although this amount is not sufficient to reimburse all protected deposits in full at once, repayments to clients are legally guaranteed. For this reason, payouts are made in stages. If needed, Esisuisse can call for additional contributions from its members, take out loans, or request support from the federal government to fulfill the repayment obligations.

Deposit Insurance is an important element in maintaining the stability of the Swiss financial system. It builds trust between banks and clients and ensures that the public’s assets remain protected even in times of crisis.

How this affects findependent clients

When investing with findependent, a small portion of the investment amount, approximately 2%, is automatically held as cash in the account at our partner bank, Hypothekarbank Lenzburg. This liquidity is needed to efficiently process ETF purchases and sales, for example in the context of rebalancing.

To reach the protected maximum of CHF 100,000 in the HBL account, an investment of around CHF 5 million with findependent would be required. While we would be happy for anyone to reach that level, this is rather the exception in practice.

What is not covered by Deposit Insurance?

Per client and per bank, a maximum of CHF 100,000 is protected by deposit insurance. Amounts above this limit are not covered in the event of a bank’s insolvency.

It’s important to note that joint accounts, for example with a spouse, are not insured twice, as the joint account is counted as a single client. If both spouses also have their own individual accounts at the same bank, each of these is independently protected up to CHF 100,000.

Here are some other types of deposits that are not covered by Esisuisse:

Vested benefits and pillar 3a accounts:
These accounts are not covered by deposit insurance. However, they are considered privileged deposits and are given preferential treatment in the event of bankruptcy, provided the bank still has sufficient assets after the liquidation. The limit of CHF 100,000 also applies here.
Investments and securities (shares, funds, bonds, etc.):
Investments are not protected by deposit insurance, but are legally considered segregated assets. This means they remain the property of the client and do not form part of the bank’s bankruptcy estate. You can read more about this here.
Deposits at foreign branches of banks
Funds held at non-account-holding securities firms

A complete overview of all deposits not covered by deposit insurance can be found on the official Esisuisse website.

Segregated Client Assets – Safeguarding your investments

Not only cash deposits in a bank are protected by law. Investments such as stocks, bonds, real estate or funds that you hold through a bank are also secured in the event of bankruptcy and do not form part of the bank’s bankruptcy estate. These assets are legally considered segregated assets. In practical terms, this means the investments are the property of the clients – not the bank. The bank simply acts as a service provider that executes buy and sell orders on the financial markets and charges a fee for doing so.

The same applies to asset managers, whether they hold a banking license themselves or operate via a partnership with a bank. At findependent, for example, our partner bank Hypothekarbank Lenzburg enables portfolio management. The assets are managed by findependent and executed by HBL.

In the event of insolvency of either the asset manager or the bank, an external bankruptcy administrator is appointed. This administrator generally initiates contact with all clients whose assets are classified as segregated. Nevertheless, it is advisable to proactively inform yourself and, if needed, reach out directly to the administrator.

Once in contact with the bankruptcy administrator, clients normally have the option to either liquidate their investments or transfer them to another bank or asset manager.