Deposit protection in five questions
An essential component of the safety net that has been set in place for the stability of the Italian financial system are the two bank deposit guarantee schemes, the Interbank Deposit Protection Fund (FITD) and the Deposit Guarantee Fund. These schemes operate in similar ways, guaranteeing deposits of up to €100,000 against the failure of the member bank in which they are held (technically speaking, the possibility that the bank is placed under compulsory administrative liquidation).
Below we give an overview of the five most important things to remember about the FITD.
1. Which banks are part of the FITD?
All Italian banks must join one of Italy's authorized deposit guarantee schemes. Digital banks are part of the FITD too, and so are the branches of non-EU banks authorized to operate in Italy (unless they are already part of an equivalent foreign guarantee scheme). The list of banks that are part of the FITD is available here.
2. What does the FITD guarantee exactly?
FITD guarantees extend to current accounts, savings accounts (such as demand deposit accounts, time deposit accounts, and passbooks), certificates of deposit and cashier's cheques. The FITD also guarantees prepaid cards that have an IBAN associated with them (for the purposes of consumer protection, they are equated to a bank deposit).
The coverage limit is €100,000 per deposit holder per bank.
Here's an example: suppose that I hold three current accounts at three different banks (which may even be part of the same banking group) and have €75,000 deposited in each account; in the unlikely event that all three banks are hit by crisis, I will still be refunded the full amount deposited in each bank, even though the sum of my deposits exceeds the €100,000 limit.
3. What happens to joint accounts?
With joint accounts, the account balance is equally divided among all joint account holders. The value of an account holder's share in a joint account is added to any other deposits they may hold (at the same bank), in applying the guarantee of up to €100,000.
Here's an example: if their bank fails, the two holders of a joint account with a deposit of €100,000 will receive €50,000 each from the FITD for that deposit (if either of them holds any other deposits at the same bank, that holder will also be compensated for up to a further €50,000); on the other hand, the two holders of a €300,000 deposit will each get €100,000.
4. How exactly are deposit holders refunded?
The refund can only take place in the event of the bank's compulsory administrative liquidation, within seven working days of the date in which the order of the liquidation comes into force. The depositor shall not bear any costs, nor shall they need to make a formal request for reimbursement, as the Fund proceeds automatically.
The FITD issues a refund through a member bank and the depositor can decide whether to receive it via credit transfer (into a different bank account from the one they held at the bank under liquidation), in the form of a cashier's cheque, or in cash (according to regulations).
5. What kinds of bank savings are not protected by the FITD?
The FITD does not guarantee savings invested in such schemes as repurchase agreements (repos) nor the deposits we entrust to banks to invest in other financial instruments (a form of investment known as indirect deposits, which includes asset management). Shares and bonds issued by the banks themselves are not protected either.
Amounts over the coverage limit of €100,000 are not reimbursed by the Fund if a bank fails, but they do get recorded as part of the bank's liabilities and are liable to be taken into account when the liquidation assets are subsequently distributed among creditors.
Finally, the FITD's guarantee only covers deposits held with its member banks. Deposits with Poste Italiane, for instance, are not protected by the Fund (though they are guaranteed by the Italian Government, on the other hand).